(State or other jurisdiction of Incorporation or organization) |
(I.R.S. Employer Identification No.) | |
|
||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
The |
|
☒ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
Emerging growth company |
PART I – |
3 |
|||||
ITEM 1. |
5 |
|||||
10 |
||||||
ITEM 2. |
37 |
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38 |
||||||
40 |
||||||
42 |
||||||
52 |
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66 |
||||||
ITEM 3. |
69 |
|||||
ITEM 4. |
69 |
|||||
PART II – |
70 |
|||||
ITEM 1. |
70 |
|||||
ITEM 1A. |
71 |
|||||
ITEM 2. |
72 |
|||||
ITEM 3. |
72 |
|||||
ITEM 4. |
73 |
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ITEM 5. |
73 |
|||||
ITEM 6. |
73 |
|||||
74 |
• |
local, regional, national and international economic and market conditions and political events and the impact they may have on us, our customers and our assets and liabilities; |
• |
our ability to attract deposits and other sources of funding or liquidity; |
• |
supply and demand for commercial or residential real estate and periodic deterioration in real estate prices and/or values in California or other states where we lend; |
• |
a sharp or prolonged slowdown or decline in real estate construction, sales or leasing activities; |
• |
changes in the financial performance and/or condition of our borrowers, depositors, key vendors or counterparties; |
• |
changes in our levels of delinquent loans, nonperforming assets, allowance for credit losses and charge-offs; |
• |
the costs or effects of mergers, acquisitions or dispositions we may make, whether we are able to obtain any required governmental approvals in connection with any such mergers, acquisitions or dispositions, and/or our ability to realize the contemplated financial or business benefits or cost savings associated with any such mergers, acquisitions or dispositions; |
• |
the effects of new laws, regulations and/or government programs, including those laws, regulations and programs enacted by federal, state or local governments in the geographic jurisdictions in which we do business in response to the recent national emergency declared in connection with the COVID-19 pandemic; |
• |
the impact of the federal CARES Act and the significant additional lending activities undertaken by the Company in connection with the Small Business Administration’s Paycheck Protection Program enacted thereunder, including risks to the Company with respect to the uncertain application by the Small Business Administration of new borrower and loan eligibility, forgiveness and audit criteria; |
• |
the effects of the Company’s participation in one or more of the new lending programs recently established by the Federal Reserve, including the Main Street New Loan Facility, the Main Street Priority Loan Facility and the Nonprofit Organization New Loan Facility, and the impact of any related actions or decisions by the Federal Reserve Bank of Boston and its special purpose vehicle established pursuant to such lending programs; |
• |
the effect of changes in laws, regulations and applicable judicial decisions (including laws, regulations and judicial decisions concerning financial reforms, taxes, bank capital levels, allowance for credit losses, consumer, commercial or secured lending, securities and securities trading and hedging, bank operations, compliance, fair lending, the Community Reinvestment Act, employment, executive compensation, insurance, cybersecurity, vendor management and information security technology) with which we and our subsidiaries must comply or believe we should comply or which may otherwise impact us; |
• |
changes in estimates of future reserve requirements and minimum capital requirements based upon the periodic review thereof under relevant regulatory and accounting standards, including changes in the Basel Committee framework establishing capital standards for bank credit, operations and market risks; |
• |
the accuracy of the assumptions and estimates and the absence of technical error in implementation or calibration of models used to estimate the fair value of financial instruments or currently expected credit losses or delinquencies; |
• |
the sensitivity of our assets and liabilities to changes in market interest rates, or our current allowance for credit losses; |
• |
inflation, changes in market interest rates, securities market and monetary fluctuations; |
• |
changes in government-established interest rates, reference rates or monetary policies, including the possible imposition of negative interest rates on bank reserves; |
• |
the impact of the anticipated phase-out of the London Interbank Offered Rate (LIBOR) on interest rate indexes specified in certain of our customer loan agreements and our interest rate swap arrangements, including any economic and compliance effects related to the expected change from LIBOR to an alternative reference rate; |
• |
changes in the amount, cost and availability of deposit insurance; |
• |
disruptions in the infrastructure that supports our business and the communities where we are located, which are concentrated in California, involving or related to physical site access and/or communication facilities; |
• |
cyber incidents, attacks, infiltrations, exfiltrations, or theft or loss of Company or customer or employee data or money; |
• |
political developments, uncertainties or instability, catastrophic events, acts of war or terrorism, or natural disasters, such as earthquakes, drought, the effects of pandemic diseases, climate changes or extreme weather events, that may affect electrical, environmental, computer servers, and communications or other services or facilities we use, or that may affect our customers, employees or third parties with whom we conduct business; |
• |
our timely development and implementation of new banking products and services and the perceived overall value of these products and services by customers and potential customers; |
• |
the Company’s relationships with and reliance upon outside vendors with respect to certain of the Company’s key internal and external systems, applications and controls; |
• |
changes in commercial or consumer spending, borrowing and savings preferences or behaviors; |
• |
technological changes and the expanding use of technology in banking and financial services (including the adoption of mobile banking, funds transfer applications, electronic marketplaces for loans, blockchain technology and other banking products, systems or services); |
• |
our ability to retain and increase market share, retain and grow customers and control expenses; |
• |
changes in the competitive environment among banks and other financial services and technology providers; |
• |
competition and innovation with respect to financial products and services by banks, financial institutions and non-traditional providers including retail businesses and technology companies; |
• |
volatility in the credit and equity markets and its effect on the general economy or local or regional business conditions or on the Company’s assets, liabilities, or customers; |
• |
fluctuations in the price of the Company’s common stock or other securities, and the resulting impact on the Company’s ability to raise capital or make acquisitions; |
• |
the effect of changes in accounting policies and practices, as may be adopted from time-to-time |
• |
changes in our organization, management, compensation and benefit plans, and our ability to retain or expand our workforce, management team, key executive positions and/or our board of directors; |
• |
our ability to identify suitable and qualified replacements for any of our executive officers who may leave their employment with us, including our Chief Executive Officer; |
• |
the costs and effects of legal, compliance and regulatory actions, changes and developments, including the initiation and resolution of legal proceedings (including any securities, lender liability, bank operations, financial product or service, data privacy, consumer or employee class action litigation); |
• |
regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations or reviews; |
• |
our ongoing relations with our various federal and state regulators, including the SEC, Federal Reserve Board, FDIC and California DFPI; |
• |
our success at managing the risks involved in the foregoing items; and |
• |
all other factors set forth in the Company’s public reports, including its Annual Report on Form 10-K for the year ended December 31, 2019, and particularly the discussion of risk factors within that document. |
September 30, |
December 31, | |||||||
2020 |
2019 | |||||||
Assets |
||||||||
Cash and due from banks |
$ | $ | ||||||
Interest-earning balances due from Federal Reserve |
||||||||
Total cash and cash equivalents |
||||||||
Interest-earning balances due from depository institutions |
||||||||
Investment securities available-for-sale, |
||||||||
Investment securities held-to-maturity |
||||||||
Total investment securities |
||||||||
Investment in stock of Federal Home Loan Bank (FHLB) |
||||||||
Loans and lease finance receivables |
||||||||
Allowance for credit losses |
( |
) | ( |
) | ||||
Net loans and lease finance receivables |
||||||||
Premises and equipment, net |
||||||||
Bank owned life insurance (BOLI) |
||||||||
Accrued interest receivable |
||||||||
Intangibles |
||||||||
Goodwill |
||||||||
Other real estate owned (OREO) |
||||||||
Income taxes |
||||||||
Other assets |
||||||||
Total assets |
$ | $ | ||||||
Liabilities and Stockholders’ Equity |
||||||||
Liabilities: |
||||||||
Deposits: |
||||||||
Noninterest-bearing |
$ | $ | ||||||
Interest-bearing |
||||||||
Total deposits |
||||||||
Customer repurchase agreements |
||||||||
Other borrowings |
- | |||||||
Deferred compensation |
||||||||
Junior subordinated debentures |
||||||||
Other liabilities |
||||||||
Total liabilities |
||||||||
Commitments and Contingencies |
||||||||
Stockholders’ Equity |
||||||||
Common stock, authorized, |
||||||||
Retained earnings |
||||||||
Accumulated other comprehensive income, net of tax |
||||||||
Total stockholders’ equity |
||||||||
Total liabilities and stockholders’ equity |
$ | $ | ||||||
Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||||||||||
2020 |
2019 |
2020 |
2019 | |||||||||||||
Interest income: |
||||||||||||||||
Loans and leases, including fees |
$ | $ | $ | |
$ | |
||||||||||
Investment securities: |
||||||||||||||||
Investment securities available-for-sale |
||||||||||||||||
Investment securities held-to-maturity |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total investment income |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Dividends from FHLB stock |
||||||||||||||||
Interest-earning deposits with other institutions |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total interest income |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Interest expense: |
||||||||||||||||
Deposits |
||||||||||||||||
Borrowings and customer repurchase agreements |
||||||||||||||||
Junior subordinated debentures |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total interest expense |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net interest income before provision for credit losses |
||||||||||||||||
Provision for credit losses |
- | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net interest income after provision for credit losses |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Noninterest income: |
||||||||||||||||
Service charges on deposit accounts |
||||||||||||||||
Trust and investment services |
||||||||||||||||
Bankcard services |
||||||||||||||||
BOLI income |
||||||||||||||||
Gain on OREO, net |
- | |||||||||||||||
Gain on sale of building, net |
- | |||||||||||||||
Gain on eminent domain condemnation, net |
- | - | - | |||||||||||||
Other |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total noninterest income |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Noninterest expense: |
||||||||||||||||
Salaries and employee benefits |
||||||||||||||||
Occupancy and equipment |
||||||||||||||||
Professional services |
||||||||||||||||
Computer software expense |
||||||||||||||||
Marketing and promotion |
||||||||||||||||
Amortization of intangible assets |
||||||||||||||||
Acquisition related expenses |
- | - | ||||||||||||||
Other |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total noninterest expense |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Earnings before income taxes |
||||||||||||||||
Income taxes |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net earnings |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other comprehensive income: |
||||||||||||||||
Unrealized (loss) gain on securities arising during the period, before tax |
$ | ( |
) | $ | $ | $ | ||||||||||
Less: Reclassification adjustment for net gain on securities included in net income |
- | ( |
) | - | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other comprehensive (loss) income, before tax |
( |
) | ||||||||||||||
Less: Income tax benefit (expense) related to items of other comprehensive income |
( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other comprehensive (loss) income, net of tax |
( |
) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Comprehensive income |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Basic earnings per common share |
$ | $ | $ | $ | ||||||||||||
Diluted earnings per common share |
$ | $ | $ | $ |
Accumulated |
||||||||||||||||||||
Common |
Other |
|||||||||||||||||||
Shares |
Common |
Retained |
Comprehensive |
|||||||||||||||||
Outstanding |
Stock |
Earnings |
Income (Loss) |
Total | ||||||||||||||||
Balance, July 1, 2020 |
$ | |
$ | |
$ | |
$ | |
||||||||||||
Repurchase of common stock |
( |
) | ( |
) | - | - | ( |
) | ||||||||||||
Exercise of stock options |
- | - | ||||||||||||||||||
Shares issued pursuant to stock-based compensation plan |
- | - | ||||||||||||||||||
Cash dividends declared on common stock ($ |
- | - | ( |
) | - | ( |
) | |||||||||||||
Net earnings |
- | - | - | |||||||||||||||||
Other comprehensive loss |
- | - | - | ( |
) | ( |
) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance, September 30, 2020 |
$ | |
$ | |
$ | |
$ | |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance, July 1, 2019 |
$ | $ | $ | $ | ||||||||||||||||
Repurchase of common stock |
( |
) | ( |
) | - | - | ( |
) | ||||||||||||
Exercise of stock options |
- | - | ||||||||||||||||||
Shares issued pursuant to stock-based compensation plan |
- | - | ||||||||||||||||||
Cash dividends declared on common stock ($ |
- | - | ( |
) | - | ( |
) | |||||||||||||
Net earnings |
- | - | - | |||||||||||||||||
Other comprehensive income |
- | - | - | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance, September 30, 2019 |
$ | $ | $ | $ | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
||||||||||||||||||||
Common |
Other |
|||||||||||||||||||
Shares |
Common |
Retained |
Comprehensive |
|||||||||||||||||
Outstanding |
Stock |
Earnings |
Income (Loss) |
Total | ||||||||||||||||
Balance, January 1, 2020 |
$ | $ | $ | $ | ||||||||||||||||
Cumulative adjustment upon adoption of ASU 2016-13 |
- | - | ( |
) | - | ( |
) | |||||||||||||
Repurchase of common stock |
( |
) | ( |
) | - | - | ( |
) | ||||||||||||
Exercise of stock options |
- | - | ||||||||||||||||||
Shares issued pursuant to stock-based compensation plan |
- | - | ||||||||||||||||||
Cash dividends declared on common stock ($ |
- | - | ( |
) | - | ( |
) | |||||||||||||
Net earnings |
- | - | - | |||||||||||||||||
Other comprehensive income |
- | - | - | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance, September 30, 2020 |
$ | |
$ | |
$ | |
$ | |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance, January 1, 2019 |
$ | |
$ | |
$ | ( |
) | $ | |
|||||||||||
Repurchase of common stock |
( |
) | ( |
) | - | - | ( |
) | ||||||||||||
Exercise of stock options |
- | - | ||||||||||||||||||
Shares issued pursuant to stock-based compensation plan |
- | - | ||||||||||||||||||
Cash dividends declared on common stock ($ |
- | - | ( |
) | - | ( |
) | |||||||||||||
Net earnings |
- | - | - | |||||||||||||||||
Other comprehensive income |
- | - | - | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance, September 30, 2019 |
$ | $ | $ | $ | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended | ||||||||
September 30, | ||||||||
2020 |
2019 | |||||||
Cash Flows from Operating Activities |
||||||||
Interest and dividends received |
$ | $ | ||||||
Service charges and other fees received |
||||||||
Interest paid |
( |
) | ( |
) | ||||
Net cash paid to vendors, employees and others |
( |
) | ( |
) | ||||
Income taxes |
( |
) | ( |
) | ||||
|
|
|
|
|
| |||
Net cash provided by operating activities |
||||||||
|
|
|
|
|
| |||
Cash Flows from Investing Activities |
||||||||
Net change in interest-earning balances from depository institutions |
( |
) | ||||||
Proceeds from sale of investment securities held-for-sale |
||||||||
Proceeds from repayment of investment securities available-for-sale |
||||||||
Proceeds from maturity of investment securities available-for-sale |
||||||||
Purchases of investment securities available-for-sale |
( |
) | ( |
) | ||||
Proceeds from repayment and maturity of investment securities held-to-maturity |
||||||||
Purchases of investment securities held-to-maturity |
( |
) | ( |
) | ||||
Net increase in equity investments |
( |
) | ( |
) | ||||
Net (increase) decrease in loan and lease finance receivables |
( |
) | ||||||
Proceeds on eminent domain condemnation, net |
||||||||
Proceeds from sale of building, net of selling costs |
||||||||
Purchase of premises and equipment |
( |
) | ( |
) | ||||
Proceeds from BOLI death benefit |
||||||||
Proceeds from sales of other real estate owned |
||||||||
|
|
|
|
|
| |||
Net cash (used in) provided by investing activities |
( |
) | ||||||
|
|
|
|
|
| |||
Cash Flows from Financing Activities |
||||||||
Net increase in other deposits |
||||||||
Net decrease in time deposits |
( |
) | ( |
) | ||||
Net increase (decrease) in other borrowings |
( |
) | ||||||
Net increase (decrease) in customer repurchase agreements |
( |
) | ||||||
Cash dividends on common stock |
( |
) | ( |
) | ||||
Repurchase of common stock |
( |
) | ( |
) | ||||
Proceeds from exercise of stock options |
||||||||
|
|
|
|
|
| |||
Net cash provided by (used in) financing activities |
( |
) | ||||||
|
|
|
|
|
| |||
Net increase in cash and cash equivalents |
||||||||
Cash and cash equivalents, beginning of period |
||||||||
|
|
|
|
|
| |||
Cash and cash equivalents, end of period |
$ | $ | ||||||
|
|
|
|
|
|
Nine Months Ended | ||||||||
September 30, | ||||||||
2020 |
2019 | |||||||
Reconciliation of Net Earnings to Net Cash Provided by Operating Activities |
||||||||
Net earnings |
$ | $ | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||
Gain on sale of investment securities, net |
( |
) | ||||||
Gain on eminent domain condemnation, net |
( |
) | ||||||
Gain on sale of building, net |
( |
) | ( |
) | ||||
Gain on sale of other real estate owned |
( |
) | ||||||
Increase in BOLI |
( |
) | ( |
) | ||||
Net amortization of premiums and discounts on investment securities |
||||||||
Accretion of discount for acquired loans, net |
( |
) | ( |
) | ||||
Provision for credit losses |
||||||||
Valuation allowance on other real estate owned |
||||||||
Stock-based compensation |
||||||||
Depreciation and amortization, net |
||||||||
Change in other assets and liabilities |
( |
) | ( |
) | ||||
|
|
|
|
|
| |||
Total adjustments |
( |
) | ||||||
|
|
|
|
|
| |||
Net cash provided by operating activities |
$ | $ | ||||||
|
|
|
|
|
| |||
Supplemental Disclosure of Non-cash Investing Activities |
||||||||
Transfer of loans to other real estate owned |
$ | $ |
1. |
BUSINESS |
2. |
BASIS OF PRESENTATION |
3. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
4. |
INVESTMENT SECURITIES |
September 30, 2020 | ||||||||||||||||||||
Amortized Cost |
Gross Unrealized Holding Gain |
Gross Unrealized Holding Loss |
Fair Value |
Total Percent | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Investment securities available-for-sale: |
||||||||||||||||||||
Mortgage-backed securities |
$ | $ | $ | ( |
$ | |||||||||||||||
CMO/REMIC |
( |
|||||||||||||||||||
Municipal bonds |
||||||||||||||||||||
Other securities |
||||||||||||||||||||
Total available-for-sale |
$ | $ | $ | ( |
$ | |||||||||||||||
Investment securities held-to-maturity: |
||||||||||||||||||||
Government agency/GSE |
$ | $ | $ | $ | ||||||||||||||||
Mortgage-backed securities |
||||||||||||||||||||
CMO/REMIC |
||||||||||||||||||||
Municipal bonds |
( |
|||||||||||||||||||
Total held-to-maturity |
$ | $ | $ | ( |
$ | |||||||||||||||
December 31, 2019 | ||||||||||||||||||||
Amortized Cost |
Gross Unrealized Holding Gain |
Gross Unrealized Holding Loss |
Fair Value |
Total Percent | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Investment securities available-for-sale: |
||||||||||||||||||||
Mortgage-backed securities |
$ | $ | $ | ( |
$ | |||||||||||||||
CMO/REMIC |
( |
|||||||||||||||||||
Municipal bonds |
( |
|||||||||||||||||||
Other securities |
||||||||||||||||||||
Total available-for-sale |
$ | $ | $ | ( |
$ | |||||||||||||||
Investment securities held-to-maturity: |
||||||||||||||||||||
Government agency/GSE |
$ | $ | $ | ( |
$ | |||||||||||||||
Mortgage-backed securities |
( |
|||||||||||||||||||
CMO/REMIC |
( |
|||||||||||||||||||
Municipal bonds |
( |
|||||||||||||||||||
Total held-to-maturity |
$ | $ | $ | ( |
$ | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||||||||||
2020 |
2019 |
2020 |
2019 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Investment securities available-for-sale: |
||||||||||||||||
Taxable |
$ | $ | $ | $ | ||||||||||||
Tax-advantaged |
||||||||||||||||
Total interest income from available-for-sale |
||||||||||||||||
Investment securities held-to-maturity: |
||||||||||||||||
Taxable |
||||||||||||||||
Tax-advantaged |
||||||||||||||||
Total interest income from held-to-maturity |
||||||||||||||||
Total interest income from investment securities |
$ | $ | $ | $ | ||||||||||||
September 30, 2020 | ||||||||||||||||||||||||
Less Than 12 Months |
12 Months or Longer |
Total | ||||||||||||||||||||||
Fair Value |
Gross Unrealized Holding Losses |
Fair Value |
Gross Unrealized Holding Losses |
Fair Value |
Gross Unrealized Holding Losses | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Investment securities available-for-sale: |
||||||||||||||||||||||||
Mortgage-backed securities |
$ | $ | ( |
$ | $ | $ | $ | ( |
||||||||||||||||
CMO/REMIC |
( |
( |
||||||||||||||||||||||
Municipal bonds |
||||||||||||||||||||||||
Total available-for-sale |
$ | $ | ( |
$ | $ | $ | $ | ( |
||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||
Less Than 12 Months |
12 Months or Longer |
Total | ||||||||||||||||||||||
Fair Value |
Gross Unrealized Holding Losses |
Fair Value |
Gross Unrealized Holding Losses |
Fair Value |
Gross Unrealized Holding Losses | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Investment securities available-for-sale: |
||||||||||||||||||||||||
Mortgage-backed securities |
$ | $ | ( |
$ | $ | ( |
$ | $ | ( |
|||||||||||||||
CMO/REMIC |
( |
( |
( |
|||||||||||||||||||||
Municipal bonds |
( |
( |
||||||||||||||||||||||
Total available-for-sale |
$ | $ | ( |
$ | $ | ( |
$ | $ | ( |
|||||||||||||||
Investment securities held-to-maturity: |
||||||||||||||||||||||||
Government agency/GSE |
$ | $ | ( |
$ | $ | ( |
$ | $ | ( |
|||||||||||||||
Mortgage-backed securities |
( |
( |
||||||||||||||||||||||
CMO/REMIC |
( |
( |
( |
|||||||||||||||||||||
Municipal bonds |
( |
( |
( |
|||||||||||||||||||||
Total held-to-maturity |
$ | $ | ( |
$ | $ | ( |
$ | $ | ( |
|||||||||||||||
September 30, 2020 | ||||||||||||||||
Available-for-sale |
Held-to-maturity | |||||||||||||||
Amortized Cost |
Fair Value |
Amortized Cost |
Fair Value | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
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 investment securities |
$ | $ | $ | $ | ||||||||||||
5. |
LOANS AND LEASE FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES |
September 30, 2020 |
December 31, 2019 | |||||||
(Dollars in thousands) | ||||||||
Commercial and industrial |
$ |
$ |
||||||
SBA |
||||||||
SBA - Paycheck Protection Program (PPP) |
||||||||
Real estate: |
||||||||
Commercial real estate |
||||||||
Construction |
||||||||
SFR mortgage |
||||||||
Dairy & livestock and agribusiness |
||||||||
Municipal lease finance receivables |
||||||||
Consumer and other loans |
||||||||
Total loans |
||||||||
Less: Deferred loan fees, net (1) |
( |
) | ||||||
Total loans, net of deferred loan fees |
||||||||
Less: Allowance for credit losses |
( |
) |
( |
) | ||||
Total loans and lease finance receivables, net |
$ |
$ |
||||||
(1) | Beginning with March 31, 2020, gross loans are presented net of deferred loan fees by respective class of financing receivables. |
Origination Year |
Revolving loans amortized cost basis |
Revolving loans converted to term loans |
||||||||||||||||||||||||||||||||||
September 30, 2020 |
2020 |
2019 |
2018 |
2017 |
2016 |
Prior |
Total | |||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||
Commercial and industrial loans: |
||||||||||||||||||||||||||||||||||||
Risk Rating: |
||||||||||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
Special Mention |
||||||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||||||
Doubtful & Loss |
||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Total Commercial and industrial loans: |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
SBA loans: |
||||||||||||||||||||||||||||||||||||
Risk Rating: |
||||||||||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
Special Mention |
||||||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||||||
Doubtful & Loss |
||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Total SBA loans: |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
SBA - PPP loans: |
||||||||||||||||||||||||||||||||||||
Risk Rating: |
||||||||||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
Special Mention |
||||||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||||||
Doubtful & Loss |
||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Total SBA - PPP loans: |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Commercial real estate loans: |
||||||||||||||||||||||||||||||||||||
Risk Rating: |
||||||||||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
Special Mention |
||||||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||||||
Doubtful & Loss |
||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Total Commercial real estate loans: |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Construction loans: |
||||||||||||||||||||||||||||||||||||
Risk Rating: |
||||||||||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
Special Mention |
||||||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||||||
Doubtful & Loss |
||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Total Construction loans: |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
SFR mortgage loans: |
||||||||||||||||||||||||||||||||||||
Risk Rating: |
||||||||||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
Special Mention |
||||||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||||||
Doubtful & Loss |
||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Total SFR mortgage loans: |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Origination Year |
Revolving loans amortized cost basis |
Revolving loans converted to term loans |
||||||||||||||||||||||||||||||||||
September 30, 2020 |
2020 |
2019 |
2018 |
2017 |
2016 |
Prior |
Total | |||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||
Dairy & livestock and agribusiness loans: |
||||||||||||||||||||||||||||||||||||
Risk Rating: |
||||||||||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
Special Mention |
||||||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||||||
Doubtful & Loss |
||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Total Dairy & livestock and agribusiness loans: |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Municipal lease finance receivables loans: |
||||||||||||||||||||||||||||||||||||
Risk Rating: |
||||||||||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
Special Mention |
||||||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||||||
Doubtful & Loss |
||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Total Municipal lease finance receivables loans: |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Consumer and other loans: |
||||||||||||||||||||||||||||||||||||
Risk Rating: |
||||||||||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
Special Mention |
||||||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||||||
Doubtful & Loss |
||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Total Consumer and other loans: |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Gross loans: |
||||||||||||||||||||||||||||||||||||
Risk Rating: |
||||||||||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
Special Mention |
||||||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||||||
Doubtful & Loss |
||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Total Gross loans: |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 | ||||||||||||||||||||
Pass |
Special Mention |
Substandard |
Doubtful & Loss |
Total | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Commercial and industrial |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
SBA |
||||||||||||||||||||
Real estate: |
||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||
Owner occupied |
||||||||||||||||||||
Non-owner occupied |
||||||||||||||||||||
Construction |
||||||||||||||||||||
Speculative |
||||||||||||||||||||
Non-speculative |
||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||||||
Consumer and other loans |
||||||||||||||||||||
Total gross loans |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Three Months Ended September 30, 2020 | ||||||||||||||||||||
Ending Balance June 30, 2020 |
Charge-offs |
Recoveries |
Provision for (Recapture of) Credit Losses |
Ending Balance September 30, 2020 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Commercial and industrial |
$ |
$ |
( |
) |
$ |
$ |
$ |
|||||||||||||
SBA |
( |
) |
( |
) |
||||||||||||||||
SBA - PPP |
||||||||||||||||||||
Real estate: |
||||||||||||||||||||
Commercial real estate |
( |
) |
||||||||||||||||||
Construction |
( |
) |
||||||||||||||||||
SFR mortgage |
||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||
Municipal lease finance receivables |
( |
) |
||||||||||||||||||
Consumer and other loans |
( |
) |
||||||||||||||||||
Total allowance for credit losses |
$ |
$ |
( |
) |
$ |
$ |
$ |
|||||||||||||
Three Months Ended September 30, 2019 | ||||||||||||||||||||
Ending Balance June 30, 2019 |
Charge-offs |
Recoveries |
Provision for (Recapture of) Loan Losses |
Ending Balance September 30, 2019 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Commercial and industrial |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
SBA |
( |
) |
||||||||||||||||||
Real estate: |
||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||
Construction |
||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||
Municipal lease finance receivables |
( |
) |
||||||||||||||||||
Consumer and other loans |
( |
) |
||||||||||||||||||
Total allowance for loan losses |
$ |
$ |
( |
) |
$ |
$ |
$ |
|||||||||||||
Nine Months Ended September 30, 2020 | ||||||||||||||||||||||||
Ending Balance, prior to adoption of ASU 2016-13 December 31, 2019 |
Impact of Adoption of ASU 2016-13 |
Charge-offs |
Recoveries |
Provision for (Recapture of) Credit Losses |
Ending Balance September 30, 2020 | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Commercial and industrial |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||
SBA |
( |
) |
||||||||||||||||||||||
SBA - PPP |
||||||||||||||||||||||||
Real estate: |
||||||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||||||
Construction |
||||||||||||||||||||||||
SFR mortgage |
( |
) |
( |
) |
||||||||||||||||||||
Dairy & livestock and agribusiness |
( |
) |
( |
) |
||||||||||||||||||||
Municipal lease finance receivables |
( |
) |
( |
) |
||||||||||||||||||||
Consumer and other loans |
( |
) |
( |
) |
||||||||||||||||||||
Total allowance for credit losses |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||
Nine Months Ended September 30, 2019 | ||||||||||||||||||||
Ending Balance December 31, 2018 |
Charge-offs |
Recoveries |
Provision for (Recapture of) Loan Losses |
Ending Balance September 30, 2019 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Commercial and industrial |
$ | $ | ( |
) | $ | $ | $ | |||||||||||||
SBA |
( |
) | ||||||||||||||||||
Real estate: |
||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||
Construction |
( |
) | ||||||||||||||||||
SFR mortgage |
( |
) | ||||||||||||||||||
Dairy & livestock and agribusiness |
( |
) | ||||||||||||||||||
Municipal lease finance receivables |
( |
) | ||||||||||||||||||
Consumer and other loans |
( |
) | ( |
) | ||||||||||||||||
Total allowance for loan losses |
$ | $ | ( |
) | $ | $ | $ | |||||||||||||
September 30, 2019 | ||||||||||||||||
Recorded Investment in Loans |
Allowance for Loan Losses | |||||||||||||||
Individually Evaluated for Impairment |
Collectively Evaluated for Impairment |
Individually Evaluated for Impairment |
Collectively Evaluated for Impairment | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Commercial and industrial |
$ | $ | $ | $ | ||||||||||||
SBA |
||||||||||||||||
Real estate: |
||||||||||||||||
Commercial real estate |
||||||||||||||||
Construction |
||||||||||||||||
SFR mortgage |
||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||
Consumer and other loans |
||||||||||||||||
Total |
$ | $ | $ | $ | ||||||||||||
September 30, 2020 | ||||||||||||||||||||||||
30-59 Days Past Due |
60-89 Days Past Due |
Greater than 89 Days Past Due |
Total Past Due |
Loans Not Past Due |
Total Loans and Financing Receivables | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Commercial and industrial |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
SBA |
||||||||||||||||||||||||
SBA - PPP |
||||||||||||||||||||||||
Real estate: |
||||||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||||||
Owner occupied |
||||||||||||||||||||||||
Non-owner occupied |
||||||||||||||||||||||||
Construction |
||||||||||||||||||||||||
Speculative (1) |
||||||||||||||||||||||||
Non-speculative |
||||||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||||||||||
Consumer and other loans |
||||||||||||||||||||||||
Total gross loans |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |||||||||||||
(1) | Speculative construction loans are generally for properties where there is no identified buyer or renter. |
September 30, 2020 | ||||||||||||
Nonaccrual with No Allowance for Credit Losses |
Total Nonaccrual (1) (3) |
Loans Past Due Over 89 Days Still Accruing | ||||||||||
(Dollars in thousands) | ||||||||||||
Commercial and industrial |
$ | $ | $ | |||||||||
SBA |
||||||||||||
SBA - PPP |
||||||||||||
Real estate: |
||||||||||||
Commercial real estate |
||||||||||||
Owner occupied |
||||||||||||
Non-owner occupied |
||||||||||||
Construction |
||||||||||||
Speculative (2) |
||||||||||||
Non-speculative |
||||||||||||
SFR mortgage |
||||||||||||
Dairy & livestock and agribusiness |
||||||||||||
Municipal lease finance receivables |
||||||||||||
Consumer and other loans |
||||||||||||
Total gross loans |
$ | |
$ | |
$ | |||||||
(1) | As of September 30, 2020, $ 30-59 days past due, $60-89 days past due, and $ |
(2) | Speculative construction loans are generally for properties where there is no identified buyer or renter. |
(3) | Excludes $ |
December 31, 2019 | ||||||||||||||||||||||||
30-59 Days Past Due |
60-89 Days Past Due |
Total Past Due and Accruing |
Nonaccrual (1) (3) |
Current |
Total Loans and Financing Receivables | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Commercial and industrial |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
SBA |
||||||||||||||||||||||||
Real estate: |
||||||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||||||
Owner occupied |
||||||||||||||||||||||||
Non-owner occupied |
||||||||||||||||||||||||
Construction |
||||||||||||||||||||||||
Speculative (2) |
||||||||||||||||||||||||
Non-speculative |
||||||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||||||||||
Consumer and other loans |
||||||||||||||||||||||||
Total gross loans |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||
(1) | As of December 31, 2019, $ 30-59 days past due, $60-89 days past due and $ |
(2) | Speculative construction loans are generally for properties where there is no identified buyer or renter. |
(3) | Excludes $ |
As of and For the Nine Months Ended September 30, 2019 | ||||||||||||||||||||
Recorded Investment |
Unpaid Principal Balance |
Related Allowance |
Average Recorded Investment |
Interest Income Recognized | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
With no related allowance recorded: |
||||||||||||||||||||
Commercial and industrial |
$ | $ | $ | $ | $ | |||||||||||||||
SBA |
||||||||||||||||||||
Real estate: |
||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||
Owner occupied |
||||||||||||||||||||
Non-owner occupied |
||||||||||||||||||||
Construction |
||||||||||||||||||||
Speculative |
||||||||||||||||||||
Non-speculative |
||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||||||
Consumer and other loans |
||||||||||||||||||||
Total |
||||||||||||||||||||
With a related allowance recorded: |
||||||||||||||||||||
Commercial and industrial |
||||||||||||||||||||
SBA |
||||||||||||||||||||
Real estate: |
||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||
Owner occupied |
||||||||||||||||||||
Non-owner occupied |
||||||||||||||||||||
Construction |
||||||||||||||||||||
Speculative |
||||||||||||||||||||
Non-speculative |
||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||||||
Consumer and other loans |
||||||||||||||||||||
Total |
||||||||||||||||||||
Total impaired loans |
$ | $ | $ | $ | $ | |||||||||||||||
December 31, 2019 | ||||||||||||
Recorded Investment |
Unpaid Principal Balance |
Related Allowance | ||||||||||
(Dollars in thousands) | ||||||||||||
With no related allowance recorded: |
||||||||||||
Commercial and industrial |
$ | $ | $ | |||||||||
SBA |
||||||||||||
Real estate: |
||||||||||||
Commercial real estate |
||||||||||||
Owner occupied |
||||||||||||
Non-owner occupied |
||||||||||||
Construction |
||||||||||||
Speculative |
||||||||||||
Non-speculative |
||||||||||||
SFR mortgage |
||||||||||||
Dairy & livestock and agribusiness |
||||||||||||
Municipal lease finance receivables |
||||||||||||
Consumer and other loans |
||||||||||||
Total |
||||||||||||
With a related allowance recorded: |
||||||||||||
Commercial and industrial |
||||||||||||
SBA |
||||||||||||
Real estate: |
||||||||||||
Commercial real estate |
||||||||||||
Owner occupied |
||||||||||||
Non-owner occupied |
||||||||||||
Construction |
||||||||||||
Speculative |
||||||||||||
Non-speculative |
||||||||||||
SFR mortgage |
||||||||||||
Dairy & livestock and agribusiness |
||||||||||||
Municipal lease finance receivables |
||||||||||||
Consumer and other loans |
||||||||||||
Total |
||||||||||||
Total impaired loans |
$ | $ | $ | |||||||||
September 30, 2020 |
Number of Loans Dependent on Collateral |
|||||||||||||||
Real Estate |
Business Assets |
Other |
||||||||||||||
(Dollars in thousands) |
||||||||||||||||
Commercial and industrial |
$ | $ | $ | |||||||||||||
SBA |
||||||||||||||||
SBA - PPP |
||||||||||||||||
Real estate: |
||||||||||||||||
Commercial real estate |
||||||||||||||||
Construction |
||||||||||||||||
SFR mortgage |
||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||
Consumer and other loans |
||||||||||||||||
Total collateral-dependent loans |
$ | $ | $ | |||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||||||||||
2020 |
2019 |
2020 |
2019 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Performing TDRs: |
||||||||||||||||
Beginning balance |
$ | $ | $ | $ | ||||||||||||
New modifications |
||||||||||||||||
Payoffs/payments, net and other |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
TDRs returned to accrual status |
||||||||||||||||
TDRs placed on nonaccrual status |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Nonperforming TDRs: |
||||||||||||||||
Beginning balance |
$ | $ | $ | $ | ||||||||||||
New modifications |
||||||||||||||||
Charge-offs |
( |
) | ||||||||||||||
Transfer to OREO |
( |
) | ||||||||||||||
Payoffs/payments, net and other |
( |
) | ( |
) | ( |
) | ||||||||||
TDRs returned to accrual status |
||||||||||||||||
TDRs placed on nonaccrual status |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Total TDRs |
$ | $ | $ | $ | ||||||||||||
6. |
EARNINGS PER SHARE RECONCILIATION |
Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||||||||||
2020 |
2019 |
2020 |
2019 | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Earnings per common share: |
||||||||||||||||
Net earnings |
$ | $ | $ | $ | ||||||||||||
Less: Net earnings allocated to restricted stock |
||||||||||||||||
Net earnings allocated to common shareholders |
$ | $ | $ | $ | ||||||||||||
Weighted average shares outstanding |
||||||||||||||||
Basic earnings per common share |
$ | $ | $ | $ | ||||||||||||
Diluted earnings per common share: |
||||||||||||||||
Net income allocated to common shareholders |
$ | $ | $ | $ | ||||||||||||
Weighted average shares outstanding |
||||||||||||||||
Incremental shares from assumed exercise of outstanding options |
||||||||||||||||
Diluted weighted average shares outstanding |
||||||||||||||||
Diluted earnings per common share |
$ | $ | $ | $ | ||||||||||||
7. |
FAIR VALUE INFORMATION |
· |
Level 1 |
· |
Level 2 |
· |
Level 3 |
Carrying Value at September 30, 2020 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
(Dollars in thousands) | ||||||||||||||||
Description of assets |
||||||||||||||||
Investment securities - AFS: |
||||||||||||||||
Mortgage-backed securities |
$ | $ | $ | $ | ||||||||||||
CMO/REMIC |
||||||||||||||||
Municipal bonds |
||||||||||||||||
Other securities |
||||||||||||||||
Total investment securities - AFS |
||||||||||||||||
Interest rate swaps |
||||||||||||||||
Total assets |
$ | $ | $ | $ | ||||||||||||
Description of liability |
||||||||||||||||
Interest rate swaps |
$ | $ | $ | $ | ||||||||||||
Total liabilities |
$ | $ | $ | $ | ||||||||||||
Carrying Value at December 31, 2019 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
(Dollars in thousands) | ||||||||||||||||
Description of assets |
||||||||||||||||
Investment securities - AFS: |
||||||||||||||||
Mortgage-backed securities |
$ | $ | $ | $ | ||||||||||||
CMO/REMIC |
||||||||||||||||
Municipal bonds |
||||||||||||||||
Other securities |
||||||||||||||||
Total investment securities - AFS |
||||||||||||||||
Interest rate swaps |
||||||||||||||||
Total assets |
$ | $ | $ | $ | ||||||||||||
Description of liability |
||||||||||||||||
Interest rate swaps |
$ | $ | $ | $ | ||||||||||||
Total liabilities |
$ | $ | $ | $ | ||||||||||||
Carrying Value at September 30, 2020 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Total Losses For the Nine Months Ended September 30, 2020 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Description of assets |
||||||||||||||||||||
Loans: |
||||||||||||||||||||
Commercial and industrial |
$ | $ | $ | $ | $ | |||||||||||||||
SBA |
||||||||||||||||||||
Real estate: |
||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||
Construction |
||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||
Consumer and other loans |
||||||||||||||||||||
Other real estate owned |
||||||||||||||||||||
Asset held-for-sale |
||||||||||||||||||||
Total assets |
$ | $ | $ | $ | $ | |||||||||||||||
Carrying Value at December 31, 2019 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Total Losses For the Year Ended December 31, 2019 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Description of assets |
||||||||||||||||||||
Impaired loans: |
||||||||||||||||||||
Commercial and industrial |
$ | $ | $ | $ | $ | |||||||||||||||
SBA |
||||||||||||||||||||
Real estate: |
||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||
Construction |
||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||
Consumer and other loans |
||||||||||||||||||||
Other real estate owned |
||||||||||||||||||||
Asset held-for-sale |
||||||||||||||||||||
Total assets |
$ | $ | $ | $ | $ | |||||||||||||||
September 30, 2020 | ||||||||||||||||||||
Carrying Amount |
Estimated Fair Value | |||||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total | |||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Assets |
||||||||||||||||||||
Total cash and cash equivalents |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Interest-earning balances due from depository institutions |
||||||||||||||||||||
Investment securities available-for-sale |
||||||||||||||||||||
Investment securities held-to-maturity |
||||||||||||||||||||
Total loans, net of allowance for credit losses |
||||||||||||||||||||
Swaps |
||||||||||||||||||||
Liabilities |
||||||||||||||||||||
Deposits: |
||||||||||||||||||||
Interest-bearing |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Borrowings |
||||||||||||||||||||
Junior subordinated debentures |
||||||||||||||||||||
Swaps |
December 31, 2019 | ||||||||||||||||||||
Carrying Amount |
Estimated Fair Value | |||||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total | |||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Assets |
||||||||||||||||||||
Total cash and cash equivalents |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Interest-earning balances due from depository institutions |
||||||||||||||||||||
Investment securities available-for-sale |
||||||||||||||||||||
Investment securities held-to-maturity |
||||||||||||||||||||
Total loans, net of allowance for loan losses |
||||||||||||||||||||
Swaps |
||||||||||||||||||||
Liabilities |
||||||||||||||||||||
Deposits: |
||||||||||||||||||||
Interest-bearing |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Borrowings |
||||||||||||||||||||
Junior subordinated debentures |
||||||||||||||||||||
Swaps |
8. |
DERIVATIVE FINANCIAL INSTRUMENTS |
September 30, 2020 | ||||||||||||||||
Asset Derivatives |
Liability Derivatives | |||||||||||||||
Balance Sheet Location |
Fair Value |
Balance Sheet Location |
Fair Value | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Derivatives not designated as hedging instruments: |
||||||||||||||||
Interest rate swaps |
Other assets |
$ |
Other liabilities |
$ |
||||||||||||
Total derivatives |
$ |
$ |
||||||||||||||
December 31, 2019 | ||||||||||||||||
Asset Derivatives |
Liability Derivatives | |||||||||||||||
Balance Sheet Location |
Fair Value |
Balance Sheet Location |
Fair Value | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Derivatives not designated as hedging instruments: |
||||||||||||||||
Interest rate swaps |
Other assets |
$ |
Other liabilities |
$ |
||||||||||||
Total derivatives |
$ |
$ |
||||||||||||||
Derivatives Not Designated as Hedging Instruments |
Location of Gain Recognized in Income on Derivative Instruments |
Amount of Gain Recognized in Income on Derivative Instruments | ||||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||||||||||||||
2020 |
2019 |
2020 |
2019 | |||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Interest rate swaps |
Other income | $ | $ | $ | $ | |||||||||||||||
Total |
$ | $ | $ | $ | ||||||||||||||||
9. |
OTHER COMPREHENSIVE INCOME |
Three Months Ended September 30, | ||||||||||||||||||||||||
2020 |
2019 | |||||||||||||||||||||||
Before-tax |
Tax effect |
After-tax |
Before-tax |
Tax effect |
After-tax | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Investment securities: |
||||||||||||||||||||||||
Net change in fair value recorded in accumulated OCI |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
||||||||||||
Amortization of net unrealized losses on securities transferred from available-for-sale held-to-maturity |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||
Net realized gain reclassified into earnings (1) |
( |
) |
( |
) | ||||||||||||||||||||
Net change |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 |
2019 | |||||||||||||||||||||||
Before-tax |
Tax effect |
After-tax |
Before-tax |
Tax effect |
After-tax | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Investment securities: |
||||||||||||||||||||||||
Net change in fair value recorded in accumulated OCI |
$ |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
Amortization of net unrealized losses on securities transferred from available-for-sale held-to-maturity |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||
Net realized gain reclassified into earnings (1) |
( |
) |
( |
) | ||||||||||||||||||||
Net change |
$ |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
(1) |
Included in other noninterest income. |
10. |
BALANCE SHEET OFFSETTING |
Gross Amounts Recognized in the Condensed Consolidated Balance Sheets |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets |
Net Amounts Presented in the Condensed Consolidated Balance Sheets |
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets |
Net Amount | ||||||||||||||||||||
Financial Instruments |
Collateral Pledged | |||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
September 30, 2020 |
||||||||||||||||||||||||
Financial assets: |
||||||||||||||||||||||||
Derivatives not designated as hedging instruments |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Financial liabilities: |
||||||||||||||||||||||||
Derivatives not designated as hedging instruments |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | ||||||||||||||
Repurchase agreements |
( |
) |
( |
) | ||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | ||||||||||||||
December 31, 2019 |
||||||||||||||||||||||||
Financial assets: |
||||||||||||||||||||||||
Derivatives not designated as hedging instruments |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Financial liabilities: |
||||||||||||||||||||||||
Derivatives not designated as hedging instruments |
$ |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
( |
) | ||||||||||||
Repurchase agreements |
( |
) |
( |
) | ||||||||||||||||||||
Total |
$ |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
( |
) | ||||||||||||
11. |
LEASES |
September 30, 2020 |
December 31, 2019 | |||||||
(Dollars in thousands) | ||||||||
Lease Assets and Liabilities |
||||||||
ROU assets |
$ |
$ |
||||||
Total lease liabilities |
Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||||||||||
2020 |
2019 |
2020 |
2019 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Lease Cost |
||||||||||||||||
Operating lease expense (1) |
$ |
$ |
$ |
$ |
||||||||||||
Sublease income |
||||||||||||||||
Total lease expense |
$ |
$ |
$ |
$ |
||||||||||||
(1) Includes short-term leases and variable lease costs, which are immaterial. |
||||||||||||||||
Other Information |
||||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: |
||||||||||||||||
Operating cash outflows from operating leases, net |
$ |
$ |
$ |
$ |
Lease Term and Discount Rate |
September 30, 2020 |
December 31, 2019 | ||||||
Weighted average remaining lease term (years) |
||||||||
Weighted average discount rate |
% |
% |
September 30, 2020 |
||||
(Dollars in thousands) |
||||
Year: |
||||
2020 (excluding the nine months ended September 30, 2020) |
$ | |||
2021 |
|
|||
2022 |
||||
2023 |
||||
2024 |
||||
Thereafter |
||||
Total future lease payments |
||||
Less: Imputed interest |
( |
) | ||
Present value of lease liabilities |
$ | |||
12. |
REVENUE RECOGNITION |
Three Months Ended |
Nine Months Ended | |||||||||||||||
September 30, |
September 30, | |||||||||||||||
2020 |
2019 |
2020 |
2019 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Noninterest income: |
||||||||||||||||
In-scope of Topic 606: |
||||||||||||||||
Service charges on deposit accounts |
$ |
$ |
$ |
$ |
||||||||||||
Trust and investment services |
||||||||||||||||
Bankcard services |
||||||||||||||||
Gain on OREO, net |
||||||||||||||||
Other |
||||||||||||||||
Noninterest Income (in-scope of Topic 606) |
||||||||||||||||
Noninterest Income (out-of-scope |
||||||||||||||||
Total noninterest income |
$ |
$ |
$ |
$ |
||||||||||||
· |
Allowance for Credit Losses (“ACL”) |
· |
Business Combinations |
· |
Valuation and Recoverability of Goodwill |
· |
Income Taxes |
Standard |
Description |
Adoption Timing |
Impact on Financial Statements | |||
ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial ReportingIssued March 2020 |
The FASB issued ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide temporary, optional guidance to ease the potential burden in accounting for transitioning away from reference rates such as LIBOR. The amendments provide optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria are met. The amendments primarily include relief related to contract modifications and hedging relationships, as well as providing a one-time election for the sale or transfer of debt securities classified as held-to-maturity. |
1st Quarter 2020 through the 4th Quarter 2022 |
Although the Company is assessing the impacts of this transition and exploring alternatives to use in place of LIBOR for various financial instruments, primarily related to our variable-rate loans, our subordinated debentures, and interest rate swap derivatives that are indexed to LIBOR, we do not expect this ASU to have a material impact on the Company’s consolidated financial statements. | |||
ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)Issued January 2020 |
The FASB issued ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). This ASU clarifies the interactions between ASC 321, ASC 323 and ASC 815 and addresses accounting for the transition into and out of the equity method and also provides guidance on whether equity method accounting would be applied to certain purchased options and forward contracts upon settlement. |
1st Quarter 2021 |
The adoption of this ASU will not have an impact on our consolidated financial statements. | |||
ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own EquityIssued August 2020 |
The FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU reduces the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification. |
1st Quarter 2022 |
The adoption of this ASU is not expected to have a material impact on our consolidated financial statements. |
Three Months Ended |
Variance |
|||||||||||||||
September 30, |
June 30, |
|||||||||||||||
2020 |
2020 |
$ |
% | |||||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||||||||
Net interest income |
$ | 103,325 | $ | 104,569 | $ | (1,244) | -1.19 | % | ||||||||
Provision for credit losses |
- | (11,500 | ) | 11,500 | 100.00 | % | ||||||||||
Noninterest income |
13,153 | 12,152 | 1,001 | 8.24 | % | |||||||||||
Noninterest expense |
(49,588 | ) | (46,398 | ) | (3,190) | -6.88 | % | |||||||||
Income taxes |
(19,398 | ) | (17,192 | ) | (2,206) | -12.83 | % | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net earnings |
$ | 47,492 | $ | 41,631 | $ | 5,861 | 14.08 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Earnings per common share: |
||||||||||||||||
Basic |
$ | 0.35 | $ | 0.31 | $ | 0.04 | ||||||||||
Diluted |
$ | 0.35 | $ | 0.31 | $ | 0.04 | ||||||||||
Return on average assets |
1.38 | % | 1.33 | % | 0.05% | |||||||||||
Return on average shareholders’ equity |
9.51 | % | 8.51 | % | 1.00% | |||||||||||
Efficiency ratio |
42.57 | % | 39.75 | % | 2.82% | |||||||||||
Noninterest expense to average assets |
1.44 | % | 1.48 | % | -0.04% |
Three Months Ended |
Nine Months Ended |
|||||||||||||||||||||||||||||||
September 30, |
Variance |
September 30, |
Variance | |||||||||||||||||||||||||||||
2020 |
2019 |
$ |
% |
2020 |
2019 |
$ |
% | |||||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
Net interest income |
$ | 103,325 | $ | 108,159 | $ | (4,834) | -4.47% | $ | 310,200 | $ | 328,752 | $ | (18,552) | -5.64% | ||||||||||||||||||
Provision for credit losses |
- | (1,500) | 1,500 | 100.00% | (23,500) | (5,000) | (18,500) | -370.00% | ||||||||||||||||||||||||
Noninterest income |
13,153 | 11,894 | 1,259 | 10.59% | 36,945 | 46,402 | (9,457) | -20.38% | ||||||||||||||||||||||||
Noninterest expense |
(49,588) | (47,535) | (2,053) | -4.32% | (144,627) | (149,667) | 5,040 | 3.37% | ||||||||||||||||||||||||
Income taxes |
(19,398) | (20,595) | 1,197 | 5.81% | (51,915) | (63,941) | 12,026 | 18.81% | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net earnings |
$ | 47,492 | $ | 50,423 | $ | (2,931 | ) | -5.81% | $ | 127,103 | $ | 156,546 | $ | (29,443 | ) | -18.81% | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Earnings per common share: |
||||||||||||||||||||||||||||||||
Basic |
$ | 0.35 | $ | 0.36 | $ | (0.01) | $ | 0.93 | $ | 1.12 | $ | (0.19) | ||||||||||||||||||||
Diluted |
$ | 0.35 | $ | 0.36 | $ | (0.01) | $ | 0.93 | $ | 1.12 | $ | (0.19) | ||||||||||||||||||||
Return on average assets |
1.38 | % | 1.78% | -0.40% | 1.35% | 1.86% | -0.51% | |||||||||||||||||||||||||
Return on average shareholders’ equity |
9.51 | % | 10.18% | -0.67% | 8.55% | 10.89% | -2.34% | |||||||||||||||||||||||||
Efficiency ratio |
42.57 | % | 39.60% | 2.97% | 41.66% | 39.89% | 1.77% | |||||||||||||||||||||||||
Noninterest expense to average assets |
1.44 | % | 1.68% | -0.24% | 1.54% | 1.77% | -0.23% |
Three Months Ended |
Nine Months Ended |
|||||||||||||||||||
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
||||||||||||||||
2020 |
2020 |
2019 |
2020 |
2019 |
||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||
Net Income |
$ | 47,492 | $ | 41,631 | $ | 50,423 | $ | 127,103 | $ | 156,546 | ||||||||||
Add: Amortization of intangible assets |
2,292 | 2,445 | 2,648 | 7,182 | 8,338 | |||||||||||||||
Less: Tax effect of amortization of intangible assets (1) |
(678) | (723) | (783) | (2,123) | (2,465) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Tangible net income |
$ | 49,106 | $ | 43,353 | $ | 52,288 | $ | 132,162 | $ | 162,419 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Average stockholders’ equity |
$ | 1,985,842 | $ | 1,966,600 | $ | 1,965,427 | $ | 1,986,300 | $ | 1,921,981 | ||||||||||
Less: Average goodwill |
(663,707) | (663,707) | (663,707) | (663,707) | (665,470) | |||||||||||||||
Less: Average intangible assets |
(37,133) | (39,287) | (46,720) | (39,376) | (49,682) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Average tangible common equity |
$ | 1,285,002 | $ | 1,263,606 | $ | 1,255,000 | $ | 1,283,217 | $ | 1,206,829 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Return on average equity, annualized |
9.51 | % | 8.51 | % | 10.18 | % | 8.55 | % | 10.89 | % | ||||||||||
Return on average tangible common equity, annualized |
15.20 | % | 13.80 | % | 16.53 | % | 13.76 | % | 17.99 | % |
(1) | Tax effected at respective statutory rates. |
Three Months Ended September 30, |
||||||||||||||||||||||||
2020 |
2019 |
|||||||||||||||||||||||
Average |
Yield/ |
Average |
Yield/ |
|||||||||||||||||||||
Balance |
Interest |
Rate |
Balance |
Interest |
Rate |
|||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||
INTEREST-EARNING ASSETS |
||||||||||||||||||||||||
Investment securities (1) |
||||||||||||||||||||||||
Available-for-sale |
||||||||||||||||||||||||
Taxable |
$ | 1,970,636 | $ | 8,244 | 1.82% | $ | 1,505,087 | $ | 8,949 | 2.38% | ||||||||||||||
Tax-advantaged |
36,193 | 203 | 3.26% | 40,189 | 273 | 3.75% | ||||||||||||||||||
Held-to-maturity |
||||||||||||||||||||||||
Taxable |
429,897 | 2,265 | 2.11% | 506,203 | 2,883 | 2.28% | ||||||||||||||||||
Tax-advantaged |
164,854 | 1,110 | 3.26% | 205,996 | 1,415 | 3.32% | ||||||||||||||||||
Investment in FHLB stock |
17,688 | 215 | 4.84% | 17,688 | 301 | 6.75% | ||||||||||||||||||
Interest-earning deposits with other institutions |
1,494,149 | 389 | 0.10% | 174,119 | 946 | 2.16% | ||||||||||||||||||
Loans (2) |
8,382,257 | 94,200 | 4.47% | 7,495,289 | 98,796 | 5.23% | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-earning assets |
12,495,674 | 106,626 | 3.45% | 9,944,571 | 113,563 | 4.55% | ||||||||||||||||||
Total noninterest-earning assets |
1,231,502 | 1,269,845 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total assets |
$ | 13,727,176 | $ | 11,214,416 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
INTEREST-BEARING LIABILITIES |
||||||||||||||||||||||||
Savings deposits (3) |
$ | 3,735,204 | 2,010 | 0.21% | $ | 2,991,330 | 3,501 | 0.46% | ||||||||||||||||
Time deposits |
449,484 | 948 | 0.84% | 473,347 | 1,088 | 0.91% | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-bearing deposits |
4,184,688 | 2,958 | 0.28% | 3,464,677 | 4,589 | 0.53% | ||||||||||||||||||
FHLB advances, other borrowings, and customer repurchase agreements |
539,833 | 343 | 0.25% | 446,087 | 815 | 0.72% | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Interest-bearing liabilities |
4,724,521 | 3,301 | 0.28% | 3,910,764 | 5,404 | 0.55% | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Noninterest-bearing deposits |
6,731,711 | 5,227,595 | ||||||||||||||||||||||
Other liabilities |
285,102 | 110,630 | ||||||||||||||||||||||
Stockholders’ equity |
1,985,842 | 1,965,427 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total liabilities and stockholders’ equity |
$ | 13,727,176 | $ | 11,214,416 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest income |
$ | 103,325 | $ | 108,159 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest spread - tax equivalent |
3.17% | 4.00% | ||||||||||||||||||||||
Net interest margin |
3.33% | 4.32% | ||||||||||||||||||||||
Net interest margin - tax equivalent |
3.34% | 4.34% |
(1) | Includes tax equivalent (TE) adjustments utilizing federal statutory rates of 21% in effect for the three months ended September 30, 2020 and 2019. The non TE rates were 1.93% and 2.40% for the three months ended September 30, 2020 and 2019, respectively. |
(2) | Includes loan fees of $7.4 million and $782,000 for the three months ended September 30, 2020 and 2019, respectively. Prepayment penalty fees of $1.8 million and $1.0 million are included in interest income for the three months ended September 30, 2020 and 2019, respectively. |
(3) | Includes interest-bearing demand and money market accounts. |
Nine Months Ended September 30, |
||||||||||||||||||||||||
2020 |
2019 |
|||||||||||||||||||||||
Average |
Yield/ |
Average |
Yield/ |
|||||||||||||||||||||
Balance |
Interest |
Rate |
Balance |
Interest |
Rate |
|||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||
INTEREST-EARNING ASSETS |
||||||||||||||||||||||||
Investment securities (1) |
||||||||||||||||||||||||
Available-for-sale |
||||||||||||||||||||||||
Taxable |
$ | 1,737,723 | $ | 26,313 | 2.08% | $ | 1,582,902 | $ | 29,079 | 2.45% | ||||||||||||||
Tax-advantaged |
36,897 | 632 | 3.30% | 42,746 | 906 | 3.87% | ||||||||||||||||||
Held-to-maturity |
||||||||||||||||||||||||
Taxable |
449,230 | 7,410 | 2.20% | 509,247 | 8,725 | 2.29% | ||||||||||||||||||
Tax-advantaged |
177,364 | 3,623 | 3.29% | 216,343 | 4,524 | 3.37% | ||||||||||||||||||
Investment in FHLB stock |
17,688 | 761 | 5.75% | 17,688 | 931 | 7.04% | ||||||||||||||||||
Interest-earning deposits with other institutions |
947,211 | 1,285 | 0.18% | 70,848 | 1,140 | 2.15% | ||||||||||||||||||
Loans (2) |
7,972,208 | 281,669 | 4.72% | 7,571,502 | 300,326 | 5.30% | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-earning assets |
11,338,321 | 321,693 | 3.82% | 10,011,276 | 345,631 | 4.63% | ||||||||||||||||||
Total noninterest-earning assets |
1,237,241 | 1,269,160 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total assets |
$ | 12,575,562 | $ | 11,280,436 | ||||||||||||||||||||
INTEREST-BEARING LIABILITIES |
||||||||||||||||||||||||
Savings deposits (3) |
$ | 3,396,259 | 7,131 | 0.28% | $ | 3,047,444 | 9,159 | 0.40% | ||||||||||||||||
Time deposits |
448,615 | 2,946 | 0.88% | 497,370 | 3,394 | 0.91% | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-bearing deposits |
3,844,874 | 10,077 | 0.35% | 3,544,814 | 12,553 | 0.47% | ||||||||||||||||||
FHLB advances, other borrowings, and customer repurchase agreements |
505,710 | 1,416 | 0.37% | 573,633 | 4,326 | 1.00% | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Interest-bearing liabilities |
4,350,584 | 11,493 | 0.35% | 4,118,447 | 16,879 | 0.55% | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Noninterest-bearing deposits |
6,063,469 | 5,136,233 | ||||||||||||||||||||||
Other liabilities |
175,209 | 103,775 | ||||||||||||||||||||||
Stockholders’ equity |
1,986,300 | 1,921,981 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total liabilities and stockholders’ equity |
$ | 12,575,562 | $ | 11,280,436 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest income |
$ | 310,200 | $ | 328,752 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest spread - tax equivalent |
3.47% | 4.08% | ||||||||||||||||||||||
Net interest margin |
3.67% | 4.39% | ||||||||||||||||||||||
Net interest margin - tax equivalent |
3.68% | 4.41% |
(1) | Includes tax equivalent (TE) adjustments utilizing federal statutory rates of 21% in effect for the nine months ended September 30, 2020 and 2019. The non TE rates were 2.16% and 2.45% for the nine months ended September 30, 2020 and 2019, respectively. |
(2) | Includes loan fees of $15.3 million and $2.3 million for the nine months ended September 30, 2020 and 2019, respectively. Prepayment penalty fees of $5.4 million and $3.4 million are included in interest income for the nine months ended September 30, 2020 and 2019, respectively. |
(3) | Includes interest-bearing demand and money market accounts. |
Comparison of Three Months Ended September 30, |
||||||||||||||||
2020 Compared to 2019 |
||||||||||||||||
Increase (Decrease) Due to |
||||||||||||||||
Volume |
Rate |
Rate/ Volume |
Total |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
Interest income: |
||||||||||||||||
Available-for-sale |
||||||||||||||||
Taxable investment securities |
$ | 1,835 | $ | (2,108 | ) | $ | (432 | ) | $ | (705 | ) | |||||
Tax-advantaged investment securities |
(24 | ) | (42 | ) | (4 | ) | (70 | ) | ||||||||
Held-to-maturity |
||||||||||||||||
Taxable investment securities |
(395 | ) | (194 | ) | (29 | ) | (618 | ) | ||||||||
Tax-advantaged investment securities |
(273 | ) | (27 | ) | (5 | ) | (305 | ) | ||||||||
Investment in FHLB stock |
- | (86 | ) | - | (86 | ) | ||||||||||
Interest-earning deposits with other institutions |
7,184 | (902 | ) | (6,839 | ) | (557 | ) | |||||||||
Loans |
12,369 | (15,170 | ) | (1,795 | ) | (4,596 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total interest income |
20,696 | (18,529 | ) | (9,104 | ) | (6,937 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Interest expense: |
||||||||||||||||
Savings deposits |
874 | (1,894 | ) | (471 | ) | (1,491 | ) | |||||||||
Time deposits |
(53 | ) | (83 | ) | (4 | ) | (140 | ) | ||||||||
FHLB advances, other borrowings, and customer repurchase agreements |
172 | (532 | ) | (112 | ) | (472 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total interest expense |
993 | (2,509 | ) | (587 | ) | (2,103 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net interest income |
$ | 19,703 | $ | (16,020 | ) | $ | (8,517 | ) | $ | (4,834 | ) | |||||
|
|
|
|
|
|
|
|
|||||||||
Comparision of Nine Months Ended September 30, |
||||||||||||||||
2020 Compared to 2019 |
||||||||||||||||
Increase (Decrease) Due to |
||||||||||||||||
Volume |
Rate |
Rate/ Volume |
Total |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
Interest income: |
||||||||||||||||
Available-for-sale |
||||||||||||||||
Taxable investment securities |
$ | 1,861 | $ | (4,349 | ) | $ | (278 | ) | $ | (2,766 | ) | |||||
Tax-advantaged investment securities |
(124 | ) | (174 | ) | 24 | (274 | ) | |||||||||
Held-to-maturity |
||||||||||||||||
Taxable investment securities |
(1,015 | ) | (339 | ) | 39 | (1,315 | ) | |||||||||
Tax-advantaged investment securities |
(815 | ) | (105 | ) | 19 | (901 | ) | |||||||||
Investment in FHLB stock |
- | (170 | ) | - | (170 | ) | ||||||||||
Interest-earning deposits with other institutions |
14,238 | (1,054 | ) | (13,039 | ) | 145 | ||||||||||
Loans |
15,682 | (32,613 | ) | (1,726 | ) | (18,657 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total interest income |
29,827 | (38,804 | ) | (14,961 | ) | (23,938 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Interest expense: |
||||||||||||||||
Savings deposits |
1,045 | (2,758 | ) | (315 | ) | (2,028 | ) | |||||||||
Time deposits |
(331 | ) | (130 | ) | 13 | (448 | ) | |||||||||
FHLB advances, other borrowings, and customer repurchase agreements |
(513 | ) | (2,719 | ) | 322 | (2,910 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total interest expense |
201 | (5,607 | ) | 20 | (5,386 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net interest income |
$ | 29,626 | $ | (33,197 | ) | $ | (14,981 | ) | $ | (18,552 | ) | |||||
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
Variance |
Nine Months Ended September 30, |
Variance |
|||||||||||||||||||||||||||||
2020 |
2019 |
$ |
% |
2020 |
2019 |
$ |
% |
|||||||||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||||||||||
Noninterest income: |
||||||||||||||||||||||||||||||||
Service charges on deposit accounts |
$ | 3,970 | $ | 4,833 | $ | (863) | -17.86% | $ | 12,555 | $ | 15,039 | $ | (2,484) | -16.52% | ||||||||||||||||||
Trust and investment services |
2,405 | 2,330 | 75 | 3.22% | 7,302 | 6,964 | 338 | 4.85% | ||||||||||||||||||||||||
Bankcard services |
456 | 637 | (181) | -28.41% | 1,438 | 2,614 | (1,176) | -44.99% | ||||||||||||||||||||||||
BOLI income |
1,469 | 1,797 | (328) | -18.25% | 5,211 | 4,482 | 729 | 16.27% | ||||||||||||||||||||||||
Swap fee income |
1,591 | 378 | 1,213 | 320.90% | 4,149 | 1,135 | 3,014 | 265.55% | ||||||||||||||||||||||||
Gain on OREO, net |
13 | - | 13 | - | 23 | 129 | (106) | -82.17% | ||||||||||||||||||||||||
Gain on sale of building, net |
1,680 | - | 1,680 | - | 1,680 | 4,545 | (2,865) | -63.04% | ||||||||||||||||||||||||
Gain on eminent domain condemnation, net |
- | - | - | - | - | 5,685 | (5,685) | -100.00% | ||||||||||||||||||||||||
Other |
1,569 | 1,919 | (350) | -18.24% | 4,587 | 5,809 | (1,222) | -21.04% | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total noninterest income |
$ | 13,153 | $ | 11,894 | $ | 1,259 | 10.59% | $ | 36,945 | $ | 46,402 | $ | (9,457) | -20.38% |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||||||||||||||||||
September 30, |
Variance |
September 30, |
Variance |
|||||||||||||||||||||||||||||
2020 |
2019 |
$ |
% |
2020 |
2019 |
$ |
% |
|||||||||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||||||||||
Noninterest expense: |
||||||||||||||||||||||||||||||||
Salaries and employee benefits |
$ | 31,034 | $ | 30,122 | $ | 912 | 3.03% | $ | 90,617 | $ | 88,286 | $ | 2,331 | 2.64% | ||||||||||||||||||
Occupancy |
4,290 | 3,976 | 314 | 7.90% | 12,171 | 12,771 | (600) | -4.70% | ||||||||||||||||||||||||
Equipment |
985 | 903 | 82 | 9.08% | 2,972 | 2,959 | 13 | 0.44% | ||||||||||||||||||||||||
Professional services |
2,019 | 1,688 | 331 | 19.61% | 6,643 | 5,653 | 990 | 17.51% | ||||||||||||||||||||||||
Computer software expense |
2,837 | 2,663 | 174 | 6.53% | 8,407 | 8,032 | 375 | 4.67% | ||||||||||||||||||||||||
Marketing and promotion |
728 | 1,517 | (789) | -52.01% | 3,538 | 4,149 | (611) | -14.73% | ||||||||||||||||||||||||
Amortization of intangible assets |
2,292 | 2,648 | (356) | -13.44% | 7,182 | 8,338 | (1,156) | -13.86% | ||||||||||||||||||||||||
Telecommunications expense |
643 | 656 | (13) | -1.98% | 1,929 | 2,126 | (197) | -9.27% | ||||||||||||||||||||||||
Regulatory assessments |
998 | 147 | 851 | 578.91% | 1,313 | 1,805 | (492) | -27.26% | ||||||||||||||||||||||||
Insurance |
400 | 430 | (30) | -6.98% | 1,192 | 1,368 | (176) | -12.87% | ||||||||||||||||||||||||
Loan expense |
207 | 308 | (101) | -32.79% | 833 | 1,115 | (282) | -25.29% | ||||||||||||||||||||||||
OREO expense |
830 | - | 830 | - | 1,200 | 37 | 1,163 | 3143.24% | ||||||||||||||||||||||||
Directors’ expenses |
358 | 350 | 8 | 2.29% | 1,067 | 1,029 | 38 | 3.69% | ||||||||||||||||||||||||
Stationery and supplies |
227 | 259 | (32) | -12.36% | 894 | 867 | 27 | 3.11% | ||||||||||||||||||||||||
Acquisition related expenses |
- | 244 | (244) | -100.00% | - | 6,005 | (6,005) | -100.00% |
||||||||||||||||||||||||
Other |
1,740 | 1,624 | 116 | 7.14% | 4,669 | 5,127 | (458) | -8.93% | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total noninterest expense |
$ | 49,588 | $ | 47,535 | $ | 2,053 | 4.32% | $ | 144,627 | $ | 149,667 | $ | (5,040) | -3.37% | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Noninterest expense to average assets |
1.44% | 1.68% | 1.54% | 1.77% | ||||||||||||||||||||||||||||
Efficiency ratio (1) |
42.57% | 39.60% | 41.66% | 39.89% |
(1) | Noninterest expense divided by net interest income before provision for credit losses plus noninterest income. |
September 30, 2020 | ||||||||||||||||||||
Amortized Cost |
Gross Unrealized Holding Gain |
Gross Unrealized Holding Loss |
Fair Value |
Total Percent | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Investment securities available-for-sale: |
||||||||||||||||||||
Mortgage-backed securities |
$ | 1,710,160 | $ | 46,713 | $ | (2) | $ | 1,756,871 | 79.65% | |||||||||||
CMO/REMIC |
404,380 | 7,326 | (212) | 411,494 | 18.66% | |||||||||||||||
Municipal bonds |
35,011 | 1,457 | - | 36,468 | 1.65% | |||||||||||||||
Other securities |
813 | - | - | 813 | 0.04% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total available-for-sale |
$ | 2,150,364 | $ | 55,496 | $ | (214) | $ | 2,205,646 | 100.00% | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Investment securities held-to-maturity: |
||||||||||||||||||||
Government agency/GSE |
$ | 103,317 | $ | 6,627 | $ | - | $ | 109,944 | 17.88% | |||||||||||
Mortgage-backed securities |
152,285 | 7,837 | - | 160,122 | 26.36% | |||||||||||||||
CMO/REMIC |
159,676 | 5,315 | - | 164,991 | 27.64% | |||||||||||||||
Municipal bonds |
162,416 | 6,387 | (338) | 168,465 | 28.12% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total held-to-maturity |
$ | 577,694 | $ | 26,166 | $ | (338) | $ | 603,522 | 100.00% | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
December 31, 2019 | ||||||||||||||||||||
Amortized Cost |
Gross Unrealized Holding Gain |
Gross Unrealized Holding Loss |
Fair Value |
Total Percent | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Investment securities available-for-sale: |
||||||||||||||||||||
Mortgage-backed securities |
$ | 1,185,757 | $ | 21,306 | $ | (750) | $ | 1,206,313 | 69.32% | |||||||||||
CMO/REMIC |
493,214 | 1,392 | (896) | 493,710 | 28.37% | |||||||||||||||
Municipal bonds |
38,506 | 850 | (2) | 39,354 | 2.26% | |||||||||||||||
Other securities |
880 | - | - | 880 | 0.05% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total available-for-sale |
$ | 1,718,357 | $ | 23,548 | $ | (1,648) | $ | 1,740,257 | 100.00% | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Investment securities held-to-maturity: |
||||||||||||||||||||
Government agency/GSE |
$ | 117,366 | $ | 2,280 | $ | (657) | $ | 118,989 | 17.40% | |||||||||||
Mortgage-backed securities |
168,479 | 2,083 | (54) | 170,508 | 24.98% | |||||||||||||||
CMO/REMIC |
192,548 | - | (2,458) | 190,090 | 28.55% | |||||||||||||||
Municipal bonds |
196,059 | 3,867 | (565) | 199,361 | 29.07% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total held-to-maturity |
$ | 674,452 | $ | 8,230 | $ | (3,734) | $ | 678,948 | 100.00% | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020 | ||||||||||||||||||||||||
Less Than 12 Months |
12 Months or Longer |
Total | ||||||||||||||||||||||
Fair Value |
Gross Unrealized Holding Losses |
Fair Value |
Gross Unrealized Holding Losses |
Fair Value |
Gross Unrealized Holding Losses | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Investment securities available-for-sale: |
||||||||||||||||||||||||
Mortgage-backed securities |
$ | 30,851 | $ | (2) | $ | - | $ | - | $ | 30,851 | $ | (2) | ||||||||||||
CMO/REMIC |
71,781 | (212) | - | - | 71,781 | (212) | ||||||||||||||||||
Municipal bonds |
- | - | - | - | - | - | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total available-for-sale |
$ | 102,632 | $ | (214) | $ | - | $ | - | $ | 102,632 | $ | (214) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
||||||||||||||||||||||||
Less Than 12 Months |
12 Months or Longer |
Total |
||||||||||||||||||||||
Fair Value |
Gross Unrealized Holding Losses |
Fair Value |
Gross Unrealized Holding Losses |
Fair Value |
Gross Unrealized Holding Losses |
|||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||
Investment securities available-for-sale: |
||||||||||||||||||||||||
Mortgage-backed securities |
$ | 20,289 | $ | (6) | $ | 97,964 | $ | (744) | $ | 118,253 | $ | (750) | ||||||||||||
CMO/REMIC |
177,517 | (705) | 34,565 | (191) | 212,082 | (896) | ||||||||||||||||||
Municipal bonds |
- | - | 563 | (2) | 563 | (2) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total available-for-sale |
$ | 197,806 | $ | (711) | $ | 133,092 | $ | (937) | $ | 330,898 | $ | (1,648) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Investment securities held-to-maturity: |
||||||||||||||||||||||||
Government agency/GSE |
$ | 28,359 | $ | (252) | $ | 19,405 | $ | (405) | $ | 47,764 | $ | (657) | ||||||||||||
Mortgage-backed securities |
10,411 | (54) | - | - | 10,411 | (54) | ||||||||||||||||||
CMO/REMIC |
23,897 | (104) | 166,193 | (2,354) | 190,090 | (2,458) | ||||||||||||||||||
Municipal bonds |
7,583 | (32) | 29,981 | (533) | 37,564 | (565) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total held-to-maturity |
$ | 70,250 | $ | (442) | $ | 215,579 | $ | (3,292) | $ | 285,829 | $ | (3,734) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020 |
December 31, 2019 |
|||||||
(Dollars in thousands) |
||||||||
Commercial and industrial |
$ | 817,056 | $ | 935,127 | ||||
SBA |
304,987 | 305,008 | ||||||
SBA - Paycheck Protection Program (PPP) |
1,101,142 | - | ||||||
Real estate: |
||||||||
Commercial real estate |
5,428,223 | 5,374,617 | ||||||
Construction |
101,903 | 116,925 | ||||||
SFR mortgage |
274,731 | 283,468 | ||||||
Dairy & livestock and agribusiness |
252,802 | 383,709 | ||||||
Municipal lease finance receivables |
38,040 | 53,146 | ||||||
Consumer and other loans |
88,988 | 116,319 | ||||||
|
|
|
|
|||||
Total loans |
8,407,872 | 7,568,319 | ||||||
Less: Deferred loan fees, net (1) |
- | (3,742) | ||||||
|
|
|
|
|||||
Total loans, net of deferred loan fees |
8,407,872 | 7,564,577 | ||||||
Less: Allowance for credit losses |
(93,869) | (68,660) | ||||||
|
|
|
|
|||||
Total loans and lease finance receivables, net |
$ | 8,314,003 | $ | 7,495,917 | ||||
|
|
|
|
(1) | Beginning with March 31, 2020, total loans are presented net of deferred loan fees by respective class of financing receivables. |
September 30, 2020 | ||||||||||||||||
Total Loans |
Commercial Real Estate Loans | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Los Angeles County |
$ | 3,609,538 | 42.9 | % | $ | 2,219,742 | 40.9 | % | ||||||||
Central Valley |
1,316,422 | 15.7 | % | 941,699 | 17.3 | % | ||||||||||
Orange County |
1,119,311 | 13.3 | % | 666,886 | 12.3 | % | ||||||||||
Inland Empire |
1,183,026 | 14.1 | % | 829,791 | 15.3 | % | ||||||||||
Central Coast |
523,297 | 6.2 | % | 368,346 | 6.8 | % | ||||||||||
San Diego |
234,903 | 2.8 | % | 144,973 | 2.7 | % | ||||||||||
Other California |
127,669 | 1.5 | % | 83,544 | 1.5 | % | ||||||||||
Out of State |
293,706 | 3.5 | % | 173,242 | 3.2 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
$ | 8,407,872 | 100.0 | % | $ | 5,428,223 | 100.0 | % | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020 |
||||||||||||||||
Loan Balance |
Percent |
Percent Owner- Occupied (1) |
Average Loan Balance |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
Commercial real estate: |
||||||||||||||||
Industrial |
$ | 1,842,412 | 33.9% | 54.4% | $ | 1,390 | ||||||||||
Office |
992,216 | 18.3% | 25.1% | 1,603 | ||||||||||||
Retail |
771,125 | 14.2% | 13.3% | 1,673 | ||||||||||||
Multi-family |
608,374 | 11.2% | 2.1% | 1,662 | ||||||||||||
Medical |
300,867 | 5.6% | 47.7% | 1,791 | ||||||||||||
Secured by farmland (2) |
271,242 | 5.0% | 97.4% | 1,858 | ||||||||||||
Other (3) |
641,987 | 11.8% | 54.7% | 1,417 | ||||||||||||
|
|
|
|
|||||||||||||
Total commercial real estate |
$ | 5,428,223 | 100.0% | 39.2% | $ | 1,534 | ||||||||||
|
|
|
|
(1) | Represents percentage of reported owner-occupied at origination in each real estate loan category. |
(2) | The loans secured by farmland included $121.1 million for loans secured by dairy & livestock land and $150.2 million for loans secured by agricultural land at September 30, 2020. |
(3) | Other loans consist of a variety of loan types, none of which exceeds 2.0% of total commercial real estate loans at September 30, 2020. |
September 30, 2020 |
December 31, 2019 |
|||||||
(Dollars in thousands) |
||||||||
Nonaccrual loans |
$ | 11,775 | $ | 5,033 | ||||
Loans past due 90 days or more and still accruing interest |
- | - | ||||||
Nonperforming troubled debt restructured loans (TDRs) |
- | 244 | ||||||
|
|
|
|
|||||
Total nonperforming loans |
11,775 | 5,277 | ||||||
OREO, net |
4,189 | 4,889 | ||||||
|
|
|
|
|||||
Total nonperforming assets |
$ | 15,964 | $ | 10,166 | ||||
|
|
|
|
|||||
Performing TDRs |
$ | 2,217 | $ | 3,112 | ||||
|
|
|
|
|||||
Total nonperforming loans and performing TDRs |
$ | 13,992 | $ | 8,389 | ||||
Percentage of nonperforming loans and performing TDRs to total loans, net of deferred fees |
0.17% | 0.11% | ||||||
Percentage of nonperforming assets to total loans, net of deferred fees, and OREO |
0.19% | 0.13% | ||||||
Percentage of nonperforming assets to total assets |
0.12% | 0.09% |
September 30, 2020 |
December 31, 2019 | |||||||||||||||
Balance |
Number of Loans |
Balance |
Number of Loans | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Performing TDRs: |
||||||||||||||||
Commercial and industrial |
$ | 47 | 1 | $ | 78 | 2 | ||||||||||
SBA |
- | - | 536 | 1 | ||||||||||||
Real Estate: |
||||||||||||||||
Commercial real estate |
354 | 1 | 397 | 1 | ||||||||||||
Construction |
- | - | - | - | ||||||||||||
SFR mortgage |
1,816 | 7 | 2,101 | 8 | ||||||||||||
Dairy & livestock and agribusiness |
- | - | - | - | ||||||||||||
Consumer and other |
- | - | - | - | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total performing TDRs |
$ | 2,217 | 9 | $ | 3,112 | 12 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Nonperforming TDRs: |
||||||||||||||||
Commercial and industrial |
$ | - | - | $ | - | - | ||||||||||
SBA |
- | - | - | - | ||||||||||||
Real Estate: |
||||||||||||||||
Commercial real estate |
- | - | - | - | ||||||||||||
Construction |
- | - | - | - | ||||||||||||
SFR mortgage |
- | - | - | - | ||||||||||||
Dairy & livestock and agribusiness |
- | - | - | - | ||||||||||||
Consumer and other |
- | - | 244 | 1 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total nonperforming TDRs |
$ | - | - | $ | 244 | 1 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total TDRs |
$ | 2,217 | 9 | $ | 3,356 | 13 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020 |
June 30, 2020 |
March 31, 2020 |
December 31, 2019 |
September 30, 2019 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Nonperforming loans (1): |
||||||||||||||||||||
Commercial and industrial |
$ |
1,822 |
$ |
1,222 |
$ |
1,703 |
$ |
1,266 |
$ |
1,550 |
||||||||||
SBA |
1,724 |
1,598 |
2,748 |
2,032 |
2,706 |
|||||||||||||||
Real estate: |
||||||||||||||||||||
Commercial real estate |
6,481 |
2,628 |
947 |
724 |
1,083 |
|||||||||||||||
Construction |
- |
- |
- |
- |
- |
|||||||||||||||
SFR mortgage |
675 |
1,080 |
864 |
878 |
888 |
|||||||||||||||
Dairy & livestock and agribusiness |
849 |
- |
- |
- |
- |
|||||||||||||||
Consumer and other loans |
224 |
289 |
166 |
377 |
385 |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total |
$ |
11,775 |
$ |
6,817 |
$ |
6,428 |
$ |
5,277 |
$ |
6,612 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
% of Total loans |
0.14% |
0.08% |
0.09% |
0.07% |
0.09% |
|||||||||||||||
Past due 30-89 days: |
||||||||||||||||||||
Commercial and industrial |
$ |
3,627 |
$ |
630 |
$ |
665 |
$ |
2 |
$ |
756 |
||||||||||
SBA |
66 |
214 |
3,086 |
1,402 |
303 |
|||||||||||||||
Real estate: |
||||||||||||||||||||
Commercial real estate |
- |
4 |
210 |
- |
368 |
|||||||||||||||
Construction |
- |
- |
- |
- |
- |
|||||||||||||||
SFR mortgage |
- |
446 |
233 |
249 |
- |
|||||||||||||||
Dairy & livestock and agribusiness |
- |
882 |
166 |
- |
- |
|||||||||||||||
Consumer and other loans |
67 |
413 |
- |
- |
- |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total |
$ |
3,760 |
$ |
2,589 |
$ |
4,360 |
$ |
1,653 |
$ |
1,427 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
% of Total loans |
0.04% |
0.03% |
0.06% |
0.02% |
0.02% |
|||||||||||||||
OREO: |
||||||||||||||||||||
SBA |
$ |
797 |
$ |
797 |
$ |
797 |
$ |
797 |
$ |
444 |
||||||||||
Real estate: |
||||||||||||||||||||
Commercial real estate |
1,575 |
2,275 |
2,275 |
2,275 |
2,275 |
|||||||||||||||
SFR mortgage |
1,817 |
1,817 |
1,817 |
1,817 |
6,731 |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total |
$ |
4,189 |
$ |
4,889 |
$ |
4,889 |
$ |
4,889 |
$ |
9,450 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total nonperforming, past due, and OREO |
$ |
19,724 |
$ |
14,295 |
$ |
15,677 |
$ |
11,819 |
$ |
17,489 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
% of Total loans |
0.23% |
0.17% |
0.21% |
0.16% |
0.23% |
(1) | As of June 30, 2020, nonperforming loans included $25,000 of commercial and industrial loans past due 90 days or more and still accruing interest. |
As of and For the Nine Months Ended September 30, |
||||||||
2020 |
2019 |
|||||||
(Dollars in thousands) |
||||||||
Allowance for credit losses at beginning of period |
$ | 68,660 | $ | 63,613 | ||||
Impact of adopting ASU 2016-13 |
1,840 | - | ||||||
Charge-offs: |
||||||||
Commercial and industrial |
(172) | (48) | ||||||
SBA |
(203) | (295) | ||||||
Commercial real estate |
- | - | ||||||
Construction |
- | - | ||||||
SFR mortgage |
- | - | ||||||
Dairy & livestock and agribusiness |
- | (78) | ||||||
Consumer and other loans |
(109) | (7) | ||||||
|
|
|
|
|||||
Total charge-offs |
(484) | (428) | ||||||
|
|
|
|
|||||
Recoveries: |
||||||||
Commercial and industrial |
7 | 253 | ||||||
SBA |
72 | 9 | ||||||
Commercial real estate |
- | - | ||||||
Construction |
9 | 9 | ||||||
SFR mortgage |
206 | 191 | ||||||
Dairy & livestock and agribusiness |
- | 19 | ||||||
Consumer and other loans |
59 | 6 | ||||||
|
|
|
|
|||||
Total recoveries |
353 | 487 | ||||||
|
|
|
|
|||||
Net (charge-offs) recoveries |
(131) | 59 | ||||||
Provision for credit losses |
23,500 | 5,000 | ||||||
|
|
|
|
|||||
Allowance for credit losses at end of period |
$ | 93,869 | $ | 68,672 | ||||
|
|
|
|
|||||
Summary of reserve for unfunded loan commitments: |
||||||||
Reserve for unfunded loan commitments at beginning of period |
$ | 8,959 | $ | 8,959 | ||||
Impact of adopting ASU 2016-13 |
41 | - | ||||||
Provision for unfunded loan commitments |
- | - | ||||||
|
|
|
|
|||||
Reserve for unfunded loan commitments at end of period |
$ | 9,000 | $ | 8,959 | ||||
|
|
|
|
|||||
Reserve for unfunded loan commitments to total unfunded loan commitments |
0.50% | 0.55% | ||||||
Amount of total loans at end of period (1) |
$ | 8,407,872 | $ | 7,494,451 | ||||
Average total loans outstanding (1) |
$ | 7,972,208 | $ | 7,571,502 | ||||
Net recoveries to average total loans |
-0.002% | 0.001% | ||||||
Net recoveries to total loans at end of period |
-0.002% | 0.001% | ||||||
Allowance for credit losses to average total loans |
1.18% | 0.91% | ||||||
Allowance for credit losses to total loans at end of period |
1.12% | 0.92% | ||||||
Net (charge-offs) recoveries to allowance for credit losses |
-0.14% | 0.09% | ||||||
Net (charge-offs) recoveries to provision for credit losses |
-0.56% | 1.18% |
(1) | Net of deferred loan origination fees, costs and discounts. |
September 30, 2020 |
December 31, 2019 | |||||||||||||||
|
|
|
|
|
| |||||||||||
Balance |
Percent |
Balance |
Percent | |||||||||||||
|
|
|
|
|
| |||||||||||
(Dollars in thousands) | ||||||||||||||||
Noninterest-bearing deposits |
$ | 6,919,423 | 61.95 | % | $ | 5,245,517 | 60.26 | % | ||||||||
Interest-bearing deposits |
||||||||||||||||
Investment checking |
447,910 | 4.01 | % | 454,565 | 5.22 | % | ||||||||||
Money market |
2,878,457 | 25.77 | % | 2,158,161 | 24.79 | % | ||||||||||
Savings |
477,896 | 4.28 | % | 400,377 | 4.60 | % | ||||||||||
Time deposits |
445,148 | 3.99 | % | 446,308 | 5.13 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total deposits |
$ | 11,168,834 | 100.00 | % | $ | 8,704,928 | 100.00 | % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Maturity by Period | ||||||||||||||||||||
Total |
Less Than One Year |
One Year Through Three Years |
Four Years Through Five Years |
Over Five Years | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Deposits (1) |
$ | 11,168,834 | $ | 11,126,422 | $ | 32,422 | $ | 9,394 | $ | 596 | ||||||||||
Customer repurchase agreements (1) |
483,420 | 483,420 | - | - | - | |||||||||||||||
Junior subordinated debentures (1) |
25,774 | - | - | - | 25,774 | |||||||||||||||
Deferred compensation |
21,864 | 681 | 1,172 | 619 | 19,392 | |||||||||||||||
Operating leases |
23,416 | 6,880 | 9,921 | 4,476 | 2,139 | |||||||||||||||
Affordable housing investment |
3,159 | 2,285 | 814 | 47 | 13 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total |
$ | 11,726,467 | $ | 11,619,688 | $ | 44,329 | $ | 14,536 | $ | 47,914 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Amounts exclude accrued interest. |
Maturity by Period | ||||||||||||||||||||
Total |
Less Than One Year |
One Year to Three Years |
Four Years to Five Years |
After Five Years | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Commitment to extend credit: |
||||||||||||||||||||
Commercial and industrial |
$ | 989,178 | $ | 672,740 | $ | 197,626 | $ | 5,295 | $ | 113,517 | ||||||||||
SBA |
591 | 185 | - | - | 406 | |||||||||||||||
SBA - PPP |
- | - | - | - | - | |||||||||||||||
Real estate: |
||||||||||||||||||||
Commercial real estate |
310,666 | 49,450 | 91,984 | 126,299 | 42,933 | |||||||||||||||
Construction |
78,623 | 63,329 | 15,294 | - | - | |||||||||||||||
SFR Mortgage |
1,706 | - | - | - | 1,706 | |||||||||||||||
Dairy & livestock and agribusiness (1) |
232,870 | 188,380 | 43,873 | 130 | 487 | |||||||||||||||
Consumer and other loans |
131,693 | 10,354 | 12,069 | 3,952 | 105,318 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total commitment to extend credit |
1,745,327 | 984,438 | 360,846 | 135,676 | 264,367 | |||||||||||||||
Obligations under letters of credit |
48,776 | 46,337 | 2,391 | 48 | - | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total |
$ | 1,794,103 | $ | 1,030,775 | $ | 363,237 | $ | 135,724 | $ | 264,367 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Total commitments to extend credit to agribusiness were $17.2 million at September 30, 2020. |
September 30, 2020 |
December 31, 2019 |
|||||||||||||||||||||||||||
Capital Ratios |
Adequately Capitalized Ratios |
Minimum Required Plus Capital Conservation Buffer |
Well Capitalized Ratios |
CVB Financial Corp. Consolidated |
Citizens Business Bank |
CVB Financial Corp. Consolidated |
Citizens Business Bank |
|||||||||||||||||||||
Tier 1 leverage capital ratio |
4.00 | % | 4.00 | % | 5.00 | % | 9.88 | % | 9.71 | % | 12.33 | % | 12.19 | % | ||||||||||||||
Common equity Tier 1 capital ratio |
4.50 | % | 7.00 | % | 6.50 | % | 14.60 | % | 14.64 | % | 14.83 | % | 14.94 | % | ||||||||||||||
Tier 1 risk-based capital ratio |
6.00 | % | 8.50 | % | 8.00 | % | 14.89 | % | 14.64 | % | 15.11 | % | 14.94 | % | ||||||||||||||
Total risk-based capital ratio |
8.00 | % | 10.50 | % | 10.00 | % | 16.08 | % | 15.83 | % | 16.00 | % | 15.83 | % |
Nine Months Ended September 30, |
||||||||
2020 |
2019 |
|||||||
(Dollars in thousands) |
||||||||
Average cash and cash equivalents |
$ | 1,071,392 | $ | 237,244 | ||||
Percentage of total average assets |
8.52% | 2.10% | ||||||
Net cash provided by operating activities |
$ | 138,019 | $ | 147,410 | ||||
Net cash (used in) provided by investing activities |
(1,200,664) | 538,256 | ||||||
Net cash provided by (used in) financing activities |
2,362,080 | (412,066) | ||||||
|
|
|
|
|||||
Net increase in cash and cash equivalents |
$ | 1,299,435 | $ | 273,600 | ||||
|
|
|
|
Estimated Net Interest Income Sensitivity (1) | ||||||||||
September 30, 2020 |
December 31, 2019 | |||||||||
24-month Period |
24-month Period | |||||||||
Interest Rate Scenario |
12-month Period |
(Cumulative) |
Interest Rate Scenario |
12-month Period |
(Cumulative) | |||||
+ 200 basis points |
9.30% | 18.30% | + 200 basis points | 5.20% | 10.00% | |||||
- 100 basis points |
-0.60% | -1.40% | - 100 basis points | -2.10% | -4.60% |
(1) | Percentage change from base scenario, but the current low interest rate environment limits the absolute decline in rates as the model does not assume rates go below zero. |
Instantaneous Rate Change |
September 30, 2020 |
|
December 31, 2019 |
|||||
100 bp decrease in interest rates |
-21.6% | -17.5 | % | |||||
100 bp increase in interest rates |
15.2% | 14.2 | % | |||||
200 bp increase in interest rates |
26.5% | 25.5 | % | |||||
300 bp increase in interest rates |
30.7% | 30.0 | % | |||||
400 bp increase in interest rates |
36.3% | 36.2 | % |
Exhibit No. |
Description of Exhibits | |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |
32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** | |
32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** | |
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 Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, has been formatted in Inline XBRL. |
* | Filed herewith |
** | Furnished herewith |
CVB FINANCIAL CORP. | ||||
(Registrant) | ||||
Date: November 6, 2020 |
| |||
/s/ E. Allen Nicholson | ||||
E. Allen Nicholson | ||||
Executive Vice President and Chief Financial Officer | ||||
(Principal Financial Officer) |
Exhibit 31.1
CERTIFICATION
I, David A. Brager, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of CVB Financial Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants Board of Directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: | November 6, 2020 | By: | /s/ David A. Brager | |||||
David A. Brager | ||||||||
Chief Executive Officer |
Exhibit 31.2
CERTIFICATION
I, E. Allen Nicholson, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of CVB Financial Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants Board of Directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: |
November 6, 2020 |
By: |
/s/ E. Allen Nicholson | |||||
E. Allen Nicholson | ||||||||
Chief Financial Officer |
Exhibit 32.1
CERTIFICATION
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CVB Financial Corp. (the Company) on Form 10-Q for the period ended September 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, David A. Brager, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge that:
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | November 6, 2020 | By: | /s/ David A. Brager | |||||
David A. Brager | ||||||||
Chief Executive Officer |
Exhibit 32.2
CERTIFICATION
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CVB Financial Corp. (the Company) on Form 10-Q for the period ended September 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, E. Allen Nicholson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge that:
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | November 6, 2020 | By: | /s/ E. Allen Nicholson | |||||
E. Allen Nicholson | ||||||||
Chief Financial Officer |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Amortized cost | $ 2,150,364 | $ 1,718,357 |
Fair Value, Held-to-maturity | $ 603,522 | $ 678,948 |
Common stock, par value | $ 0 | $ 0 |
Common stock, authorized | 225,000,000 | 225,000,000 |
Common stock, shares issued | 135,509,143 | 140,102,480 |
Common stock, shares outstanding | 135,509,143 | 140,102,480 |
Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividends per common share | $ 0.18 | $ 0.18 | $ 0.54 | $ 0.54 |
Business |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2020 | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Business |
The condensed consolidated financial statements include CVB Financial Corp. (referred to herein on an unconsolidated basis as “CVB” and on a consolidated basis as “we,” “our” or the “Company”) and its wholly owned subsidiary, Citizens Business Bank (the “Bank” or “CBB”), after elimination of all intercompany transactions and balances. The Company has one inactive subsidiary, Chino Valley Bancorp. The Company is also the common stockholder of CVB Statutory Trust III. CVB Statutory Trust III was created in January 2006 to issue trust preferred securities in order to raise capital for the Company. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation, this trust does not meet the criteria for consolidation. The Company’s primary operations are related to traditional banking activities. This includes the acceptance of deposits and the lending and investing of money through the operations of the Bank. The Bank also provides trust and investment-related services to customers through its CitizensTrust Division. The Bank’s customers consist primarily of small to
mid-sized businesses and individuals located in the Inland Empire, Los Angeles County, Orange County, San Diego County, Ventura County, Santa Barbara County, and the Central Valley area of California. The Bank operates 57 banking centers, one loan production office in Modesto, California and three trust office locations. The Company is headquartered in the city of Ontario, California. |
Basis of Presentation |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2020 | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements and notes thereto have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for Form 10-Q and conform to practices within the banking industry and include all of the information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting. The accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments), which are necessary for a fair presentation of financial results for the interim periods presented. The results of operations for the nine months ended September 30, 2020 are not necessarily indicative of the results for the full year. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements, accounting policies and financial notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC. A summary of the significant accounting policies consistently applied in the preparation of the accompanying unaudited condensed consolidated financial statements follows.Reclassification |
Summary of Significant Accounting Policies |
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Sep. 30, 2020 | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Summary of Significant Accounting Policies |
Except as discussed below, our accounting policies are described in Note 3 – Summary of Significant Accounting Policies 10-K for the year ended December 31, 2019 as filed with the SEC (“Form 10-K”). Use of Estimates in the Preparation of Financial Statements Adoption of New Accounting Standard Provision and Allowance for Credit Losses No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. This ASU significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. This ASU replaces the current “incurred loss” approach with an “expected loss” model. The new model, referred to as the Current Expected Credit Loss (“CECL”) model, applies to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off balance sheet credit exposures. This includes, but is not limited to, loans, held-to-maturity available-for-sale The Company adopted this ASU using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company recorded a net decrease to beginning retained earnings of $1.3 million, net of tax as of January 1, 2020 for the cumulative adjustment upon adoption of ASC 326. The transition adjustment of $1.8 million was added to the beginning balance of the allowance for credit losses (“ACL”) for loans and $41,000 was added to the beginning balance of reserve for unfunded loan commitments. Upon adoption of CECL there was no impact on the accounting for AFS or HTM investment securities.The Company developed an allowance model that calculates reserves over the life of the loan and is largely driven by portfolio characteristics, risk grading, macroeconomic variables and the associated economic outlook, as well as other key methodology assumptions. The allowance is based upon historical lifetime loss rate models segregated by three loan segments: Commercial and Industrial, Commercial Real Estate, and Consumer Retail. In addition to determining the quantitative life of loan loss rate to be applied against the portfolio segments, the ASU indicates management has the opportunity to layer on current conditions and forecast adjustments to ensure that the life of loan loss rate reflects both the current state of the portfolio, and expectations for macroeconomic changes in the near future. We utilized a single economic forecast that is based on probability weighted scenarios to incorporate macroeconomic uncertainty over a 2 or 3-year forecast horizon. After the initial 2 to 3 year forecast horizon, we use an input reversion methodology in the model structure to complete a reasonable and supportable forecast period for the life of the loan.Beginning in the second half of March 2020, the broader economy experienced a significant deterioration in the economic environment driven by the COVID-19 pandemic resulting in adverse changes to the forecasted macroeconomic variables utilized in our modeling processes. This economic deterioration, coupled with the implementation of the expected loss methodology for determining our provision for credit losses, have contributed to an increased provision for credit losses of $23.5 million in the first half of 2020. We continue to monitor the impact on the economy from COVID-19 closely, as well as any effects that may result from the CARES Act. The extent to which the COVID-19 pandemic will impact our operations and financial results during the final quarter of 2020 is uncertain, but we may experience increased provision for credit losses if the COVID-19 pandemic results in additional economic stress on our borrowers and loan portfolios. |
Investment Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities |
The amortized cost and estimated fair value of investment securities are summarized below. The majority of securities held are available-for-sale
The following table provides information about the amount of interest income earned on investment securities which is fully taxable and which is exempt from regular federal income tax.
The adoption of CECL did not have a material impact on the accounting for investment securities, as approximately 93% of the total investment securities portfolio at September 30, 2020 represents securities issued by the U.S. government or U.S. government-sponsored enterprises, with the implied guarantee of payment of principal and interest. The remaining securities are predominately AA- or better general-obligation municipal bonds. The allowance for credit losses for held-to-maturity We adopted ASU 2016-13 on January 1, 2020, on a prospective basis. Under the new guidance, once it is determined that a credit loss has occurred, an allowance for credit losses is established on our available-for-sale held-to-maturity The following table presents the Company’s available-for-sale
The table below presents the Company’s investment securities’ gross unrealized losses and fair value by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2019, prior to adoption of ASU
2016-13. Management previously reviewed individual securities to determine whether a decline in fair value below the amortized cost basis is other-than-temporary. The unrealized losses on these securities were primarily attributed to changes in interest rates. The issuers of these securities have not, to our knowledge, evidenced any cause for default on these securities. These securities have fluctuated in value since their purchase dates as market interest rates have fluctuated. However, we have the ability and the intention to hold these securities until their fair values recover to cost or maturity. As such, management does not deem these securities to be other-than-temporarily-impaired.
At September 30, 2020 and December 31, 2019, investment securities having a carrying value of approximately $1.86 billion and $1.64 billion, respectively, were pledged to secure public deposits, short and long-term borrowings, and for other purposes as required or permitted by law. The amortized cost and fair value of debt securities at September 30, 2020, by contractual maturity, are shown in the table below. Although mortgage-backed and CMO/REMIC securities have weighted average remaining contractual maturities of approximately 17 years, expected maturities will differ from contractual maturities because borrowers may have the right to prepay such obligations without penalty . Mortgage-backed and CMO/REMIC securities are included in maturity categories based upon estimated average lives, which incorporate estimated prepayment speeds.
The investment in FHLB stock is periodically evaluated for impairment based on, among other things, the capital adequacy of the FHLB and its overall financial condition. No impairment losses have been recorded as of September 30, 2020. |
Loans and Lease Finance Receivables and Allowance for Credit Losses |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Lease Finance Receivables and Allowance for Credit Losses |
The following table provides a summary of total loans and lease finance receivables by type.
As of September 30, 2020, 69.04% of the Company’s total gross loan portfolio consisted of real estate loans, with commercial real estate loans representing 64.56% of total loans. Substantially all of the Company’s real estate loans and construction loans are secured by real properties located in California. As of September 30, 2020, $271.2 million, or 5.00% of the total commercial real estate loans included loans secured by farmland, compared to $241.8 million, or 4.50%, at December 31, 2019. The loans secured by farmland included $121.1 million for loans secured by dairy & livestock land and $150.2 million for loans secured by agricultural land at September 30, 2020, compared to $125.9 million for loans secured by dairy & livestock land and $115.9 million for loans secured by agricultural land at December 31, 2019. As of September 30, 2020, dairy & livestock and agribusiness loans of $252.8 million were comprised of $210.4 million for dairy & livestock loans and $42.4 million for agribusiness loans, compared to $323.5 million for dairy & livestock loans and $60.2 million for agribusiness loans at December 31, 2019. At September 30, 2020 and December 31, 2019, loans totaling $6.00 billion and $6.03 billion, respectively, were pledged to secure the borrowings and available lines of credit from the FHLB and the Federal Reserve Bank. There were no outstanding loans held-for-sale Credit Quality Indicators An important element of our approach to credit risk management is our loan risk rating system. The originating officer assigns each loan an initial risk rating, which is reviewed and confirmed or changed, as appropriate, by credit management. Approvals are made based upon the amount of inherent credit risk specific to the transaction and are reviewed for appropriateness by senior line and credit management personnel. Loans are monitored by line and credit management personnel on an ongoing basis for deterioration or improvement in a borrower’s financial condition, which would impact the ability of the borrower to perform under the contract. Risk ratings are adjusted as necessary. Loans are risk rated into the following categories (Credit Quality Indicators): Pass, Special Mention, Substandard, Doubtful and Loss. Each of these groups is assessed for the proper amount to be used in determining the adequacy of our allowance for losses. These categories can be described as follows: Pass — These loans, including loans on the Bank’s internal watch list, range from minimal credit risk to lower than average, but still acceptable, credit risk. Watch list loans usually require more than normal management attention. Loans on the watch list may involve borrowers with adverse financial trends, higher debt/equity ratios, or weaker liquidity positions, but not to the degree of being considered a defined weakness or problem loan where risk of loss may be apparent. Special Mention — Loans assigned to this category have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or the Company’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. Substandard — Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. Substandard loans are characterized by the distinct possibility that the Company will sustain some loss if deficiencies are not corrected. Doubtful — Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or the liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loss — Loans classified as 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 that it is not practical or desirable to defer writing off this asset with insignificant value even though partial recovery may be affected in the future. The following table summarizes loans by type and origination year, according to our internal risk ratings as of the date presented.
The following table summarizes loans by type, according to our internal risk ratings as of the date presented.
Allowance for Credit Losses The allowance for credit losses for 2020 is based upon historical lifetime loss rate models segregated by three loan segments: Commercial and Industrial, Commercial Real Estate, and Consumer Retail. Our methodology for assessing the appropriateness of the allowance is reviewed on a regular basis and considers overall risks in the Bank’s loan portfolio. Refer to Note 3 – Summary of Significant Accounting Policies Our allowance for credit losses decreased in the third quarter by $114,000, as a result of net charge-offs of $114,000. There was no provision for credit losses in the third quarter of 2020. Our allowance for credit losses at September 30, 2020 was $93.9 million or 1.12% of total loans. For the nine months ended September 30, 2020, the ACL increased by $25.2 million, including a $1.8 million increase from the adoption of CECL on January 1, 2020. The increase in the ACL was primarily due to $23.5 million in provision for credit losses recorded in the first half of 2020 resulting from the forecasted changes in macroeconomic variables related to the COVID pandemic. Our economic forecast continues to be a blend of multiple forecasts produced by Moody’s. Moody’s baseline forecast continues to represent more than a 50% weighting in our multi-weighted forecast scenario. This U.S. baseline forecast assumes GDP will increase by 27% in the third quarter, 2.9% in the fourth quarter and then grow by 3.5% in 2021 and 5% in 2022. The unemployment rate-19 in this baseline forec is forecasted to be 8.9% in the third quarter of 2021, stay at an elevated level over 8% through 2021, before declining to 6.4% percent in 2022. With California slowly as t re-opening its economy and currently having an unemployment rate greater than 11% percent, our forecast includes a partial weighting of downside economic forecast scenarios from Moody’s. Management believes that the ACL was appropriate at September 30, 2020 and December 31, 2019. There is a high degree of uncertainty around the epidemiological assumptions and impact of government responses to the pandemic that impact our economic forecast, so no assurance can be given that economic conditions that adversely affect the Company’s service areas or other circumstances will not be reflected in increased provisions for credit losses in the future. The following tables present the balance and activity related to the allowance for credit losses for held-for-investment
The following table presents the recorded investment in loans held-for-investment
Past Due and Nonperforming Loans We seek to manage asset quality and control credit risk through diversification of the loan portfolio and the application of policies designed to promote sound underwriting and loan monitoring practices. The Bank’s Credit Management Division is in charge of monitoring asset quality, establishing credit policies and procedures and enforcing the consistent application of these policies and procedures across the Bank. Reviews of nonperforming, past due loans and larger credits, designed to identify potential charges to the allowance for loan losses, and to determine the adequacy of the ACL, are conducted on an ongoing basis. These reviews consider such factors as the financial strength of borrowers and any guarantors, the value of the applicable collateral, loan loss experience, estimated loan losses, growth in the loan portfolio, prevailing economic conditions and other factors. Refer to Note 3 – Summary of Significant Accounting Policies 10-K for the year ended December 31, 2019, for additional discussion concerning the Bank’s policy for past due and nonperforming loans.The following table presents the recorded investment in, and the aging of, past due loans (including nonaccrual loans), by type of loans as of the date presented.
Following the adoption of CECL on January 1, 2020, the definitions of impairment and related impaired loan disclosures were removed. Under CECL, amortized cost of our finance receivables and loans that are on nonaccrual status, including loans with no allowance, are presented as of September 30, 2020 by type of loan.
The following table presents the recorded investment in, and the aging of, past due and nonaccrual loans, by type of loans as of the date presented.
Impaired Loans (prior to adoption of CECL) Following the adoption of CECL as of January 1, 2020, the definitions of impairment and related impaired loan disclosures were removed. As a result of the change, the following tables present information about our impaired loans and lease finance receivables, individually evaluated for impairment by type of loans, as of September 30, 2019 and December 31, 2019, prior to the date of adoption of the amendments to the credit loss standard.
Collateral Dependent Loans A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following table presents the recorded investment in collateral-dependent loans by type of loans as of the date presented.
Reserve for Unfunded Loan Commitments The allowance for off-balance sheet credit exposure relates to commitments to extend credit, letters of credit and undisbursed funds on lines of credit. The Company evaluates credit risk associated with the off-balance sheet loan commitments at the same time as it evaluates credit risk associated with the loan and lease portfolio. As a result of the adoption of ASU 2016-13, the reserve for unfunded loan commitments included a transition adjustment of $41,000 as of January 1, 2020. There was no provision or recapture of provision for unfunded commitments for the nine months ended September 30, 2020. As of September 30, 2020 and December 31, 2019, the balance in this reserve was $9.0 million and was included in other liabilities.Troubled Debt Restructurings (“TDRs”) Loans that are reported as TDRs are considered nonperforming and charge-off amounts are taken on an individual loan basis, as deemed appropriate. The majority of restructured loans are loans for which the terms of repayment have been renegotiated, resulting in a reduction in interest rate or deferral of principal. Refer to Note 3 – Summary of Significant Accounting Policies, 10-K for the year ended December 31, 2019 for a more detailed discussion regarding TDRs.As of September 30, 2020, there were $2.2 million of loans classified as a TDR, all of which were performing. TDRs on accrual status are comprised of loans that were accruing interest at the time of restructuring or have demonstrated repayment performance in compliance with the restructured terms for a sustained period and for which the Company anticipates full repayment of both principal and interest. At September 30, 2020, performing TDRs were comprised of seven SFR mortgage loans of $1.8 million, one commercial real estate loan of $354,000, and one commercial and industrial loan of $47,000. The majority of TDRs have no specific allowance allocated as any impairment amount is normally charged off at the time a probable loss is determined. We have no allocated allowance to TDRs as of September 30, 2020 and December 31, 2019. The following table provides a summary of the activity related to TDRs for the periods presented.
As of September 30, 2020 and 2019, there were no loans that were modified as TDRs during the nine months ended September 30, 2020 and 2019, respectively. There were no loans that were previously modified as a TDR within the previous 12 months that subsequently defaulted during the nine months ended September 30, 2020 and 2019. In accordance with regulatory guidance, if borrowers are less than 30 days past due on their loans, upon implementation of the modification program, or as allowed under the CARES Act if borrowers are less than 30 days past due on their loans as of December 31, 2019, and enter into short-term loan modifications offered as a result of
COVID-19, their loans generally continue to be considered performing loans and continue to accrue interest during the period of the loan modification. For borrowers who are 30 days or more past due when entering into loan modifications offered as a result of COVID-19, we evaluate the loan modifications under our existing troubled debt restructuring framework, and where such a loan modification would result in a concession to a borrower experiencing financial difficulty, the loan will be accounted for as a TDR and will generally not accrue interest. For all borrowers who enroll in these loan modification programs offered as a result of COVID-19, the delinquency status of the borrowers is frozen, resulting in a static delinquency metric during the deferral period. Upon exiting the deferral program, the measurement of loan delinquency will resume where it had left off upon entry into the program. As of October 9, 2020, we have loans with temporary payment deferments of interest or of principal and interest for 90 days in the amount of $68.6 million, or less than 1% of our total loan portfolio, at September 30, 2020. |
Earnings Per Share Reconciliation |
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Earnings Per Share Reconciliation |
Basic earnings per common share are computed by dividing income allocated to common stockholders by the weighted-average number of common shares outstanding during each period. The computation of diluted earnings per common share considers the number of shares issuable upon the assumed exercise of outstanding common stock options. Antidilutive common shares are not included in the calculation of diluted earnings per common share. For the three and nine months ended September 30, 2020, shares deemed to be antidilutive, and thus excluded from the computation of earnings per common share, were 517,000 and 361,000, respectively. For the three and nine months ended September 30, 2019, shares deemed to be antidilutive, and thus excluded from the computation of earnings per common share, were 240,000 and 184,000, respectively. The table below shows earnings per common share and diluted earnings per common share, and reconciles the numerator and denominator of both earnings per common share calculations.
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Fair Value Information |
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Fair Value Information |
Fair Value Hierarchy Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The following disclosure provides the fair value information for financial assets and liabilities as of September 30, 2020. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels (Level 1, Level 2 and Level 3).
Assets and Liabilities Measured at Fair Value on a Recurring Basis The tables below present the balances of assets and liabilities measured at fair value on a recurring basis as of the dates presented.
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis We may be required to measure certain assets at fair value on a non-recurring basis in accordance with GAAP. These adjustments to fair value usually result from application of lower of cost or fair value accounting or impairment write-downs of individual assets.For assets measured at fair value on a non-recurring basis that were held on the balance sheet at September 30, 2020 and December 31, 2019, respectively, the following tables provide the level of valuation assumptions used to determine each adjustment and the carrying value of the related assets that had losses during the period.
Fair Value of Financial Instruments The following disclosure presents estimated fair value of our financial instruments. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to develop the estimates of fair value. Accordingly, the estimates presented below are not necessarily indicative of the amounts the Company may realize in a current market exchange as of September 30, 2020 and December 31, 2019, respectively. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
The fair value estimates presented herein are based on pertinent information available to management as of September 30, 2020 and December 31, 2019. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date, and therefore, current estimates of fair value may differ significantly from the amounts presented above. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments |
The Bank is exposed to certain risks relating to its ongoing business operations and utilizes interest rate swap agreements (“swaps”) as part of its asset/liability management strategy to help manage its interest rate risk position. As of September 30, 2020, the Bank has entered into 133 interest-rate swap agreements with customers with a notional amount totaling $455.2 million. The Bank then entered into identical offsetting swaps with a counterparty. The swap agreements are not designated as hedging instruments. The purpose of entering into offsetting derivatives not designated as a hedging instrument is to provide the Bank a variable-rate loan receivable and to provide the customer the financial effects of a fixed-rate loan without creating significant volatility in the Bank’s earnings. The structure of the swaps is as follows. The Bank enters into an interest rate swap with its customers in which the Bank pays the customer a variable rate and the customer pays the Bank a fixed rate, therefore allowing customers to convert variable rate loans to fixed rate loans. At the same time, the Bank enters into a swap with the counterparty bank in which the Bank pays the counterparty a fixed rate and the counterparty in return pays the Bank a variable rate. The net effect of the transaction allows the Bank to receive interest on the loan from the customer at a variable rate based on LIBOR plus a spread. The changes in the fair value of the swaps primarily offset each other and therefore should not have a significant impact on the Company’s results of operations, although the Company does incur credit and counterparty risk with respect to performance on the swap agreements by the Bank’s customer and counterparty, respectively. As a result of the Bank exceeding $10 billion in assets, federal regulations required the Bank, beginning in January 2019, to clear most interest rate swaps through a clearing house (“centrally cleared”). These instruments contain language outlining collateral pledging requirements for each counterparty, in which collateral must be posted if market value exceeds certain agreed upon threshold limits. Cash or securities are pledged as collateral. Our interest rate swap derivatives are subject to a master netting arrangement with our counterparties. None of our derivative assets and liabilities are offset in the Company’s condensed consolidated balance sheet. We believe our risk of loss associated with our counterparty borrowers related to interest rate swaps is mitigated as the loans with swaps are underwritten to take into account potential additional exposure, although there can be no assurances in this regard since the performance of our swaps is subject to market and counterparty risk. Balance Sheet Classification of Derivative Financial Instruments As of September 30, 2020 and December 31, 2019, the total notional amount of the Company’s swaps was $455.2 million, and $260.0 million, respectively. The location of the asset and liability, and their respective fair values, are summarized in the tables below.
The Effect of Derivative Financial Instruments on the Condensed Consolidated Statements of Earnings The following table summarizes the effect of derivative financial instruments on the condensed consolidated statement of earnings for the periods presented.
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Other Comprehensive Income |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income |
The table below provides a summary of the components of other comprehensive income (“OCI”) for the periods presented.
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Balance Sheet Offsetting |
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Text Block [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Offsetting |
Assets and liabilities relating to certain financial instruments, including, derivatives and securities sold under repurchase agreements (“repurchase agreements”), may be eligible for offset in the condensed consolidated balance sheets as permitted under accounting guidance. As noted above, our interest rate swap derivatives are subject to master netting arrangements. Our interest rate swap derivatives require the Company to pledge investment securities as collateral based on certain risk thresholds. Investment securities that have been pledged by the Company to counterparties continue to be reported in the Company’s condensed consolidated balance sheets unless the Company defaults. We offer a repurchase agreement product to our customers, which include master netting agreements that allow for the netting of collateral positions. This product, known as Citizens Sweep Manager, sells certain of our securities overnight to our customers under an agreement to repurchase them the next day. The repurchase agreements are not offset in the Company’s condensed consolidated balances.
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
The Company’s operating leases, where the Company is a lessee, include real estate, such as office space and banking centers. Lease expense for operating leases is recognized on a straight-line basis over the term of the lease and is reflected in the consolidated statement of earnings. Right-of-use While the Company has, as a lessor, certain equipment finance leases, such leases are not material to the Company’s consolidated financial statements. The tables below present the components of lease costs and supplemental information related to leases as of and for the periods presented.
The Company’s lease arrangements that have not yet commenced as of September 30, 2020 and the Company’s short-term lease costs and variable lease costs, for the nine months ended September 30, 2020 are not material to the consolidated financial statements. The future lease payments required for leases that have initial or remaining non-cancelable lease terms in excess of one year as of September 30, 2020, excluding property taxes and insurance, are as follows:
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Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition |
On January 1, 2018, the Company adopted ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” and all subsequent ASUs that modified Topic 606. Refer to Note 3 – Summary of Significant Accounting Policies Revenue Recognition our 2019 Annual Report on Form 10-K for the year ended December 31, 2019 for a more detailed discussion about noninterest revenue streams that are in-scope of Topic 606.The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope
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Accounting policies (Policies) |
9 Months Ended |
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Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Reclassification | Reclassification |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements |
Adoption of New Accounting Standard | Adoption of New Accounting Standard Provision and Allowance for Credit Losses No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. This ASU significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. This ASU replaces the current “incurred loss” approach with an “expected loss” model. The new model, referred to as the Current Expected Credit Loss (“CECL”) model, applies to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off balance sheet credit exposures. This includes, but is not limited to, loans, held-to-maturity available-for-sale The Company adopted this ASU using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company recorded a net decrease to beginning retained earnings of $1.3 million, net of tax as of January 1, 2020 for the cumulative adjustment upon adoption of ASC 326. The transition adjustment of $1.8 million was added to the beginning balance of the allowance for credit losses (“ACL”) for loans and $41,000 was added to the beginning balance of reserve for unfunded loan commitments. Upon adoption of CECL there was no impact on the accounting for AFS or HTM investment securities.The Company developed an allowance model that calculates reserves over the life of the loan and is largely driven by portfolio characteristics, risk grading, macroeconomic variables and the associated economic outlook, as well as other key methodology assumptions. The allowance is based upon historical lifetime loss rate models segregated by three loan segments: Commercial and Industrial, Commercial Real Estate, and Consumer Retail. In addition to determining the quantitative life of loan loss rate to be applied against the portfolio segments, the ASU indicates management has the opportunity to layer on current conditions and forecast adjustments to ensure that the life of loan loss rate reflects both the current state of the portfolio, and expectations for macroeconomic changes in the near future. We utilized a single economic forecast that is based on probability weighted scenarios to incorporate macroeconomic uncertainty over a 2 or 3-year forecast horizon. After the initial 2 to 3 year forecast horizon, we use an input reversion methodology in the model structure to complete a reasonable and supportable forecast period for the life of the loan.Beginning in the second half of March 2020, the broader economy experienced a significant deterioration in the economic environment driven by the COVID-19 pandemic resulting in adverse changes to the forecasted macroeconomic variables utilized in our modeling processes. This economic deterioration, coupled with the implementation of the expected loss methodology for determining our provision for credit losses, have contributed to an increased provision for credit losses of $23.5 million in the first half of 2020. We continue to monitor the impact on the economy from COVID-19 closely, as well as any effects that may result from the CARES Act. The extent to which the COVID-19 pandemic will impact our operations and financial results during the final quarter of 2020 is uncertain, but we may experience increased provision for credit losses if the COVID-19 pandemic results in additional economic stress on our borrowers and loan portfolios. |
Investment Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Amortized Cost and Estimated Fair Value of Investment Securities |
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Summary of Interest Income Earned on Investment Securities | The following table provides information about the amount of interest income earned on investment securities which is fully taxable and which is exempt from regular federal income tax.
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Summary of Continuous Unrealized Loss Position of Securities | The following table presents the Company’s available-for-sale
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Summary of Amortized Cost and Fair Value of Debt Securities by Contractual Maturity | Mortgage-backed and CMO/REMIC securities are included in maturity categories based upon estimated average lives, which incorporate estimated prepayment speeds.
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Loans and Lease Finance Receivables and Allowance for Credit Losses (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Components of Loans and Lease Finance Receivables, Excluding PCI Loans | The following table provides a summary of total loans and lease finance receivables by type.
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Summary of loans by type and origination year, according to our internal risk ratings | The following table summarizes loans by type and origination year, according to our internal risk ratings as of the date presented.
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Summary of Loan, Excluding PCI Loans by Internal Risk Ratings | The following table summarizes loans by type, according to our internal risk ratings as of the date presented.
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Schedule of Balance and Activity Related to Allowance for Loan Losses for Held-for-Investment Loans by Type | The following tables present the balance and activity related to the allowance for credit losses for held-for-investment
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Schedule of Recorded Investment in Loans Held-for-Investment and Related Allowance for Loan Losses by Loan Type |
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Schedule of Recorded Investment in, and Aging of, Past Due and Nonaccrual Loans, Excluding PCI Loans by Class of Loans | The following table presents the recorded investment in, and the aging of, past due loans (including nonaccrual loans), by type of loans as of the date presented.
Following the adoption of CECL on January 1, 2020, the definitions of impairment and related impaired loan disclosures were removed. Under CECL, amortized cost of our finance receivables and loans that are on nonaccrual status, including loans with no allowance, are presented as of September 30, 2020 by type of loan.
The following table presents the recorded investment in, and the aging of, past due and nonaccrual loans, by type of loans as of the date presented.
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Schedule of Held-for-Investment Loans, Individually Evaluated for Impairment by Class of Loans |
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Summary of pledged assets not separately reported on statement of financial position | A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following table presents the recorded investment in collateral-dependent loans by type of loans as of the date presented.
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Summary of Activity Related to Troubled Debt Restructurings | The following table provides a summary of the activity related to TDRs for the periods presented.
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Earnings Per Share Reconciliation (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Common Share Reconciliation | The table below shows earnings per common share and diluted earnings per common share, and reconciles the numerator and denominator of both earnings per common share calculations.
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Fair Value Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | The tables below present the balances of assets and liabilities measured at fair value on a recurring basis as of the dates presented.
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Assets and Liabilities Measured at Fair Value on Non-Recurring Basis | the following tables provide the level of valuation assumptions used to determine each adjustment and the carrying value of the related assets that had losses during the period.
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Estimated Fair Value of Financial Instruments | The following disclosure presents estimated fair value of our financial instruments. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to develop the estimates of fair value. Accordingly, the estimates presented below are not necessarily indicative of the amounts the Company may realize in a current market exchange as of September 30, 2020 and December 31, 2019, respectively. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
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Derivative Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Derivative Instruments | As of September 30, 2020 and December 31, 2019, the total notional amount of the Company’s swaps was $455.2 million, and $260.0 million, respectively. The location of the asset and liability, and their respective fair values, are summarized in the tables below.
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Effect of Derivative Instruments on Consolidated Statement of Earnings | The following table summarizes the effect of derivative financial instruments on the condensed consolidated statement of earnings for the periods presented.
|
Other Comprehensive Income (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Components of Other Comprehensive Income | The table below provides a summary of the components of other comprehensive income (“OCI”) for the periods presented.
|
Balance Sheet Offsetting (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Text Block [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Balance Sheet Offsetting |
|
Leases (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of lease costs and supplemental information related to leases | The tables below present the components of lease costs and supplemental information related to leases as of and for the periods presented.
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Future lease payments required for leases that have initial or remaining non-cancelable lease terms | The future lease payments required for leases that have initial or remaining non-cancelable lease terms in excess of one year as of September 30, 2020, excluding property taxes and insurance, are as follows:
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Revenue Recognition (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Non Interest Income, Segregated by Revenue Streams in-Scope and Out-of-Scope of Topic 606 | The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope
|
Business - Additional Information (Detail) |
Sep. 30, 2020
Location
Loan
Subsidiary
|
---|---|
Schedule Of Description Of Company [Line Items] | |
Number of inactive subsidiaries | Subsidiary | 1 |
Bank operated banking centers | 57 |
Bank operated trust office locations, number | 3 |
Number of loan production office | Loan | 1 |
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) |
6 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jan. 01, 2020 |
Jun. 30, 2020 |
Sep. 30, 2020 |
Dec. 31, 2019 |
|
Summary Of Significant Accounting Policies [Line Items] | ||||
Net decrease in retained earnings | $ 735,218,000 | $ 682,692,000 | ||
Transition adjustment, allowance for credit loses for loans | $ 1,800,000 | 1,800,000 | ||
Adjustment of transition reserve for loans | $ 41,000 | |||
Increase in provision for credit loses | $ 23,500,000 | |||
Revision of Prior Period, Accounting Standards Update, Adjustment [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Net decrease in retained earnings | $ 1,300,000 |
Investment Securities - Summary of Interest Income Earned on Investment Securities (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Net Investment Income [Line Items] | ||||
Total interest income from available-for-sale securities | $ 8,447 | $ 9,222 | $ 26,945 | $ 29,985 |
Total interest income from held-to-maturity securities | 3,375 | 4,298 | 11,033 | 13,249 |
Total investment income | 11,822 | 13,520 | 37,978 | 43,234 |
Investment securities available-for-sale [Member] | ||||
Net Investment Income [Line Items] | ||||
Taxable | 8,244 | 8,949 | 26,313 | 29,079 |
Tax-advantaged | 203 | 273 | 632 | 906 |
Total interest income from available-for-sale securities | 8,447 | 9,222 | 26,945 | 29,985 |
Investment securities held-to-maturity [Member] | ||||
Net Investment Income [Line Items] | ||||
Taxable | 2,265 | 2,883 | 7,410 | 8,725 |
Tax-advantaged | 1,110 | 1,415 | 3,623 | 4,524 |
Total interest income from held-to-maturity securities | $ 3,375 | $ 4,298 | $ 11,033 | $ 13,249 |
Investment Securities - Additional Information (Detail) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Dec. 31, 2019 |
|
Debt Securities, Available-for-sale [Line Items] | ||
Investment securities pledged as collateral | $ 1,860,000,000 | $ 1,640,000,000 |
Investment in FHLB stock, impairment losses | $ 0 | |
Debt securities weighted average remaining contractual maturity term | 17 years | |
United States [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Securities issued by U.S. government percentage | 93.00% |
Earnings Per Share Reconciliation - Additional Information (Detail) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Earnings Per Share [Abstract] | ||||
Antidilutive securities excluded from computation of earnings per common share | 517,000 | 240,000 | 361,000 | 184,000 |
Earnings Per Share Reconciliation - Schedule of Earnings Per Common Share Reconciliation (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Earnings per common share: | ||||
Net earnings | $ 47,492 | $ 50,423 | $ 127,103 | $ 156,546 |
Less: Net earnings allocated to restricted stock | 175 | 116 | 407 | 390 |
Net earnings allocated to common shareholders | $ 47,317 | $ 50,307 | $ 126,696 | $ 156,156 |
Weighted average shares outstanding | 135,017 | 139,824 | 136,369 | 139,730 |
Basic earnings per common share | $ 0.35 | $ 0.36 | $ 0.93 | $ 1.12 |
Diluted earnings per common share: | ||||
Net income allocated to common shareholders | $ 47,317 | $ 50,307 | $ 126,696 | $ 156,156 |
Weighted average shares outstanding | 135,017 | 139,824 | 136,369 | 139,730 |
Incremental shares from assumed exercise of outstanding options | 167 | 151 | 167 | 217 |
Diluted weighted average shares outstanding | 135,184 | 139,975 | 136,536 | 139,947 |
Diluted earnings per common share | $ 0.35 | $ 0.36 | $ 0.93 | $ 1.12 |
Derivative Financial Instruments - Additional Information (Detail) |
9 Months Ended | |
---|---|---|
Sep. 30, 2020
USD ($)
Agreement
|
Dec. 31, 2019
USD ($)
|
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative assets and liabilities offset in balance sheet | $ 0 | |
Total notional amount of the Company's swaps | $ 455,200,000 | $ 260,000,000.0 |
Description of Conditions Relating to Clearing of Interest rate Swaps | As a result of the Bank exceeding $10 billion in assets, federal regulations required the Bank, beginning in January 2019, to clear most interest rate swaps through a clearing house (“centrally cleared”). These instruments contain language outlining collateral pledging requirements for each counterparty, in which collateral must be posted if market value exceeds certain agreed upon threshold limits. Cash or securities are pledged as collateral. | |
Interest-rate Swap Agreements with Customers [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Number of interest-rate swap agreements | Agreement | 133 | |
Total notional amount of the Company's swaps | $ 455,200,000 |
Derivative Financial Instruments - Fair Value of Derivative Instruments (Detail) - Derivatives Not Designated as Hedging Instruments [Member] - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Other Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | $ 37,255 | $ 11,502 |
Other Assets [Member] | Interest Rate Swaps [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives | 37,255 | 11,502 |
Other Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | 37,255 | 11,502 |
Other Liabilities [Member] | Interest Rate Swaps [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Liability Derivatives | $ 37,255 | $ 11,502 |
Derivative Financial Instruments - Effect of Derivative Instruments on Consolidated Statement of Earnings (Detail) - Derivatives Not Designated as Hedging Instruments [Member] - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Derivatives, Fair Value [Line Items] | ||||
Amount of Gain Recognized in Income on Derivative Instruments | $ 1,591 | $ 378 | $ 4,149 | $ 1,135 |
Interest Rate Swaps [Member] | Other Income [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
Amount of Gain Recognized in Income on Derivative Instruments | $ 1,591 | $ 378 | $ 4,149 | $ 1,135 |
Leases - Components of lease costs and supplemental information related to leases (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Dec. 31, 2019 |
|
Lease Assets and Liabilities | |||||
ROU assets | $ 19,771 | $ 19,771 | $ 18,522 | ||
Total lease liabilities | 21,939 | 21,939 | $ 21,392 | ||
Lease Cost | |||||
Operating lease expense | 1,654 | $ 1,628 | 4,900 | $ 5,634 | |
Sublease income | 0 | 0 | 0 | ||
Total lease expense | 1,654 | 1,628 | 4,900 | 5,634 | |
Other Information | |||||
Operating cash outflows from operating leases, net | $ 1,826 | $ 1,640 | $ 5,630 | $ 6,499 | |
Lease Term and Discount Rate | |||||
Weighted average remaining lease term (years) | 4 years 3 months 14 days | 4 years 3 months 14 days | 4 years 2 months 4 days | ||
Weighted average discount rate | 2.86% | 2.86% | 3.34% |
Leases - Future lease payments required for leases that have initial or remaining non-cancelable lease terms (Detail) $ in Thousands |
Sep. 30, 2020
USD ($)
|
---|---|
2020 (excluding the nine months ended September 30, 2020) | $ 1,781 |
2021 | 6,656 |
2022 | 5,475 |
2023 | 3,615 |
2024 | 2,428 |
Thereafter | 3,461 |
Total future lease payments | 23,416 |
Less: Imputed interest | (1,477) |
Present value of lease liabilities | $ 21,939 |
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