(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
(Address of Principal Executive Offices) | (Zip Code) |
Title of Class |
Trading Symbol |
Name of Each Exchange on Which | ||
☒ |
Accelerated filer |
☐ | ||||
Non-accelerated filer |
☐ |
Smaller reporting company |
||||
Emerging growth company |
DOCUMENTS INCORPORATED BY REFERENCE |
PART OF | |
Definitive Proxy Statement for the Annual Meeting of Stockholders which will be filed within 120 days of the fiscal year ended December 31, 2020 |
Part III of Form 10-K |
ITEM 1. |
BUSINESS | 5 | ||||
ITEM 1A. |
RISK FACTORS | 25 | ||||
ITEM 1B. |
UNRESOLVED STAFF COMMENTS | 40 | ||||
ITEM 2. |
PROPERTIES | 40 | ||||
ITEM 3. |
LEGAL PROCEEDINGS | 40 | ||||
ITEM 4. |
MINE SAFETY DISCLOSURES | 41 |
ITEM 15. |
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | 94 | ||||
ITEM 16. |
FORM 10-K SUMMARY | 94 | ||||
98 |
• |
local, regional, national and international economic and market conditions, political events and public health developments 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 current national emergency declared in connection with the COVID-19 pandemic; |
• |
the impact of the federal CARES Act, the Consolidated Appropriations Act, and the significant additional lending activities undertaken by the Company in connection with the Small Business Administration’s Paycheck Protection Program enacted and extended under those statutes, 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 lending programs established by the Federal Reserve in 2020, 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 other pertinent 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 public health, physical site access and/or communications 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, computer 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, block-chain technology and other banking products, systems or services); |
• |
our ability to retain and increase market share, to retain and grow customers and to 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 capital, 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 recruit, retain, expand or contract 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, or to fill any key employment vacancies; |
• |
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, health and safety, 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 Department of Financial Protection and Innovation (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 our Annual Report on Form 10-K for the year ended December 31, 2020, and particularly the discussion of risk factors within this document. |
ITEM 1. |
BUSINESS |
• | Improving regulatory efficiency and effectiveness by critically evaluating mandates and regulatory fragmentation, overlap, and duplication across regulatory agencies; |
• | Aligning the financial system to help support the U.S. economy; |
• | Reducing regulatory burden by decreasing unnecessary complexity; |
• | Tailoring the regulatory approach based on size and complexity of regulated firms and requiring greater regulatory cooperation and coordination among financial regulators; |
• | Aligning regulations to support market liquidity, investment, and lending in the U.S. economy; and |
• | Creating a regulatory landscape that better supports nonbank financial institutions, embraces financial technology and fosters innovation. |
• | Tier 1 Leverage Ratio |
• | CET1 Risk-Based Capital Ratio phase-in periods that began on January 1, 2015 and ended on January 1, 2018. The last phase of the Basel III Capital Rules’ transition provisions relating to capital deductions for mortgage servicing assets, certain deferred tax assets and investments in the capital instruments of unconsolidated financial institutions, and the recognition of minority interests in regulatory capital was delayed for certain bank holding companies and banks, including us and the Bank, but a revised rule was finalized in July 2019 that was effective in April 2020. Hybrid securities, such as trust preferred securities, generally are excluded from being counted as Tier 1 capital. However, for bank holding companies like us that have less than $15 billion in total consolidated assets, certain trust preferred securities were grandfathered in as a component of Tier 1 capital. In addition, because we are not an advanced approach banking organization, we were permitted to make a one-time permanent election to exclude accumulated other comprehensive income items from regulatory capital. We made this election in order to avoid significant variations in our levels of capital depending upon the impact of interest rate fluctuations on the fair value of our Bank’s available-for-sale |
• | Tier 1 Risk-Based Capital Ratio |
• | Total Risk-Based Capital Ratio |
Minimum Basel III Regulatory Capital Ratio Plus Capital Conservation Buffer |
||||
Effective January 1, 2019 |
||||
CET1 risk-based capital ratio |
7.0 | % | ||
Tier 1 risk-based capital ratio |
8.5 | % | ||
Total risk-based capital ratio |
10.5 | % |
• | Require periodic reports and such additional reports of information as the Federal Reserve may require; |
• | Require bank holding companies to meet or exceed increased levels of capital (See “Capital Adequacy Requirements”); |
• | Require that bank holding companies serve as a source of financial and managerial strength to subsidiary banks and commit resources as necessary to support each subsidiary bank; |
• | Limit of dividends payable to shareholders and restrict the ability of bank holding companies to obtain dividends or other distributions from their subsidiary banks. The Company’s ability to pay dividends on both its common and preferred stock is subject to legal and regulatory restrictions. Substantially all of CVB’s funds to pay dividends or to pay principal and interest on our debt obligations are derived from dividends paid by the Bank; |
• | Require a bank holding company to terminate an activity or terminate control of or liquidate or divest certain subsidiaries, affiliates or investments if the Federal Reserve believes the activity or the control of the subsidiary or affiliate constitutes a significant risk to the financial safety, soundness or stability of any bank subsidiary; |
• | Require the prior approval of senior executive officer or director changes and prohibit golden parachute payments, including change in control agreements, or new employment agreements with such payment terms, which are contingent upon termination if an institution is in “troubled condition”; |
• | Regulate provisions of certain bank holding company debt, including the authority to impose interest ceilings and reserve requirements on such debt and require prior approval to purchase or redeem securities in certain situations; |
• | Require prior approval for the acquisition of 5% or more of the voting stock of a bank or bank holding company by bank holding companies or other acquisitions and mergers with banks and consider certain competitive, management, financial, anti-money-laundering compliance, potential impact on U.S. financial stability or other factors in granting these approvals, in addition to similar California or other state banking agency approvals which may also be required; and |
• | Require prior notice and/or prior approval of the acquisition of control of a bank or a bank holding company by a shareholder or individuals acting in concert with ownership or control of certain percentage thresholds of the voting stock being a presumption of control. |
• | Require affirmative action to correct any conditions resulting from any violation or practice; |
• | Direct an increase in capital and the maintenance of higher specific minimum capital ratios, which could preclude the Bank from being deemed well capitalized and restrict its ability to accept certain brokered deposits; |
• | Restrict the Bank’s growth geographically, by products and services, or by mergers and acquisitions, including bidding in FDIC receiverships for failed banks; |
• | Enter into or issue informal or formal enforcement actions, including required Board resolutions, Matters Requiring Board Attention (MRBA), written agreements and consent or cease and desist orders or prompt corrective action orders to take corrective action and cease unsafe and unsound practices; |
• | Require prior approval of senior executive officer or director changes; remove officers and directors and assess civil monetary penalties; and |
• | Terminate FDIC insurance, revoke the charter and/or take possession of and close and liquidate the Bank or appoint the FDIC as receiver. |
• | Tax Rate. The Tax Reform Act replaces the corporate tax rates applicable under prior law, which imposed a maximum tax rate of 35%, with a reduced 21% tax rate for 2018. Although the reduced tax rate generally should be favorable to us by resulting in lower tax expense in future periods, it decreased the value of our existing deferred tax assets as of December 31, 2017. Generally accepted accounting principles (“GAAP”) requires that the impact of the provisions of the Tax Reform Act be accounted for in the period of enactment. Accordingly, the incremental income tax expense recorded by the Company in the fourth quarter of 2017 related to the Tax Reform Act was $13.2 million, resulting primarily from a re-measurement of deferred tax assets; |
• | FDIC Insurance Premiums. The Tax Reform Act prohibits taxpayers with consolidated assets over $50 billion from deducting any FDIC insurance premiums and prohibits taxpayers with consolidated assets between $10 and $50 billion from deducting the portion of their FDIC premiums equal to the ratio, expressed as a percentage, that (i) the taxpayer’s total consolidated assets over $10 billion, as of the close of the taxable year, bears to (ii) $40 billion; |
• | Employee Compensation. A “publicly held company” is not permitted to deduct compensation in excess of $1 million per year paid to certain employees. The Tax Reform Act eliminates certain exceptions to the $1 million limit applicable under prior law related to performance-based compensation, such as equity grants and cash bonuses that are paid only on the attainment of performance goals. As a result, our ability to deduct certain compensation paid to our most highly compensated employees is limited; and |
• | Business Asset Expensing. The Tax Reform Act allows taxpayers immediately to expense the entire cost (instead of only 50%, as under prior law) of certain depreciable tangible property and real property improvements acquired and placed in service after September 27, 2017 and before January 1, 2023 (with an additional year for certain property). This 100% “bonus” depreciation is phased out proportionately for property placed in service on or after January 1, 2023 and before January 1, 2027 (with an additional year for certain property). |
Executive Officers: |
||||||||
Name |
Position |
Age | ||||||
David A. Brager |
Chief Executive Officer of the Company and the Bank | 53 | ||||||
E. Allen Nicholson |
Chief Financial Officer of the Company and Executive Vice President and Chief Financial Officer of the Bank | 53 | ||||||
David F. Farnsworth |
Executive Vice President and Chief Credit Officer of the Bank | 64 | ||||||
David C. Harvey |
Executive Vice President and Chief Operations Officer of the Bank | 53 | ||||||
Richard H. Wohl |
Executive Vice President and General Counsel | 62 | ||||||
Yamynn DeAngelis |
Executive Vice President and Chief Risk Officer | 64 |
ITEM 1A. |
RISK FACTORS |
• | The process we use to estimate losses inherent in our credit exposure requires difficult, subjective and complex judgments, including forecasts of economic conditions and how these economic conditions might impair the ability of our borrowers to repay their loans. The level of uncertainty |
concerning economic conditions may adversely affect the accuracy of our estimates which may, in turn, impact the reliability of the process; |
• | The Company’s commercial, residential and consumer borrowers may be unable to make timely repayments of their loans, or the decrease in value of real estate collateral securing the payment of such loans could result in significant credit losses, increasing delinquencies, foreclosures and customer bankruptcies, any of which could have a material adverse effect on the Company’s operating results; |
• | A sustained environment of low interest rates would continue to cause lending margins to stay compressed, which in turn may limit our revenues and profitability; |
• | The value of the portfolio of investment securities that we hold may be adversely affected by increasing interest rates and defaults by debtors; |
• | Further disruptions in the capital markets or other events, including actions by rating agencies and deteriorating investor expectations, may result in changes in applicable rates of interest, difficulty in accessing capital or an inability to borrow on favorable terms or at all from other financial institutions; and |
• | Increased competition among financial services companies due to expected further consolidation in the industry may adversely affect the Company’s ability to market its products and services. |
• | Potential exposure to unknown or contingent liabilities of the target company; |
• | Exposure to potential asset quality issues of the target company; |
• | Potential disruption to our business; |
• | Potential diversion of our management’s time and attention; |
• | The possible loss of key employees and customers of the target company; |
• | Difficulty in estimating the value of the target company; and |
• | Potential changes in banking or tax laws or regulations that may affect the target company. |
• | actual or anticipated fluctuations in our operating results and financial condition; |
• | changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts; |
• | credit events or losses; |
• | failure to meet analysts’ revenue or earnings estimates; |
• | speculation in the press or investment community; |
• | strategic actions by us or our competitors, such as acquisitions or restructurings; |
• | actions or trades by institutional shareholders or other large shareholders; |
• | our capital position; |
• | fluctuations in the stock price and operating results of our competitors; |
• | actions by hedge funds, short term investors, activist shareholders or shareholder representative organizations; |
• | general market conditions and, in particular, developments related to market conditions for the financial services industry; |
• | proposed or adopted regulatory changes or developments; |
• | anticipated or pending investigations, proceedings or litigation that involve or affect the Company and/or the Bank; |
• | fraud losses or data or privacy breaches; or |
• | domestic and international economic factors, whether related or unrelated to the Company’s performance. |
ITEM 1B. |
UNRESOLVED STAFF COMMENTS |
ITEM 2. |
PROPERTIES |
ITEM 3. |
LEGAL PROCEEDINGS |
ITEM 4. |
MINE SAFETY DISCLOSURES |
ITEM 5. |
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Company/Market/Peer Group |
12/31/2015 |
12/31/2016 |
12/31/2017 |
12/31/2018 |
12/31/2019 |
12/31/2020 |
||||||||||||||||||
CVB Financial Corp. |
100.00 |
138.47 |
145.52 |
128.08 |
141.16 |
133.78 |
||||||||||||||||||
NASDAQ Composite |
100.00 |
108.87 |
141.13 |
137.12 |
187.44 |
271.64 |
||||||||||||||||||
Peer Group Index |
100.00 |
138.17 |
158.23 |
127.37 |
159.28 |
163.05 |
ITEM 6. |
SELECTED FINANCIAL DATA |
Year Ended December 31, |
||||||||||||||||||||
2020 |
2019 |
2018 |
2017 |
2016 |
||||||||||||||||
(Dollars in thousands, except per share amounts) |
||||||||||||||||||||
Interest income |
$ | 430,337 | $ | 457,850 | $ | 361,860 | $ | 287,226 | $ | 265,050 | ||||||||||
Interest expense |
14,284 | 22,078 | 12,815 | 8,296 | 7,976 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net interest income before provision for (recapture of) credit losses |
416,053 | 435,772 | 349,045 | 278,930 | 257,074 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Provision for (recapture of) credit losses |
23,500 | 5,000 | 1,500 | (8,500 | ) | (6,400 | ) | |||||||||||||
Net interest income after provision for (recapture of) credit losses |
392,553 | 430,772 | 347,545 | 287,430 | 263,474 | |||||||||||||||
Noninterest income |
49,870 | 59,042 | 43,481 | 42,118 | 35,552 | |||||||||||||||
Noninterest expense |
192,903 | 198,740 | 179,911 | 140,753 | 136,740 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Earnings before income taxes |
249,520 | 291,074 | 211,115 | 188,795 | 162,286 | |||||||||||||||
Income taxes |
72,361 | 83,247 | 59,112 | 84,384 | 60,857 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Earnings |
$ | 177,159 | $ | 207,827 | $ | 152,003 | $ | 104,411 | $ | 101,429 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic earnings per common share |
$ | 1.30 | $ | 1.48 | $ | 1.25 | $ | 0.95 | $ | 0.94 | ||||||||||
Diluted earnings per common share |
$ | 1.30 | $ | 1.48 | $ | 1.24 | $ | 0.95 | $ | 0.94 | ||||||||||
Cash dividends declared per common share |
$ | 0.72 | $ | 0.72 | $ | 0.56 | $ | 0.54 | $ | 0.48 | ||||||||||
Dividend pay-out ratio (1) |
55.13% | 48.57% | 46.19% | 56.97% | 51.12% | |||||||||||||||
Weighted average common shares: |
||||||||||||||||||||
Basic |
136,030,613 | 139,757,355 | 121,670,113 | 109,409,301 | 107,282,332 | |||||||||||||||
Diluted |
136,206,210 | 139,934,211 | 121,957,364 | 109,806,710 | 107,686,955 | |||||||||||||||
Common Stock Data: |
||||||||||||||||||||
Common shares outstanding at year end |
135,600,501 | 140,102,480 | 140,000,017 | 110,184,922 | 108,251,981 | |||||||||||||||
Book value per share |
$ | 14.81 | $ | 14.23 | $ | 13.22 | $ | 9.70 | $ | 9.15 | ||||||||||
Financial Position: |
||||||||||||||||||||
Assets |
$ | 14,419,314 | $ | 11,282,450 | $ | 11,529,153 | $ | 8,270,586 | $ | 8,073,707 | ||||||||||
Investment securities |
2,977,549 | 2,414,709 | 2,478,525 | 2,910,875 | 3,182,142 | |||||||||||||||
Net loans (2) |
8,255,116 | 7,495,917 | 7,700,998 | 4,771,046 | 4,333,524 | |||||||||||||||
Deposits |
11,736,501 | 8,704,928 | 8,827,490 | 6,546,853 | 6,309,680 | |||||||||||||||
Borrowings |
444,406 | 428,659 | 722,255 | 553,773 | 656,028 | |||||||||||||||
Junior subordinated debentures |
25,774 | 25,774 | 25,774 | 25,774 | 25,774 | |||||||||||||||
Stockholders’ equity |
2,007,990 | 1,994,098 | 1,851,190 | 1,069,266 | 990,862 | |||||||||||||||
Equity-to-assets |
13.93% | 17.67% | 16.06% | 12.93% | 12.27% | |||||||||||||||
Financial Performance: |
||||||||||||||||||||
Return on average equity (ROAE) |
8.90% | 10.71% | 11.00% | 9.84% | 10.26% | |||||||||||||||
Return on average assets (ROAA) |
1.37% | 1.84% | 1.60% | 1.26% | 1.26% | |||||||||||||||
Net interest margin, tax-equivalent (TE) (4) |
3.59% | 4.36% | 4.03% | 3.63% | 3.46% | |||||||||||||||
Efficiency ratio (5) |
41.40% | 40.16% | 45.83% | 43.84% | 46.73% | |||||||||||||||
Noninterest expense to average assets |
1.49% | 1.76% | 1.89% | 1.70% | 1.70% | |||||||||||||||
Credit Quality: |
||||||||||||||||||||
Allowance for credit losses |
$ | 93,692 | $ | 68,660 | $ | 63,613 | $ | 59,585 | $ | 61,540 | ||||||||||
Allowance/total loans |
1.12% | 0.91% | 0.82% | 1.23% | 1.40% | |||||||||||||||
Total nonaccrual loans |
$ | 14,347 | $ | 5,277 | $ | 19,951 | $ | 10,716 | $ | 7,152 | ||||||||||
Nonaccrual loans/total loans, net of deferred loan fees |
0.17% | 0.07% | 0.26% | 0.22% | 0.16% | |||||||||||||||
Allowance/nonaccrual loans |
653.04% | 1301.12% | 318.85% | 556.04% | 860.46% | |||||||||||||||
Net (charge-offs) recoveries/average loans |
-0.004% | 0.001% | 0.04% | 0.14% | 0.21% | |||||||||||||||
Regulatory Capital Ratios: |
||||||||||||||||||||
Company: |
||||||||||||||||||||
Tier 1 leverage ratio |
9.90% | 12.33% | 10.98% | 11.88% | 11.49% | |||||||||||||||
Common equity Tier 1 risk-based capital ratio |
14.77% | 14.83% | 13.04% | 16.43% | 16.48% | |||||||||||||||
Tier 1 risk-based capital ratio |
15.06% | 15.11% | 13.32% | 16.87% | 16.94% | |||||||||||||||
Total risk-based capital ratio |
16.24% | 16.01% | 14.13% | 18.01% | 18.19% | |||||||||||||||
Bank: |
||||||||||||||||||||
Tier 1 leverage ratio |
9.58% | 12.19% | 10.90% | 11.77% | 11.36% | |||||||||||||||
Common equity Tier 1 risk-based capital ratio |
14.57% | 14.94% | 13.22% | 16.71% | 16.76% | |||||||||||||||
Tier 1 risk-based capital ratio |
14.57% | 14.94% | 13.22% | 16.71% | 16.76% | |||||||||||||||
Total risk-based capital ratio |
15.75% | 15.83% | 14.03% | 17.86% | 18.01% |
(1) | Dividends declared on common stock divided by net earnings. |
(2) | 2016-2018 includes purchased credit-impaired (“PCI”) loans. |
(3) | Stockholders’ equity divided by total assets. |
(4) | Net interest income (TE) divided by average interest-earning assets. |
(5) | Noninterest expense divided by net interest income before provision for credit losses plus noninterest income. Also refer to “Noninterest Expense and Efficiency Ratio Reconciliation (non-GAAP)” under Analysis of the Results of Operations 10-K. |
ITEM 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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 | The Company established a LIBOR Transition Task Force in 2020, which has inventoried our instruments that reflect exposure to LIBOR, created a framework to manage the transition and established a timeline for key decisions and actions to complete the transition from LIBOR in 2021. 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 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”Issued December 2019 |
The FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU removes certain exceptions for: recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. This ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. ASU 2019-12 is effective for interim and annual reporting periods beginning after December 15, 2020; early adoption is permitted. |
1st Quarter 2021 | We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements. |
Standard |
Description |
Adoption Timing |
Impact on 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. | |||
ASU 2020-08 Codification Improvements to Subtopic 310-20, Receivables — Nonrefundable Fees and Other CostsIssued October 2020 |
The FASB issued this amendment to clarify that an entity should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 |
1st Quarter 2021 | The adoption of this ASU is not expected to have a material impact on our consolidated financial statements. |
Variance |
||||||||||||||||||||||||||||
Year Ended December 31, |
2020 |
2019 |
||||||||||||||||||||||||||
2020 |
2019 |
2018 |
$ |
% |
$ |
% |
||||||||||||||||||||||
(Dollars in thousands, except per share amounts) |
||||||||||||||||||||||||||||
Net interest income |
$ | 416,053 | $ | 435,772 | $ | 349,045 | $ | (19,719 | ) | -4.53% | $ | 86,727 | 24.85% | |||||||||||||||
Provision for credit losses |
(23,500 | ) | (5,000 | ) | (1,500 | ) | (18,500 | ) | -370.00% | (3,500 | ) | -233.33% | ||||||||||||||||
Noninterest income |
49,870 | 59,042 | 43,481 | (9,172 | ) | -15.53% | 15,561 | 35.79% | ||||||||||||||||||||
Noninterest expense |
(192,903 | ) | (198,740 | ) | (179,911 | ) | 5,837 | 2.94% | (18,829 | ) | -10.47% | |||||||||||||||||
Income taxes |
(72,361 | ) | (83,247 | ) | (59,112 | ) | 10,886 | 13.08% | (24,135 | ) | -40.83% | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net earnings |
$ | 177,159 | $ | 207,827 | $ | 152,003 | $ | (30,668 | ) | -14.76% | $ | 55,824 | 36.73% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Earnings per common share: |
||||||||||||||||||||||||||||
Basic |
$ | 1.30 | $ | 1.48 | $ | 1.25 | $ | (0.18 | ) | $ | 0.23 | |||||||||||||||||
Diluted |
$ | 1.30 | $ | 1.48 | $ | 1.24 | $ | (0.18 | ) | $ | 0.24 | |||||||||||||||||
Return on average assets |
1.37% | 1.84% | 1.60% | -0.47% | 0.24% | |||||||||||||||||||||||
Return on average shareholders’ equity |
8.90% | 10.71% | 11.00% | -1.81% | -0.29% | |||||||||||||||||||||||
Efficiency ratio |
41.40% | 40.16% | 45.83% | 1.24% | -5.67% | |||||||||||||||||||||||
Noninterest expense to average assets |
1.49% | 1.76% | 1.89% | -0.27% | -0.13% |
Year Ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
(Dollars in thousands) |
||||||||||||
Net Income |
$ | 177,159 | $ | 207,827 | $ | 152,003 | ||||||
Add: Amortization of intangible assets |
9,352 | 10,798 | 5,254 | |||||||||
Less: Tax effect of amortization of intangible assets (1) |
(2,765 | ) | (3,192 | ) | (1,553 | ) | ||||||
|
|
|
|
|
|
|||||||
Tangible net income |
$ | 183,746 | $ | 215,433 | $ | 155,704 | ||||||
|
|
|
|
|
|
|||||||
Average stockholders’ equity |
$ | 1,991,664 | $ | 1,939,961 | $ | 1,382,392 | ||||||
Less: Average goodwill |
(663,707 | ) | (665,026 | ) | (330,613 | ) | ||||||
Less: Average intangible assets |
(38,203 | ) | (48,296 | ) | (26,055 | ) | ||||||
|
|
|
|
|
|
|||||||
Average tangible common equity |
$ | 1,289,754 | $ | 1,226,639 | $ | 1,025,724 | ||||||
|
|
|
|
|
|
|||||||
Return on average equity, annualized |
8.90% | 10.71% | 11.00% | |||||||||
Return on average tangible common equity |
14.25% | 17.56% | 15.18% |
(1) | Tax effected at respective statutory rates. |
Year Ended December 31, |
||||||||||||||||||||||||||||||||||||
2020 |
2019 |
2018 |
||||||||||||||||||||||||||||||||||
Average Balance |
Interest |
Yield/ Rate |
Average Balance |
Interest |
Yield/ Rate |
Average Balance |
Interest |
Yield/ Rate |
||||||||||||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||||||||||||||
INTEREST-EARNING ASSETS |
||||||||||||||||||||||||||||||||||||
Investment securities (1) |
||||||||||||||||||||||||||||||||||||
Available-for-sale |
||||||||||||||||||||||||||||||||||||
Taxable |
$ | 1,854,964 | $ | 35,129 | 1.94% | $ | 1,580,850 | $ | 38,189 | 2.42% | $ | 1,869,842 | $ | 44,423 | 2.38% | |||||||||||||||||||||
Tax-advantaged |
37,110 | 923 | 3.50% | 41,991 | 1,141 | 3.76% | 52,550 | 1,565 | 3.98% | |||||||||||||||||||||||||||
Held-to-maturity |
||||||||||||||||||||||||||||||||||||
Taxable |
438,190 | 9,542 | 2.18% | 504,814 | 11,498 | 2.28% | 534,642 | 11,848 | 2.22% | |||||||||||||||||||||||||||
Tax-advantaged |
173,756 | 4,681 | 3.26% | 211,899 | 5,890 | 3.36% | 243,955 | 7,053 | 3.50% | |||||||||||||||||||||||||||
Investment in FHLB stock |
17,688 | 978 | 5.53% | 17,688 | 1,235 | 6.98% | 19,441 | 2,045 | (4) | 10.52% | ||||||||||||||||||||||||||
Interest-earning deposits with other institutions |
1,098,814 | 1,682 | 0.15% | 120,247 | 2,269 | 1.89% | 97,266 | 1,642 | 1.69% | |||||||||||||||||||||||||||
Loans (2) |
8,066,483 | 377,402 | 4.68% | 7,552,505 | 397,628 | 5.26% | 5,905,674 | 293,284 | 4.97% | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total interest-earning assets |
11,687,005 | 430,337 | 3.71% | 10,029,994 | 457,850 | 4.58% | 8,723,370 | 361,860 | 4.17% | |||||||||||||||||||||||||||
Total noninterest-earning assets |
1,242,808 | 1,272,907 | 789,299 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total assets |
$ | 12,929,813 | $ | 11,302,901 | $ | 9,512,669 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
INTEREST-BEARING LIABILITIES |
||||||||||||||||||||||||||||||||||||
Savings deposits (3) |
$ | 3,530,606 | 8,803 | 0.25% | $ | 3,048,785 | 12,698 | 0.42% | $ | 2,656,660 | 7,250 | 0.27% | ||||||||||||||||||||||||
Time deposits |
445,962 | 3,799 | 0.85% | 487,221 | 4,422 | 0.91% | 453,031 | 2,575 | 0.57% | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total interest-bearing deposits |
3,976,568 | 12,602 | 0.32% | 3,536,006 | 17,120 | 0.48% | 3,109,691 | 9,825 | 0.32% | |||||||||||||||||||||||||||
FHLB advances, other borrowings, and customer repurchase agreements |
511,404 | 1,682 | 0.33% | 537,964 | 4,958 | 0.91% | 499,526 | 2,990 | 0.60% | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Interest-bearing liabilities |
4,487,972 | 14,284 | 0.32% | 4,073,970 | 22,078 | 0.54% | 3,609,217 | 12,815 | 0.35% | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Noninterest-bearing deposits |
6,281,989 | 5,177,035 | 4,449,110 | |||||||||||||||||||||||||||||||||
Other liabilities |
168,188 | 111,935 | 71,950 | |||||||||||||||||||||||||||||||||
Stockholders’ equity |
1,991,664 | 1,939,961 | 1,382,392 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity |
$ | 12,929,813 | $ | 11,302,901 | $ | 9,512,669 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Net interest income |
$ | 416,053 | $ | 435,772 | $ | 349,045 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Net interest spread - tax equivalent |
3.39% | 4.04% | 3.82% | |||||||||||||||||||||||||||||||||
Net interest margin |
3.57% | 4.35% | 4.00% | |||||||||||||||||||||||||||||||||
Net interest margin - tax equivalent |
3.59% | 4.36% | 4.03% |
(1) | Includes tax equivalent (TE) adjustments utilizing a federal statutory rate of 21% in effect for the years ended December 31, 2020, 2019 and 2018. Non-tax equivalent (TE) rate was 2.04%, 2.43% and 2.41% for the years ended December 31, 2020, 2019 and 2018, respectively. |
(2) | Includes loan fees of $23.9 million, $3.1 million and $3.4 million for the years ended December 31, 2020, 2019 and 2018, respectively. Prepayment penalty fees of $8.2 million, $5.4 million and $3.0 million are included in interest income for the years ended December 31, 2020, 2019 and 2018, respectively. |
(3) | Includes interest-bearing demand and money market accounts. |
(4) | Includes a special dividend from the FHLB of $520,000. |
Comparision of Year Ended December 31, |
||||||||||||||||||||||||||||||||
2020 Compared to 2019 Increase (Decrease) Due to |
2019 Compared to 2018 Increase (Decrease) Due to |
|||||||||||||||||||||||||||||||
Volume |
Rate |
Rate/ Volume |
Total |
Volume |
Rate |
Rate/ Volume |
Total |
|||||||||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||||||||||
Interest income: |
||||||||||||||||||||||||||||||||
Available-for-sale |
||||||||||||||||||||||||||||||||
Taxable investment securities |
$ | 5,679 | $ | (7,608 | ) | $ | (1,131 | ) | $ | (3,060 | ) | $ | (6,919 | ) | $ | 811 | $ | (126 | ) | $ | (6,234 | ) | ||||||||||
Tax-advantaged investment securities |
(132 | ) | (97 | ) | 11 | (218 | ) | (315 | ) | (137 | ) | 28 | (424 | ) | ||||||||||||||||||
Held-to-maturity |
||||||||||||||||||||||||||||||||
Taxable investment securities |
(1,499 | ) | (525 | ) | 68 | (1,956 | ) | (706 | ) | 377 | (21 | ) | (350 | ) | ||||||||||||||||||
Tax-advantaged investment securities |
(1,061 | ) | (181 | ) | 33 | (1,209 | ) | (927 | ) | (272 | ) | 36 | (1,163 | ) | ||||||||||||||||||
Investment in FHLB stock |
- | (257 | ) | - | (257 | ) | (184 | ) | (688 | ) | 62 | (810 | ) | |||||||||||||||||||
Interest-earning deposits with other institutions |
18,465 | (2,085 | ) | (16,967 | ) | (587 | ) | 388 | 193 | 46 | 627 | |||||||||||||||||||||
Loans |
27,060 | (44,273 | ) | (3,013 | ) | (20,226 | ) | 81,775 | 17,648 | 4,921 | 104,344 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest income |
48,512 | (55,026 | ) | (20,999 | ) | (27,513 | ) | 73,112 | 17,932 | 4,946 | 95,990 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Interest expense: |
||||||||||||||||||||||||||||||||
Savings deposits |
2,007 | (5,097 | ) | (805 | ) | (3,895 | ) | 1,070 | 3,815 | 563 | 5,448 | |||||||||||||||||||||
Time deposits |
(374 | ) | (272 | ) | 23 | (623 | ) | 194 | 1,537 | 116 | 1,847 | |||||||||||||||||||||
FHLB advances, other borrowings, and customer repurchase agreements |
(245 | ) | (3,188 | ) | 157 | (3,276 | ) | 234 | 1,610 | 124 | 1,968 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest expense |
1,388 | (8,557 | ) | (625 | ) | (7,794 | ) | 1,498 | 6,962 | 803 | 9,263 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net interest income |
$ | 47,124 | $ | (46,469 | ) | $ | (20,374 | ) | $ | (19,719 | ) | $ | 71,614 | $ | 10,970 | $ | 4,143 | $ | 86,727 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variance |
||||||||||||||||||||||||||||
Year Ended December 31, |
2020 |
2019 |
||||||||||||||||||||||||||
2020 |
2019 |
2018 |
$ |
% |
$ |
% |
||||||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||||||
Noninterest income: |
||||||||||||||||||||||||||||
Service charges on deposit accounts |
$ | 16,561 | $ | 20,010 | $ | 17,070 | $ | (3,449 | ) | -17.24% | $ | 2,940 | 17.22% | |||||||||||||||
Trust and investment services |
9,978 | 9,525 | 8,774 | 453 | 4.76% | 751 | 8.56% | |||||||||||||||||||||
Bankcard services |
1,886 | 3,163 | 3,485 | (1,277 | ) | -40.37% | (322 | ) | -9.24% | |||||||||||||||||||
BOLI income |
8,100 | 5,798 | 4,018 | 2,302 | 39.70% | 1,780 | 44.30% | |||||||||||||||||||||
Swap fee income |
5,025 | 1,806 | 340 | 3,219 | 178.24% | 1,466 | 431.18% | |||||||||||||||||||||
Gain on OREO, net |
388 | 129 | 3,546 | 259 | 200.78% | (3,417 | ) | -96.36% | ||||||||||||||||||||
Gain on sale of building, net |
1,680 | 4,776 | - | (3,096 | ) | -64.82% | 4,776 | - | ||||||||||||||||||||
Gain on eminent domain condemnation, net |
- | 5,685 | - | (5,685 | ) | -100.00% | 5,685 | - | ||||||||||||||||||||
Other |
6,252 | 8,150 | 6,248 | (1,898 | ) | -23.29% | 1,902 | 30.44% | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total noninterest income |
$ | 49,870 | $ | 59,042 | $ | 43,481 | $ | (9,172 | ) | -15.53% | $ | 15,561 | 35.79% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variance |
||||||||||||||||||||||||||||
Year Ended December 31, |
2020 |
2019 |
||||||||||||||||||||||||||
2020 |
2019 |
2018 |
$ |
% |
$ |
% |
||||||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||||||
Noninterest expense: |
||||||||||||||||||||||||||||
Salaries and employee benefits |
$ | 119,759 | $ | 119,475 | $ | 100,601 | $ | 284 | 0.24% | $ | 18,874 | 18.76% | ||||||||||||||||
Occupancy |
16,677 | 16,565 | 16,386 | 112 | 0.68% | 179 | 1.09% | |||||||||||||||||||||
Equipment |
3,945 | 3,892 | 3,767 | 53 | 1.36% | 125 | 3.32% | |||||||||||||||||||||
Professional services |
9,460 | 7,752 | 6,477 | 1,708 | 22.03% | 1,275 | 19.69% | |||||||||||||||||||||
Computer software expense |
11,302 | 10,658 | 9,343 | 644 | 6.04% | 1,315 | 14.07% | |||||||||||||||||||||
Marketing and promotion |
4,488 | 5,890 | 5,302 | (1,402 | ) | -23.80% | 588 | 11.09% | ||||||||||||||||||||
Amortization of intangible assets |
9,352 | 10,798 | 5,254 | (1,446 | ) | -13.39% | 5,544 | 105.52% | ||||||||||||||||||||
Telecommunications expense |
2,566 | 2,785 | 2,564 | (219 | ) | -7.86% | 221 | 8.62% | ||||||||||||||||||||
Regulatory assessments |
2,375 | 1,958 | 3,218 | 417 | 21.30% | (1,260 | ) | -39.15% | ||||||||||||||||||||
Insurance |
1,636 | 1,475 | 1,735 | 161 | 10.92% | (260 | ) | -14.99% | ||||||||||||||||||||
Loan expense |
1,159 | 1,439 | 1,103 | (280 | ) | -19.46% | 336 | 30.46% | ||||||||||||||||||||
OREO expense |
1,247 | 64 | 7 | 1,183 | 1848.44% | 57 | 814.29% | |||||||||||||||||||||
Recapture of provision for unfunded loan commitments |
- | - | (250 | ) | - | - | 250 | 100.00% | ||||||||||||||||||||
Directors’ expenses |
1,420 | 1,230 | 1,073 | 190 | 15.45% | 157 | 14.63% | |||||||||||||||||||||
Stationery and supplies |
1,172 | 1,179 | 1,207 | (7 | ) | -0.59% | (28 | ) | -2.32% | |||||||||||||||||||
Acquisition related expenses |
- | 6,447 | 16,404 | (6,447 | ) | -100.00% | (9,957 | ) | -60.70% | |||||||||||||||||||
Other |
6,345 | 7,133 | 5,720 | (788 | ) | -11.05% | 1,413 | 24.70% | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total noninterest expense |
$ | 192,903 | $ | 198,740 | $ | 179,911 | $ | (5,837 | ) | -2.94% | $ | 18,829 | 10.47% | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Noninterest expense to average assets |
1.49% | 1.76% | 1.89% | |||||||||||||||||||||||||
Efficiency ratio (1) |
41.40% | 40.16% | 45.83% |
(1) | Noninterest expense divided by net interest income before provision for credit losses plus noninterest income. |
December 31, |
||||||||||||||||
2020 |
2019 |
|||||||||||||||
Fair Value |
Percent |
Fair Value |
Percent |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
Investment securities available-for-sale |
||||||||||||||||
Mortgage-backed securities |
$ | 1,904,935 | 79.41% | $ | 1,206,313 | 69.32% | ||||||||||
CMO/REMIC |
462,814 | 19.29% | 493,710 | 28.37% | ||||||||||||
Municipal bonds |
30,285 | 1.26% | 39,354 | 2.26% | ||||||||||||
Other securities |
889 | 0.04% | 880 | 0.05% | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total available-for-sale |
$ | 2,398,923 | 100.00% | $ | 1,740,257 | 100.00% | ||||||||||
|
|
|
|
|
|
|
|
December 31, |
||||||||||||||||
2020 |
2019 |
|||||||||||||||
Amortized Cost |
Percent |
Amortized Cost |
Percent |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
Investment securities held-to-maturity |
||||||||||||||||
Government agency/GSE |
$ | 98,663 | 17.05% | $ | 117,366 | 17.40% | ||||||||||
Mortgage-backed securities |
146,382 | 25.30% | 168,479 | 24.98% | ||||||||||||
CMO/REMIC |
145,309 | 25.11% | 192,548 | 28.55% | ||||||||||||
Municipal bonds |
188,272 | 32.54% | 196,059 | 29.07% | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total held-to-maturity |
$ | 578,626 | 100.00% | $ | 674,452 | 100.00% | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Fair Value |
$ | 604,223 | $ | 678,948 | ||||||||||||
|
|
|
|
December 31, 2020 |
||||||||||||||||||||||||
One Year or Less |
After One Year Through Five Years |
After Five Years Through Ten Years |
After Ten Years |
Total |
Percent to Total |
|||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||
Investment securities available-for-sale: |
||||||||||||||||||||||||
Mortgage-backed securities |
$ | 807 | $ | 1,903,307 | $ | 821 | $ | - | $ | 1,904,935 | 79.41% | |||||||||||||
CMO/REMIC |
8,803 | 350,905 | 81,052 | 22,054 | 462,814 | 19.29% | ||||||||||||||||||
Municipal bonds (1) |
- | 1,088 | 12,922 | 16,275 | 30,285 | 1.26% | ||||||||||||||||||
Other securities |
889 | - | - | - | 889 | 0.04% | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 10,499 | $ | 2,255,300 | $ | 94,795 | $ | 38,329 | $ | 2,398,923 | 100.00% | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Weighted average yield: |
||||||||||||||||||||||||
Mortgage-backed securities |
4.80% | 1.83% | 3.37% | - | 1.84% | |||||||||||||||||||
CMO/REMIC |
0.48% | 1.50% | 2.26% | 2.52% | 1.66% | |||||||||||||||||||
Municipal bonds (1) |
- | 4.03% | 2.48% | 2.55% | 2.58% | |||||||||||||||||||
Other securities |
2.74% | - | - | - | 2.74% | |||||||||||||||||||
Total |
1.00% | 1.78% | 2.30% | 2.53% | 1.81% |
(1) | The weighted average yield for the portfolio is based on projected duration and is not tax-equivalent. The tax-equivalent yield at December 31, 2020 was 3.26%. |
December 31, 2020 |
||||||||||||||||||||||||
One Year or Less |
After One Year Through Five Years |
After Five Years Through Ten Years |
After Ten Years |
Total |
Percent to Total |
|||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||
Investment securities held-to-maturity: |
||||||||||||||||||||||||
Government agency/GSE |
$ | - | $ | - | $ | - | $ | 98,663 | $ | 98,663 | 17.05% | |||||||||||||
Mortgage-backed securities |
262 | 134,978 | 9,031 | 2,111 | 146,382 | 25.30% | ||||||||||||||||||
CMO/REMIC |
- | 145,309 | - | - | 145,309 | 25.11% | ||||||||||||||||||
Municipal bonds (1) |
2,462 | 24,961 | 66,530 | 94,319 | 188,272 | 32.54% | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 2,724 | $ | 305,248 | $ | 75,561 | $ | 195,093 | $ | 578,626 | 100.00% | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Weighted average yield: |
||||||||||||||||||||||||
Government agency/GSE |
- | - | - | 1.92% | 1.92% | |||||||||||||||||||
Mortgage-backed securities |
3.16% | 2.21% | 2.43% | 3.43% | 2.25% | |||||||||||||||||||
CMO/REMIC |
- | 2.26% | - | - | 2.26% | |||||||||||||||||||
Municipal bonds (1) |
3.11% | 2.80% | 2.64% | 2.10% | 2.40% | |||||||||||||||||||
Total |
3.12% | 2.29% | 2.61% | 2.02% | 2.24% |
(1) | The weighted average yield for the portfolio is based on projected duration and is not tax-equivalent. The tax equivalent yield at December 31, 2020 was 3.03%. |
December 31, |
||||||||||||||||
2020 |
2019 |
|||||||||||||||
Book Value |
Market Value |
Book Value |
Market Value |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
Major issuer: |
||||||||||||||||
Federal National Mortgage Association |
$ | 1,133,321 | $ | 1,166,735 | $ | 963,002 | $ | 976,431 | ||||||||
Federal Home Loan Mortgage Corporation |
1,058,957 | 1,084,494 | 805,841 | 815,311 | ||||||||||||
Government National Mortgage Association |
413,991 | 421,025 | 271,154 | 268,879 |
December 31, 2020 |
||||||||||||||||
Amortized Cost |
Percent of Total |
Fair Value |
Percent of Total |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
Municipal Securities available-for-sale: |
||||||||||||||||
Minnesota |
$ | 11,055 | 38.5 | % | $ | 11,588 | 38.3 | % | ||||||||
Connecticut |
5,653 | 19.7 | % | 5,910 | 19.5 | % | ||||||||||
Massachusetts |
4,147 | 14.4 | % | 4,394 | 14.5 | % | ||||||||||
Iowa |
2,345 | 8.2 | % | 2,430 | 8.0 | % | ||||||||||
Ohio |
2,115 | 7.4 | % | 2,194 | 7.2 | % | ||||||||||
Maine |
1,506 | 5.2 | % | 1,598 | 5.3 | % | ||||||||||
All other states (2 states) |
1,886 | 6.6 | % | 2,171 | 7.2 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 28,707 | 100.0 | % | $ | 30,285 | 100.0 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Municipal Securities held-to-maturity: |
||||||||||||||||
Minnesota |
$ | 44,820 | 23.8 | % | $ | 46,243 | 23.7 | % | ||||||||
Massachusetts |
22,361 | 11.9 | % | 23,573 | 12.1 | % | ||||||||||
Ohio |
17,781 | 9.4 | % | 18,502 | 9.5 | % | ||||||||||
Texas |
17,135 | 9.1 | % | 17,706 | 9.1 | % | ||||||||||
Wisconsin |
12,236 | 6.5 | % | 12,755 | 6.5 | % | ||||||||||
Connecticut |
8,759 | 4.7 | % | 9,001 | 4.6 | % | ||||||||||
All other states (20 states) |
65,180 | 34.6 | % | 67,398 | 34.5 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 188,272 | 100.0 | % | $ | 195,178 | 100.0 | % | ||||||||
|
|
|
|
|
|
|
|
December 31, 2019 |
||||||||||||||||
Amortized Cost |
Percent of Total |
Fair Value |
Percent of Total |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
Municipal Securities available-for-sale: |
||||||||||||||||
Minnesota |
$ | 11,067 | 28.7% | $ | 11,274 | 28.6% | ||||||||||
Connecticut |
5,976 | 15.5% | 6,103 | 15.5% | ||||||||||||
Iowa |
5,831 | 15.1% | 5,907 | 15.0% | ||||||||||||
California |
5,675 | 14.7% | 5,845 | 14.9% | ||||||||||||
Massachusetts |
4,150 | 10.8% | 4,260 | 10.8% | ||||||||||||
Ohio |
2,125 | 5.5% | 2,219 | 5.6% | ||||||||||||
All other states (3 states) |
3,682 | 9.7% | 3,746 | 9.6% | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 38,506 | 100.0% | $ | 39,354 | 100.0% | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Municipal Securities held-to-maturity: |
||||||||||||||||
Minnesota |
$ | 47,999 | 24.5% | $ | 48,695 | 24.4% | ||||||||||
Massachusetts |
24,700 | 12.6% | 25,328 | 12.7% | ||||||||||||
Texas |
21,586 | 11.0% | 21,758 | 10.9% | ||||||||||||
Wisconsin |
12,276 | 6.2% | 12,416 | 6.2% | ||||||||||||
Washington |
11,680 | 6.0% | 11,873 | 6.0% | ||||||||||||
Ohio |
9,523 | 4.9% | 9,909 | 5.0% | ||||||||||||
All other states (20 states) |
68,295 | 34.8% | 69,382 | 34.8% | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 196,059 | 100.0% | $ | 199,361 | 100.0% | ||||||||||
|
|
|
|
|
|
|
|
December 31, 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 |
$ | 72,219 | $ | (101 | ) | $ | - | $ | - | $ | 72,219 | $ | (101 | ) | ||||||||||
CMO/REMIC |
96,974 | (249 | ) | - | - | 96,974 | (249 | ) | ||||||||||||||||
Municipal bonds |
- | - | - | - | - | - | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total available-for-sale |
$ | 169,193 | $ | (350 | ) | $ | - | $ | - | $ | 169,193 | $ | (350 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
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 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
||||||||||||||||||||
2020 |
2019 (1) |
2018 |
2017 |
2016 |
||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||
Commercial real estate |
$ | 5,501,509 | $ | 5,374,617 | $ | 5,394,229 | $ | 3,376,713 | $ | 2,930,141 | ||||||||||
Construction |
85,145 | 116,925 | 122,782 | 77,982 | 85,879 | |||||||||||||||
SBA |
303,896 | 305,008 | 350,043 | 122,055 | 97,184 | |||||||||||||||
SBA - PPP |
882,986 | - | - | - | - | |||||||||||||||
Commercial and industrial |
812,062 | 935,127 | 1,002,209 | 513,325 | 485,078 | |||||||||||||||
Dairy & livestock and agribusiness |
361,146 | 383,709 | 393,843 | 347,289 | 338,631 | |||||||||||||||
Municipal lease finance receivables |
45,547 | 53,146 | 64,186 | 70,243 | 64,639 | |||||||||||||||
SFR mortgage |
270,511 | 283,468 | 296,504 | 236,202 | 250,605 | |||||||||||||||
Consumer and other loans |
86,006 | 116,319 | 128,429 | 64,229 | 78,274 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross loans (Non-PCI) |
8,348,808 | 7,568,319 | 7,752,225 | 4,808,038 | 4,330,431 | |||||||||||||||
Less: Deferred loan fees, net (2) |
- | (3,742 | ) | (4,828 | ) | (6,289 | ) | (6,952 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross loans, net of deferred loan fees (Non-PCI) |
8,348,808 | 7,564,577 | 7,747,397 | 4,801,749 | 4,323,479 | |||||||||||||||
Less: Allowance for credit losses |
(93,692 | ) | (68,660 | ) | (63,409 | ) | (59,218 | ) | (60,321 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loans (Non-PCI) |
$ | 8,255,116 | $ | 7,495,917 | 7,683,988 | 4,742,531 | 4,263,158 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
PCI Loans |
17,214 | 30,908 | 73,093 | |||||||||||||||||
Discount on PCI loans |
- | (2,026 | ) | (1,508 | ) | |||||||||||||||
Less: Allowance for credit losses |
(204 | ) | (367 | ) | (1,219 | ) | ||||||||||||||
|
|
|
|
|
|
|||||||||||||||
PCI loans, net |
17,010 | 28,515 | 70,366 | |||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
Total loans and lease finance receivables |
$ | 7,700,998 | $ | 4,771,046 | $ | 4,333,524 | ||||||||||||||
|
|
|
|
|
|
(1) | Beginning with June 30, 2019, PCI loans were accounted for and combined with Non-PCI loans and were reflected in total loans and lease finance receivables. |
(2) | Beginning with March 31, 2020, gross loans are presented net of deferred loan fees by respective class of financing receivables. |
December 31, 2020 |
||||||||||||||||
Total Loans |
Commercial Real Estate Loans |
|||||||||||||||
(Dollars in thousands) |
||||||||||||||||
Los Angeles County |
$ | 3,543,375 | 42.4 | % | $ | 2,234,357 | 40.6 | % | ||||||||
Central Valley |
1,401,683 | 16.8 | % | 997,819 | 18.1 | % | ||||||||||
Inland Empire |
1,150,925 | 13.8 | % | 833,012 | 15.2 | % | ||||||||||
Orange County |
1,072,852 | 12.8 | % | 658,303 | 12.0 | % | ||||||||||
Central Coast |
497,024 | 6.0 | % | 367,787 | 6.7 | % | ||||||||||
San Diego |
227,664 | 2.7 | % | 160,572 | 2.9 | % | ||||||||||
Other California |
131,998 | 1.6 | % | 77,418 | 1.4 | % | ||||||||||
Out of State |
323,287 | 3.9 | % | 172,241 | 3.1 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 8,348,808 | 100.0 | % | $ | 5,501,509 | 100.0 | % | |||||||||
|
|
|
|
|
|
|
|
December 31, 2020 |
||||||||||||||||
Loan Balance |
Percent |
Percent Owner- Occupied (1) |
Average Loan Balance |
|||||||||||||
Commercial real estate: | (Dollars in thousands) |
|||||||||||||||
Industrial |
$ | 1,863,337 | 33.9% | 53.0% | $ | 1,399 | ||||||||||
Office |
998,673 | 18.1% | 24.5% | 1,608 | ||||||||||||
Retail |
784,402 | 14.3% | 13.2% | 1,702 | ||||||||||||
Multi-family |
618,333 | 11.2% | 2.0% | 1,627 | ||||||||||||
Secured by farmland (2) |
314,429 | 5.7% | 98.0% | 2,139 | ||||||||||||
Medical |
289,622 | 5.3% | 44.8% | 1,745 | ||||||||||||
Other (3) |
632,713 | 11.5% | 56.5% | 1,403 | ||||||||||||
|
|
|
|
|||||||||||||
Total commercial real estate |
$ | 5,501,509 | 100.0% | 39.0% | $ | 1,546 | ||||||||||
|
|
|
|
(1) | Represents percentage of reported owner-occupied at origination in each real estate loan category. |
(2) | The loans secured by farmland included $132.9 million for loans secured by dairy & livestock land and $181.5 million for loans secured by agricultural land at December 31, 2020. |
(3) | Other loans consist of a variety of loan types, none of which exceeds 2.0% of total commercial real estate loans. |
Within One Year |
After One But Within Five Years |
After Five Years |
Total |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
Types of Loans: |
||||||||||||||||
Commercial real estate |
$ | 250,873 | $ | 1,654,783 | $ | 3,595,853 | $ | 5,501,509 | ||||||||
Construction |
76,453 | 8,692 | - | 85,145 | ||||||||||||
SBA |
11,522 | 23,002 | 269,372 | 303,896 | ||||||||||||
SBA - PPP |
- | 882,986 | - | 882,986 | ||||||||||||
Commercial and industrial |
288,070 | 346,151 | 177,841 | 812,062 | ||||||||||||
Dairy & livestock and agribusiness |
260,241 | 99,065 | 1,840 | 361,146 | ||||||||||||
Municipal lease finance receivables |
96 | 6,223 | 39,228 | 45,547 | ||||||||||||
SFR mortgage |
123 | 295 | 270,093 | 270,511 | ||||||||||||
Consumer and other loans |
9,903 | 16,757 | 59,346 | 86,006 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total gross loans |
$ | 897,281 | $ | 3,037,954 | $ | 4,413,573 | $ | 8,348,808 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Amount of Loans based upon: |
||||||||||||||||
Fixed Rates |
$ | 174,052 | $ | 2,408,735 | $ | 2,308,500 | $ | 4,891,287 | ||||||||
Floating or adjustable rates |
723,229 | 629,219 | 2,105,073 | 3,457,521 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total gross loans |
$ | 897,281 | $ | 3,037,954 | $ | 4,413,573 | $ | 8,348,808 | ||||||||
|
|
|
|
|
|
|
|
December 31, |
||||||||||||||||||||
2020 |
2019 |
2018 (1) |
2017 (1) |
2016 (1) |
||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||
Nonaccrual loans |
$ | 14,347 | $ | 5,033 | $ | 16,442 | $ | 6,516 | $ | 5,526 | ||||||||||
Loans past due 90 days or more and still accruing interest |
||||||||||||||||||||
Nonperforming troubled debt restructured loans (TDRs |
- | 244 | 3,509 | 4,200 | 1,626 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total nonperforming loans |
14,347 | 5,277 | 19,951 | 10,716 | 7,152 | |||||||||||||||
OREO, net |
3,392 | 4,889 | 420 | 4,527 | 4,527 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total nonperforming assets |
$ | 17,739 | $ | 10,166 | $ | 20,371 | $ | 15,243 | $ | 11,679 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Performing TDRs |
$ | 2,159 | $ | 3,112 | $ | 3,594 | $ | 4,809 | $ | 19,233 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total nonperforming loans and performing TDRs |
$ | 16,506 | $ | 8,389 | $ | 23,545 | $ | 15,525 | $ | 26,385 | ||||||||||
Percentage of nonperforming loans and performing TDRs to total loans, net of deferred fees |
0.20 | % | 0.11 | % | 0.30 | % | 0.32 | % | 0.60 | % | ||||||||||
Percentage of nonperforming assets to total loans outstanding, net of deferred fees, and OREO |
0.21 | % | 0.13 | % | 0.26 | % | 0.32 | % | 0.27 | % | ||||||||||
Percentage of nonperforming assets to total assets |
0.12 | % | 0.09 | % | 0.18 | % | 0.18 | % | 0.14 | % |
(1) | Excludes PCI loans. |
December 31, |
||||||||||||||||
2020 |
2019 |
|||||||||||||||
Balance |
Number of Loans |
Balance |
Number of Loans |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
Performing TDRs: |
||||||||||||||||
Commercial real estate |
$ | 320 | 1 | $ | 397 | 1 | ||||||||||
Construction |
- | - | - | - | ||||||||||||
SBA |
- | - | 536 | 1 | ||||||||||||
Commercial and industrial |
43 | 1 | 78 | 2 | ||||||||||||
Dairy & livestock and agribusiness |
- | - | - | - | ||||||||||||
SFR mortgage |
1,796 | 7 | 2,101 | 8 | ||||||||||||
Consumer and other |
- | - | - | - | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total performing TDRs |
$ | 2,159 | 9 | $ | 3,112 | 12 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Nonperforming TDRs: |
||||||||||||||||
Commercial real estate |
$ | - | - | $ | - | - | ||||||||||
Construction |
- | - | - | - | ||||||||||||
SBA |
- | - | - | - | ||||||||||||
Commercial and industrial |
- | - | - | - | ||||||||||||
Dairy & livestock and agribusiness |
- | - | - | - | ||||||||||||
SFR mortgage |
- | - | - | - | ||||||||||||
Consumer and other |
- | - | 244 | 1 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total nonperforming TDRs |
$ | - | - | $ | 244 | 1 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total TDRs |
$ | 2,159 | 9 | $ | 3,356 | 13 | ||||||||||
|
|
|
|
|
|
|
|
December 31, 2020 |
September 30, 2020 |
June 30, 2020 |
March 31, 2020 |
December 31, 2019 |
||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||
Nonperforming loans (1): |
||||||||||||||||||||
Commercial real estate |
$ | 7,563 | $ | 6,481 | $ | 2,628 | $ | 947 | $ | 724 | ||||||||||
Construction |
- | - | - | - | - | |||||||||||||||
SBA |
2,273 | 1,724 | 1,598 | 2,748 | 2,032 | |||||||||||||||
Commercial and industrial |
3,129 | 1,822 | 1,222 | 1,703 | 1,266 | |||||||||||||||
Dairy & livestock and agribusiness |
785 | 849 | - | - | - | |||||||||||||||
SFR mortgage |
430 | 675 | 1,080 | 864 | 878 | |||||||||||||||
Consumer and other loans |
167 | 224 | 289 | 166 | 377 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ |
14,347 |
$ |
11,775 |
$ |
6,817 |
$ |
6,428 |
$ |
5,277 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
% of Total loans |
0.17% |
0.14% |
0.08% |
0.09% |
0.07% |
|||||||||||||||
Past due 30-89 days: |
||||||||||||||||||||
Commercial real estate |
$ | - | $ | - | $ | 4 | $ | 210 | $ | - | ||||||||||
Construction |
- | - | - | - | - | |||||||||||||||
SBA |
1,965 | 66 | 214 | 3,086 | 1,402 | |||||||||||||||
Commercial and industrial |
1,101 | 3,627 | 630 | 665 | 2 | |||||||||||||||
Dairy & livestock and agribusiness |
- | - | 882 | 166 | - | |||||||||||||||
SFR mortgage |
- | - | 446 | 233 | 249 | |||||||||||||||
Consumer and other loans |
- | 67 | 413 | - | - | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ |
3,066 |
$ |
3,760 |
$ |
2,589 |
$ |
4,360 |
$ |
1,653 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
% of Total loans |
0.04% |
0.04% |
0.03% |
0.06% |
0.02% |
|||||||||||||||
OREO: |
||||||||||||||||||||
Commercial real estate |
$ | 1,575 | $ | 1,575 | $ | 2,275 | $ | 2,275 | $ | 2,275 | ||||||||||
SBA |
- | 797 | 797 | 797 | 797 | |||||||||||||||
SFR mortgage |
1,817 | 1,817 | 1,817 | 1,817 | 1,817 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ |
3,392 |
$ |
4,189 |
$ |
4,889 |
$ |
4,889 |
$ |
4,889 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total nonperforming, past due, and OREO |
$ |
20,805 |
$ |
19,724 |
$ |
14,295 |
$ |
15,677 |
$ |
11,819 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
% of Total loans |
0.25% |
0.23% |
0.17% |
0.21% |
0.16% |
(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. |
Year Ended December 31, |
||||||||||||||||||||
2020 |
2019 |
2018 |
2017 |
2016 |
||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||
Allowance for credit losses at beginning of period |
$ | 68,660 | $ | 63,613 | $ | 59,585 | $ | 61,540 | $ | 59,156 | ||||||||||
Impact of adopting ASU 2016-13 |
1,840 | - | - | - | - | |||||||||||||||
Charge-offs: |
||||||||||||||||||||
Commercial real estate |
- | - | - | - | - | |||||||||||||||
Construction |
- | - | - | - | - | |||||||||||||||
SBA |
(362) | (321) | (257) | - | - | |||||||||||||||
Commercial and industrial |
(195) | (48) | (10) | (138) | (120) | |||||||||||||||
Dairy & livestock and agribusiness |
- | (78) | - | - | - | |||||||||||||||
SFR mortgage |
- | - | (13) | - | (102) | |||||||||||||||
Consumer and other loans |
(109) | (7) | (11) | (13) | (16) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total charge-offs |
(666) | (454) | (291) | (151) | (238) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Recoveries: |
||||||||||||||||||||
Commercial real estate |
- | - | - | 154 | 792 | |||||||||||||||
Construction |
11 | 12 | 2,506 | 6,036 | 7,174 | |||||||||||||||
SBA |
72 | 9 | 20 | 78 | 40 | |||||||||||||||
Commercial and industrial |
10 | 255 | 82 | 118 | 630 | |||||||||||||||
Dairy & livestock and agribusiness |
- | 19 | 19 | 19 | 216 | |||||||||||||||
SFR mortgage |
206 | 196 | 51 | 212 | - | |||||||||||||||
Consumer and other loans |
59 | 10 | 141 | 79 | 170 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total recoveries |
358 | 501 | 2,819 | 6,696 | 9,022 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net recoveries |
(308) | 47 | 2,528 | 6,545 | 8,784 | |||||||||||||||
Provision for (recapture of) credit losses |
23,500 | 5,000 | 1,500 | (8,500) | (6,400) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Allowance for credit losses at end of period |
$ | 93,692 | $ | 68,660 | $ | 63,613 | $ | 59,585 | $ | 61,540 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Summary of reserve for unfunded loan commitments: |
||||||||||||||||||||
Reserve for unfunded loan commitments at beginning of period |
$ | 8,959 | $ | 8,959 | $ | 6,306 | $ | 6,706 | $ | 7,156 | ||||||||||
Impact of adopting ASU 2016-13 |
41 | |||||||||||||||||||
Estimated fair value of reserve for unfunded loan commitment assumed from Community Bank |
- | - | 2,903 | - | - | |||||||||||||||
Recapture of provision for unfunded loan commitments |
- | - | (250) | (400) | (450) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Reserve for unfunded loan commitments at end of period |
$ | 9,000 | $ | 8,959 | $ | 8,959 | $ | 6,306 | $ | 6,706 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Reserve for unfunded loan commitments to total unfunded loan commitments |
0.54% | 0.56% | 0.51% | 0.66% | 0.76% | |||||||||||||||
Amount of total loans at end of period (1) |
$ | 8,348,808 | $ | 7,564,577 | $ | 7,764,611 | $ | 4,830,631 | $ | 4,395,064 | ||||||||||
Average total loans outstanding (1) |
$ | 8,066,483 | $ | 7,552,505 | $ | 5,905,674 | $ | 4,623,244 | $ | 4,195,129 | ||||||||||
Net (charge-offs) recoveries to average total loans |
-0.004% | 0.00% | 0.04% | 0.14% | 0.21% | |||||||||||||||
Net (charge-offs) recoveries to total loans at end of period |
-0.004% | 0.00% | 0.03% | 0.14% | 0.20% | |||||||||||||||
Allowance for credit losses to average total loans |
1.16% | 0.91% | 1.08% | 1.29% | 1.47% | |||||||||||||||
Allowance for credit losses to total loans at end of period |
1.12% | 0.91% | 0.82% | 1.23% | 1.40% | |||||||||||||||
Net (charge-offs) recoveries to allowance for credit losses |
-0.33% | 0.07% | 3.97% | 10.98% | 14.27% | |||||||||||||||
Net (charge-offs) recoveries to provision for (recapture of) credit losses |
-1.31% | 0.94% | 168.53% | -77.00% | -137.25% |
(1) | Net of deferred loan origination fees, costs and discounts. |
December 31, |
||||||||||||||||||||||||||||||||||||||||
2020 |
2019 |
2018 |
2017 |
2016 |
||||||||||||||||||||||||||||||||||||
Allowance Amount |
Loans as % of Total Loans |
Allowance Amount |
Loans as % of Total Loans |
Allowance Amount |
Loans as % of Total Loans |
Allowance Amount |
Loans as % of Total Loans |
Allowance Amount |
Loans as % of Total Loans |
|||||||||||||||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||||||||||||||||||
Commercial real estate |
$ | 75,439 | 65.9% | $ | 48,629 | 71.0% | $ | 44,934 | 69.4% | $ | 41,722 | 69.8% | $ | 37,443 | 66.6% | |||||||||||||||||||||||||
Construction |
1,934 | 1.0% | 858 | 1.5% | 981 | 1.6% | 984 | 1.6% | 1,096 | 1.9% | ||||||||||||||||||||||||||||||
SBA |
2,992 | 3.6% | 1,453 | 4.0% | 1,062 | 4.5% | 869 | 2.5% | 871 | 2.2% | ||||||||||||||||||||||||||||||
SBA - PPP |
- | 10.6% | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
Commercial and industrial |
7,142 | 9.7% | 8,880 | 12.4% | 7,520 | 12.9% | 7,280 | 10.6% | 8,154 | 11.0% | ||||||||||||||||||||||||||||||
Dairy & livestock and agribusiness |
3,949 | 4.4% | 5,255 | 5.1% | 5,215 | 5.1% | 4,647 | 7.2% | 8,541 | 7.7% | ||||||||||||||||||||||||||||||
Municipal lease finance receivables |
74 | 0.5% | 623 | 0.7% | 775 | 0.8% | 851 | 1.5% | 941 | 1.5% | ||||||||||||||||||||||||||||||
SFR mortgage |
367 | 3.2% | 2,339 | 3.8% | 2,196 | 3.8% | 2,112 | 4.9% | 2,287 | 5.7% | ||||||||||||||||||||||||||||||
Consumer and other loans |
1,795 | 1.1% | 623 | 1.5% | 726 | 1.7% | 753 | 1.3% | 988 | 1.8% | ||||||||||||||||||||||||||||||
PCI loans |
- | - | - | - | 204 | 0.2% | 367 | 0.6% | 1,219 | 1.6% | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total |
$ | 93,692 | 100.0% | $ | 68,660 | 100.0% | $ | 63,613 | 100.0% | $ | 59,585 | 100.0% | $ | 61,540 | 100.0% | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||||||||||||||
2020 |
2019 |
2018 |
||||||||||||||||||||||
Average |
||||||||||||||||||||||||
Balance |
Rate |
Balance |
Rate |
Balance |
Rate |
|||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||
Noninterest-bearing deposits |
$ | 6,281,989 | - | $ | 5,177,035 | - | $ | 4,449,110 | - | |||||||||||||||
Interest-bearing deposits |
||||||||||||||||||||||||
Investment checking |
478,458 | 0.08% | 452,437 | 0.11% | 438,112 | 0.08% | ||||||||||||||||||
Money market |
2,599,553 | 0.31% | 2,197,194 | 0.54% | 1,834,540 | 0.36% | ||||||||||||||||||
Savings |
452,595 | 0.09% | 399,154 | 0.10% | 384,008 | 0.10% | ||||||||||||||||||
Time deposits |
445,962 | 0.85% | 487,221 | 0.91% | 453,031 | 0.57% | ||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Total deposits |
$ | 10,258,557 | $ | 8,713,041 | $ | 7,558,801 | ||||||||||||||||||
|
|
|
|
|
|
December 31, 2020 |
||||
(Dollars in thousands) |
||||
3 months or less |
$ | 35,384 | ||
Over 3 months through 6 months |
15,277 | |||
Over 6 months through 12 months |
27,685 | |||
Over 12 months |
21,954 | |||
|
|
|||
Total |
$ | 100,300 | ||
|
|
Repurchase Agreements |
FHLB Advances |
Other Borrowings |
Total |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
At December 31, 2020 |
||||||||||||||||
Amount outstanding |
$ | 439,406 | $ | - | $ | 5,000 | $ | 444,406 | ||||||||
Weighted-average interest rate |
0.10 | % | - | - | 0.10 | % | ||||||||||
Year ended December 31, 2020 |
||||||||||||||||
Highest amount at month-end |
$ | 501,881 | $ | - | $ | 10,000 | $ | 511,881 | ||||||||
Daily-average amount outstanding |
$ | 479,956 | $ | - | $ | 5,674 | $ | 485,630 | ||||||||
Weighted-average interest rate |
0.24 | % | - | 0.04 | % | 0.23 | % | |||||||||
At December 31, 2019 |
||||||||||||||||
Amount outstanding |
$ | 428,659 | $ | - | $ | - | $ | 428,659 | ||||||||
Weighted-average interest rate |
0.44 | % | - | - | 0.44 | % | ||||||||||
Year ended December 31, 2019 |
||||||||||||||||
Highest amount at month-end |
$ | 547,730 | $ | - | $ | 295,000 | $ | 842,730 | ||||||||
Daily-average amount outstanding |
$ | 435,317 | $ | - | $ | 76,873 | $ | 512,190 | ||||||||
Weighted-average interest rate |
0.47 | % | - | 2.51 | % | 0.77 | % | |||||||||
At December 31, 2018 |
||||||||||||||||
Amount outstanding |
$ | 442,255 | $ | - | $ | 280,000 | $ | 722,255 | ||||||||
Weighted-average interest rate |
0.39 | % | - | 2.53 | % | 1.22 | % | |||||||||
Year ended December 31, 2018 |
||||||||||||||||
Highest amount at month-end |
$ | 556,356 | $ | - | $ | 280,000 | $ | 836,356 | ||||||||
Daily-average amount outstanding |
$ | 439,658 | $ | 2,446 | $ | 31,648 | $ | 473,752 | ||||||||
Weighted-average interest rate |
0.31 | % | 1.59 | % | 2.09 | % | 0.44 | % |
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) |
$ | 11,736,501 | $ | 11,697,276 | $ | 29,251 | $ | 9,362 | $ | 612 | ||||||||||
Customer repurchase agreements (1) |
439,406 | 439,406 | - | - | - | |||||||||||||||
Junior subordinated debentures (1) |
25,774 | - | - | - | 25,774 | |||||||||||||||
Deferred compensation |
22,142 | 689 | 1,098 | 619 | 19,736 | |||||||||||||||
Operating leases |
22,382 | 6,800 | 9,389 | 4,472 | 1,721 | |||||||||||||||
Affordable housing investment |
1,950 | 1,026 | 864 | 47 | 13 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | 12,248,155 | $ | 12,145,197 | $ | 40,602 | $ | 14,500 | $ | 47,856 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(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 real estate |
$ | 309,966 | $ | 50,755 | $ | 91,502 | $ | 136,108 | $ | 31,601 | ||||||||||
Construction |
89,987 | 62,964 | 27,023 | — | — | |||||||||||||||
SBA |
257 | 41 | — | — | 216 | |||||||||||||||
SBA - PPP |
— | — | — | — | — | |||||||||||||||
Commercial and industrial |
928,767 | 623,258 | 193,791 | 5,793 | 105,925 | |||||||||||||||
Dairy & livestock and agribusiness (1) |
140,926 | 109,823 | 31,049 | — | 54 | |||||||||||||||
SFR Mortgage |
3,786 | — | 500 | — | 3,286 | |||||||||||||||
Consumer and other loans |
131,604 | 9,227 | 13,389 | 3,186 | 105,802 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total commitment to extend credit |
1,605,293 | 856,068 | 357,254 | 145,087 | 246,884 | |||||||||||||||
Obligations under letters of credit |
53,164 | 51,856 | 1,308 | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | 1,658,457 | $ | 907,924 | $ | 358,562 | $ | 145,087 | $ | 246,884 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Total commitments to extend credit to agribusiness were $19.5 million at December 31, 2020. |
Minimum Required Plus Capital Conservation Buffer |
December 31, 2020 |
December 31, 2019 | ||||||||||||
Capital Ratios |
Adequately Capitalized Ratios |
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% | 9.90% | 9.58% | 12.33% | 12.19% | |||||||
Common equity Tier 1 capital ratio |
4.50% | 7.00% | 6.50% | 14.77% | 14.57% | 14.83% | 14.94% | |||||||
Tier 1 risk-based capital ratio |
6.00% | 8.50% | 8.00% | 15.06% | 14.57% | 15.11% | 14.94% | |||||||
Total risk-based capital ratio |
8.00% | 10.50% | 10.00% | 16.24% | 15.75% | 16.01% | 15.83% |
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
(Dollars in thousands) |
||||||||
Average cash and cash equivalents |
$ | 1,226,262 | $ | 288,425 | ||||
Percentage of total average assets |
9.48% | 2.55% | ||||||
Net cash provided by operating activities |
$ | 185,096 | $ | 208,182 | ||||
Net cash (used in) provided by investing activities |
(1,268,758 | ) | 325,323 | |||||
Net cash provided by (used in) financing activities |
2,856,304 | (511,935 | ) | |||||
|
|
|
|
|||||
Net increase in cash and cash equivalents |
$ | 1,772,642 | $ | 21,570 | ||||
|
|
|
|
Maturing |
||||||||||||||||||||||||||||||||
December 31, 2020 |
Average Rate |
One Year |
Two Years |
Three Years |
Four Years |
Five Years and Beyond |
Estimated Fair Value |
|||||||||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||||||||||
Interest-earning assets: |
||||||||||||||||||||||||||||||||
Investment securities available-for-sale |
$ | 2,398,923 | 1.97 | % | $ | 12,694 | $ | 149,991 | $ | 613,608 | $ | 686,367 | $ | 936,263 | $ | 2,398,923 | ||||||||||||||||
Investment securities held-to-maturity (1) |
578,626 | 2.48 | % | 34,306 | 42,548 | 84,513 | 149,053 | 268,206 | 604,223 | |||||||||||||||||||||||
Investment in FHLB stock |
17,688 | 5.53 | % | - | - | - | - | 17,688 | 17,688 | |||||||||||||||||||||||
Interest-earning deposits due from |
||||||||||||||||||||||||||||||||
Federal |
1,879,418 | 0.15 | % | 1,878,678 | - | 740 | - | - | 1,879,455 | |||||||||||||||||||||||
Reserve and with other institutions |
||||||||||||||||||||||||||||||||
Loans and lease finance receivables (2) |
8,348,808 | 4.68 | % | 897,281 | 1,413,759 | 555,899 | 483,212 | 4,998,657 | 8,349,870 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total interest-earning assets |
$ | 13,223,463 | $ | 2,822,959 | $ | 1,606,298 | $ | 1,254,760 | $ | 1,318,632 | $ | 6,220,814 | $ | 13,250,159 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||||||||||
Interest-bearing deposits |
$ | 4,281,114 | 0.32 | % | $ | 4,241,889 | $ | 24,154 | $ | 5,096 | $ | 1,312 | $ | 8,663 | $ | 4,281,952 | ||||||||||||||||
Borrowings |
444,406 | 0.23 | % | 444,406 | - | - | - | - | 444,349 | |||||||||||||||||||||||
Junior subordinated debentures |
25,774 | 2.10 | % | - | - | - | - | 25,774 | 19,431 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total interest-bearing liabilities |
$ | 4,751,294 | $ | 4,686,295 | $ | 24,154 | $ | 5,096 | $ | 1,312 | $ | 34,437 | $ | 4,745,732 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | These include mortgage-backed securities which generally prepay before maturity. |
(2) | Gross loans, net of deferred loan fees, costs and discounts. |
Estimated Net Interest Income Sensitivity (1) | ||||||||||
December 31, 2020 |
December 31, 2019 | |||||||||
Interest Rate Scenario |
12-month Period |
24-month Period (Cumulative) |
Interest Rate Scenario |
12-month Period |
24-month Period (Cumulative) | |||||
+ 200 basis points |
11.10% | 19.60% | + 200 basis points | 5.20% | 10.00% | |||||
- 100 basis points |
-1.20% | -2.40% | - 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 |
December 31, 2020 |
December 31, 2019 | ||
100 bp decrease in interest rates |
-21.0% | -17.5% | ||
100 bp increase in interest rates |
16.1% | 14.2% | ||
200 bp increase in interest rates |
28.4% | 25.5% | ||
300 bp increase in interest rates |
34.4% | 30.0% | ||
400 bp increase in interest rates |
41.6% | 36.2% |
• | We do not have any investments in the preferred stock of any other company; |
• | Most of our investment securities are either municipal securities or securities either issued or guaranteed by government, agencies, including Fannie Mae, Freddie Mac, SBA or FHLB; |
• | All of our commercial line insurance policies are with companies with the highest AM Best ratings of A or above; |
• | We have no significant exposure to our Cash Surrender Value of Life Insurance since the Cash Surrender Value balance is predominately supported by insurance companies that carry an AM Best rating of B+ or greater; |
• | We have no significant Counterparty exposure related to derivatives such as interest rate swaps. Our Counterparty is a major financial institution and our agreement requires the Counterparty to post cash collateral for mark-to-market |
• | We believe our risk of loss associated with our counterparty borrowers related to interest rate swaps is generally mitigated as the loans with swaps are underwritten to take into account potential additional exposure; |
• | As of December 31, 2020, we had $389.0 million in Fed Funds lines of credit with other major U.S. banks. These lines of credit are available for overnight borrowings; and |
• | At December 31, 2020, we had $5.0 million in FHLB short-term borrowing at 0% cost. Our secured borrowing capacity with the FHLB was $4.29 billion, of which $4.29 billion was available as of December 31, 2020. |
ITEM 7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Page |
||||
99 | ||||
100 | ||||
101 | ||||
102 | ||||
104 | ||||
156 |
ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. |
CONTROLS AND PROCEDURES |
1) |
Management’s Report on Internal Control over Financial Reporting |
2) |
Auditor attestation |
3) |
Evaluation of Disclosure Controls and Procedures; Changes in Internal Control over Financial Reporting |
ITEM 9B. |
OTHER INFORMATION |
ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
ITEM 11. |
EXECUTIVE COMPENSATION |
ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Plan category |
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights (a) |
Weighted-Average Exercise Price of Outstanding Options, Warrants, and Rights (b) |
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) |
|||||||||
Equity compensation plans approved by security holders |
428,320 | $ | 17.57 | 7,322,206 | ||||||||
Equity compensation plans not approved by security holders |
- | - | - | |||||||||
|
|
|
|
|
|
|||||||
Total |
428,320 | $ | 17.57 | 7,322,206 | ||||||||
|
|
|
|
|
|
ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
ITEM 14. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
ITEM 15. |
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
(a) |
(1) |
All Financial Statements Reference is made to the Index to Financial Statements on page 89 for a list of financial statements filed as part of this Annual Report on Form 10-K. | ||||
(2) |
Financial Statement Schedules Reference is made to the Index to Financial Statements on page 89 for the listing of supplementary financial statement schedules required by this item. | |||||
(3) |
Exhibits The listing of exhibits required by this item is set forth in the Index to Exhibits on page 95 of this Annual Report on Form 10-K. | |||||
(b) |
Exhibits See Index to Exhibits on Page 95 of this Form 10-K. | |||||
(c) |
Financial Statement Schedules There are no financial statement schedules required by Regulation S-X that have been excluded from the annual report to shareholders. |
ITEM 16. |
FORM 10-K SUMMARY |
Exhibit No. |
||
31.2 | Certification of E. Allen Nicholson pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |
32.1 | Certification of David A. Brager pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** | |
32.2 | Certification of E. Allen Nicholson pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** | |
101.INS | XBRL Instance Document* | |
101.SCH | XBRL Taxonomy Extension Schema Document* | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document* | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document* | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document* | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document* | |
104 | The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, has been formatted in Inline XBRL |
* | Filed herewith. |
** | Furnished herewith. |
† | Indicates a management contract or compensation plan. |
‡ | Except as noted below, Form 8-A12G, Form 8-K, Form 10-Q, Form 10-K and Form DEF 14A identified in the exhibit index have SEC file number 001-10140. |
D |
We have entered into the following trust preferred security issuances and agree to furnish a copy to the SEC upon request: |
(a) | Indenture by and between CVB Financial Corp. and U.S. Bank, National Association, as Trustee, dated as of January 31, 2006 (CVB Statutory Trust III). |
(1) | Incorporated herein by reference to Exhibit 2.1 to our Form 8-K filed with the SEC on February 27, 2018. |
(2) | Incorporated herein by reference to Exhibit 3.1 to our Form 10-Q filed with the SEC on August 9, 2010. |
(3) | Incorporated herein by reference to Exhibits 3.1 to our Form 8-K filed with the SEC on January 23, 2020. |
(4) | Incorporated herein by reference to Exhibit 4.1 to our Form 8-A12G filed with the SEC on June 11, 2001. |
(5) | Incorporated herein by reference to Exhibit 4.2 to our Annual Report on Form 10-K filed with the SEC on March 2, 2020. |
Incorporated herein by reference to Exhibit 10.2 to the Annual Report on Form 10-K filed with the SEC on February 29, 2016. |
(6) | Incorporated herein by reference to Exhibit 10.2 to the Annual Report on Form 10-K filed with the SEC on February 29, 2016. |
(7) | Incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed June 29, 2016. |
(8) | Incorporated herein by reference to Annex A to our Definitive Proxy Statement on Form DEF 14A filed with the SEC on April 16, 2008. |
(9) | Incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the SEC on September 22, 2009 |
(10) | Incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on November 24, 2009. |
(11) | Incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the SEC on February 6, 2014. |
(12) | Incorporated herein by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed with the SEC on May 10, 2017. |
(13) | Incorporated herein by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q filed with the SEC on May 10, 2017. |
(14) | Incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the SEC on May 23, 2008. |
(15) | Incorporated herein by reference to Exhibit 10.3 to our Current Report on Form 8-K filed with the SEC on May 23, 2008. |
(16) | Incorporated herein by reference to Annex A to our Definitive Proxy Statement on Form DEF 14A filed with the SEC on April 4, 2018. |
(17) | Incorporated herein by reference to Exhibit 10.2 to our Form 8-K filed with the SEC on May 24, 2018. |
(18) | Incorporated herein by reference to Exhibit 10.3 to our Form 8-K filed with the SEC on May 24, 2018. |
(19) | Incorporated hereby by reference to Exhibit 10.4 to our Form 8-K filed with the SEC on May 24, 2018. |
(20) | Incorporated herein by reference to Exhibit 10.26 to our Annual Report on Form 10-K filed with the SEC on March 1, 2007. |
(21) | Incorporated herein by reference to Exhibit A to our Definitive Proxy Statement on Form DEF 14A filed with the SEC on April 3, 2015 |
(22) | Incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on September 13, 2018. |
(23) | Incorporated herein by reference to Exhibit 10.23 to our Annual Report on Form 10-K filed with the SEC on March 1, 2007. |
(24) | Incorporated herein by reference to Exhibit 10.1 to our Form 8-K filed with the SEC on July 19, 2019. |
(25) | Incorporated herein by reference to Exhibit 10.2 to our Form 8-K filed with the SEC on July 19, 2019. |
(26) | Incorporated herein by reference to Exhibit 10.1 to our Form 8-K filed with the SEC on February 20, 2020 |
(27) | Incorporated herein by reference to Exhibit 10.21(A) to our Annual Report on Form 10-K filed with the SEC on March 4, 2010. |
(28) | Incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on January 28, 2021. |
(29) | Incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed May 5, 2016. |
(30) | Incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed November 9, 2016. |
CVB FINANCIAL CORP. | ||
By: | /s/ DAVID A. BRAGER | |
David A. Brager | ||
Chief Executive Officer |
Signature |
Title |
Date | ||||||
/s/ RAYMOND V. O’BRIEN III |
Chairman of the Board | March 1, 2021 | ||||||
Raymond V. O’Brien III |
||||||||
/s/ GEORGE A. BORBA, JR. |
Vice Chairman | March 1, 2021 | ||||||
George A. Borba, Jr. |
||||||||
/s/ STEPHEN A. DEL GUERCIO |
Director | March 1, 2021 | ||||||
Stephen A. Del Guercio |
||||||||
/s/ RODRIGO GUERRA, JR. |
Director | March 1, 2021 | ||||||
Rodrigo Guerra, Jr. |
||||||||
/s/ ANNA KAN |
Director | March 1, 2021 | ||||||
Anna Kan |
||||||||
/s/ MARSHALL V. LAITSCH |
Director | March 1, 2021 | ||||||
Marshall V. Laitsch |
||||||||
/s/ KRISTINA M. LESLIE |
Director | March 1, 2021 | ||||||
Kristina M. Leslie |
||||||||
/s/ JANE OLVERA |
Director | March 1, 2021 | ||||||
Jane Olvera |
||||||||
/s/ HAL W. OSWALT |
Director | March 1, 2021 | ||||||
Hal W. Oswalt |
||||||||
/s/ DAVID A. BRAGER |
Director and Chief Executive Officer (Principal Executive Officer) |
March 1, 2021 | ||||||
David A. Brager |
||||||||
/s/ E. ALLEN NICHOLSON |
Chief Financial Officer (Principal Financial and Accounting Officer) |
March 1, 2021 | ||||||
E. Allen Nicholson |
||||||||
December 31, 2020 |
December 31, 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, and $ |
||||||||
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 |
||||||||
Payable for securities purchased |
- | |||||||
Other liabilities |
||||||||
|
|
|
|
|||||
Total liabilities |
||||||||
|
|
|
|
|||||
Commitments and Contingencies |
||||||||
Stockholders’ Equity |
||||||||
Common stock, authorized, par; issued and outstanding |
||||||||
Retained earnings |
||||||||
Accumulated other comprehensive income, net of tax |
||||||||
|
|
|
|
|||||
Total stockholders’ equity |
||||||||
|
|
|
|
|||||
Total liabilities and stockholders’ equity |
$ |
$ |
||||||
|
|
|
|
Year Ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
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 |
||||||||||||
Recapture of provision for unfunded loan commitments |
( |
) | ||||||||||
Amortization of intangible assets |
||||||||||||
Acquisition related expenses |
||||||||||||
Other |
||||||||||||
|
|
|
|
|
|
|||||||
Total noninterest expense |
||||||||||||
|
|
|
|
|
|
|||||||
Earnings before income taxes |
||||||||||||
Income taxes |
||||||||||||
|
|
|
|
|
|
|||||||
Net earnings |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Other comprehensive income (loss): |
||||||||||||
Unrealized gain (loss) on securities arising during the period, before tax |
$ | $ | $ | ( |
) | |||||||
|
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Other comprehensive income (loss), before tax |
( |
) | ||||||||||
Less: Income tax (expense) benefit related to items of other comprehensive income |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Other comprehensive income (loss), net of tax |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Comprehensive income |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Basic earnings per common share |
$ | $ | $ | |||||||||
Diluted earnings per common share |
$ | $ | $ |
Common Shares Outstanding |
Common Stock |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Total |
||||||||||||||||
Balance, January 1, 2018 |
$ | $ | $ | $ | ||||||||||||||||
Cumulative adjustment upon adoption of ASU 2018-02 |
- | - | ( |
) | - | |||||||||||||||
Repurchase of common stock |
( |
) | ( |
) | - | - | ( |
) | ||||||||||||
Issuance of common stock for acquisition of Community Bank |
- | - | ||||||||||||||||||
Exercise of stock options |
- | - | ||||||||||||||||||
Shares issued pursuant to stock-based compensation plan |
- | - | ||||||||||||||||||
Cash dividends declared on common stock ($ |
- | - | ( |
) | - | ( |
) | |||||||||||||
Net earnings |
- | - | - | |||||||||||||||||
Other comprehensive loss |
- | - | - | ( |
) | ( |
) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, December 31, 2018 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
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 incom e |
- | - | - | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, December 31, 2019 |
$ | $ | $ | $ | ||||||||||||||||
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, December 31, 2020 |
$ | $ | $ | $ | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
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 |
( |
) |
( |
) |
( |
) | ||||||
Payments to FDIC, loss share agreement |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net cash provided by operating activities |
||||||||||||
|
|
|
|
|
|
|||||||
Cash Flows from Investing Activities |
||||||||||||
Proceeds from redemption of FHLB stock |
||||||||||||
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 |
||||||||||||
Cash acquired from acquisition, net of cash paid |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net cash (used in) provided by investing activities |
( |
) |
||||||||||
|
|
|
|
|
|
|||||||
Cash Flows from Financing Activities |
||||||||||||
Net increase (decrease) in other deposits |
( |
) |
( |
) | ||||||||
Net decrease in time deposits |
( |
) |
( |
) |
( |
) | ||||||
Repayment of FHLB advances |
( |
) | ||||||||||
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 |
$ |
$ |
$ |
|||||||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
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 |
||||||||||||
Recapture of provision for unfunded loan commitments |
( |
) | ||||||||||
Valuation allowance on other real estate owned |
||||||||||||
Payments to FDIC, loss share agreement |
( |
) | ||||||||||
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 |
||||||||||||
Securities purchased and not settled |
$ |
$ |
$ |
|||||||||
Transfer of loans to other real estate owned |
$ |
$ |
$ |
|||||||||
Issuance of common stock for acquisition |
$ |
$ |
$ |
1. |
BUSINESS |
2. |
BASIS OF PRESENTATION |
3. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
1. |
Whether the amount of the restructured payments subject to delay is insignificant relative to the unpaid principal balance or collateral value of the debt and will result in an insignificant shortfall in the contractual amount due; and |
2. |
The delay is insignificant relative to any of the following: |
• |
The frequency of payments due; |
• |
The debt’s original contractual maturity; or |
• |
The debt’s original expected duration. |
Bank premises | ||
Leasehold improvements | ||
Computer equipment | ||
Furniture, fixtures and equipment |
• | Management, having the authority to approve the action, commits to a plan to sell the asset; |
• | The asset is available for immediate sale, an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; |
• | The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year; |
• | The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; |
• | Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. |
4. |
BUSINESS COMBINATIONS |
August 10, 2018 |
||||||||
(Dollars in thousands) |
||||||||
Merger Consideration |
||||||||
Cash paid |
$ | |||||||
CVBF common stock issued |
||||||||
|
|
|||||||
Total merger consideration |
$ | |||||||
Identifiable net assets acquired, at fair value |
||||||||
Assets Acquired |
||||||||
Cash and cash equivalents |
||||||||
Investment securities |
||||||||
FHLB stock |
||||||||
Loans |
||||||||
Accrued interest receivable |
||||||||
Premises and equipment |
||||||||
BOLI |
||||||||
Core deposit intangible |
||||||||
Other assets |
||||||||
|
|
|||||||
Total assets acquired |
|
|||||||
Liabilities assumed |
||||||||
Deposits |
|
|||||||
FHLB advances |
||||||||
Other borrowings |
||||||||
Other liabilities |
||||||||
|
|
|||||||
Total liabilities assumed |
||||||||
|
|
|||||||
Total fair value of identifiable net assets, at fair value |
||||||||
|
|
|||||||
Goodwill |
$ |
|||||||
|
|
Unaudited Pro Forma Year Ended December 31, 2018 |
||||
(Dollars in thousands, except per share amounts) |
||||
Total revenues (net interest income plus noninterest income) |
$ | |||
Net income |
$ | |||
Earnings per share - basic |
$ | |||
Earnings per share - diluted |
$ |
5. |
INVESTMENT SECURITIES |
December 31, 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 |
$ | $ | $ | ( |
) | $ | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
(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 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
December 31, 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 |
$ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 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 |
$ |
$ |
$ |
$ |
||||||||||||
|
|
|
|
|
|
|
|
6. |
LOANS AND LEASE FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES |
December 31, |
||||||||
2020 |
2019 |
|||||||
(Dollars in thousands) |
||||||||
Commercial real estate |
$ |
$ |
||||||
Construction |
||||||||
SBA |
||||||||
SBA - Paycheck Protection Program (PPP) |
- |
|||||||
Commercial and industrial |
||||||||
Dairy & livestock and agribusiness |
||||||||
Municipal lease finance receivables |
||||||||
SFR mortgage |
||||||||
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 |
||||||||||||||||||||||||||||||||||
December 31, 2020 |
2020 |
2019 |
2018 |
2017 |
2016 |
Prior |
Total |
|||||||||||||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||||||||||||||
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: |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
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 and industrial loans: |
||||||||||||||||||||||||||||||||||||
Risk Rating: |
||||||||||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
Special Mention |
||||||||||||||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||||||||||
Doubtful & Loss |
||||||||||||||||||||||||||||||||||||
Total Commercial and industrial loans: |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
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: |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||
Origination Year |
Revolving loans amortized cost basis |
Revolving loans converted to term loans |
|||||||||||||||||||||||||||||||||||
December 31, 2020 |
2020 |
2019 |
2018 |
2017 |
2016 |
Prior |
Total |
||||||||||||||||||||||||||||||
(Dollars in thousands) |
|||||||||||||||||||||||||||||||||||||
SFR mortgage loans: |
|||||||||||||||||||||||||||||||||||||
Risk Rating: |
|||||||||||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||||||
Special Mention |
|||||||||||||||||||||||||||||||||||||
Substandard |
|||||||||||||||||||||||||||||||||||||
Doubtful & Loss |
|||||||||||||||||||||||||||||||||||||
Total SFR mortgage 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 real estate |
||||||||||||||||||||
Owner occupied |
$ | $ | $ | $ | $ | |||||||||||||||
Non-owner occupied |
||||||||||||||||||||
Construction |
||||||||||||||||||||
Speculative |
||||||||||||||||||||
Non-speculative |
||||||||||||||||||||
SBA |
||||||||||||||||||||
Commercial and industrial |
||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||
Consumer and other loans |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total gross loans |
$ | $ | $ | $ | $ | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 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 December 31, 2020 |
|||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||
Commercial real estate |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Construction |
||||||||||||||||||||||||
SBA |
( |
) |
||||||||||||||||||||||
SBA - PPP |
||||||||||||||||||||||||
Commercial and industrial |
( |
) |
( |
) |
||||||||||||||||||||
Dairy & livestock and agribusiness |
( |
) |
( |
) |
||||||||||||||||||||
Municipal lease finance receivables |
( |
) |
( |
) |
||||||||||||||||||||
SFR mortgage |
( |
) |
( |
) |
||||||||||||||||||||
Consumer and other loans |
( |
) |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total allowance for credit losses |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2019 |
||||||||||||||||||||
Ending Balance December 31, 2018 |
Charge- offs |
Recoveries |
Provision for (Recapture of) Loan Losses |
Ending Balance December 31, 2019 |
||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||
Commercial real estate |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Construction |
( |
) |
||||||||||||||||||
SBA |
( |
) |
||||||||||||||||||
Commercial and industrial |
( |
) |
||||||||||||||||||
Dairy & livestock and agribusiness |
( |
) |
||||||||||||||||||
Municipal lease finance receivables |
( |
) |
||||||||||||||||||
SFR mortgage |
( |
) |
||||||||||||||||||
Consumer and other loans |
( |
) |
( |
) |
||||||||||||||||
Total allowance for loan losses |
$ |
$ |
( |
) |
$ |
$ |
$ |
|||||||||||||
Year Ended December 31, 2018 |
||||||||||||||||||||
Ending Balance December 31, 2017 |
Charge- offs |
Recoveries |
Provision for (Recapture of) Loan Losses |
Ending Balance December 31, 2018 |
||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||
Commercial real estate |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Construction |
( |
) |
||||||||||||||||||
SBA |
( |
) |
||||||||||||||||||
Commercial and industrial |
( |
) |
||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||
Municipal lease finance receivables |
( |
) |
||||||||||||||||||
SFR mortgage |
( |
) |
||||||||||||||||||
Consumer and other loans |
( |
) |
( |
) |
||||||||||||||||
PCI loans |
( |
) |
||||||||||||||||||
Total allowance for loan losses |
$ |
$ |
( |
) |
$ |
$ |
$ |
|||||||||||||
December 31, 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 real estate |
$ | $ | $ | $ | ||||||||||||
Construction |
||||||||||||||||
SBA |
||||||||||||||||
Commercial and industrial |
||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||
SFR mortgage |
||||||||||||||||
Consumer and other loans |
||||||||||||||||
Total |
$ | $ | $ | $ | ||||||||||||
December 31, 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 real estate |
||||||||||||||||||||||||
Owner occupied |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Non-owner occupied |
||||||||||||||||||||||||
Construction |
||||||||||||||||||||||||
Speculative (1) |
||||||||||||||||||||||||
Non-speculative |
||||||||||||||||||||||||
SBA |
||||||||||||||||||||||||
SBA - PPP |
||||||||||||||||||||||||
Commercial and industrial |
||||||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||||||
Consumer and other loans |
||||||||||||||||||||||||
Total gross loans |
$ | $ | $ | $ | $ | |
$ | |||||||||||||||||
(1) | Speculative construction loans are generally for properties where there is no identified buyer or renter. |
December 31, 2020 |
||||||||||||
Nonaccrual with No Allowance for Credit Losses |
Total Nonaccrual (1) (3) |
Loans Past Due Over 89 Days Still Accruing |
||||||||||
(Dollars in thousands) |
||||||||||||
Commercial real estate |
||||||||||||
Owner occupied |
$ |
$ |
$ |
|||||||||
Non-owner occupied |
||||||||||||
Construction |
||||||||||||
Speculative (2) |
||||||||||||
Non-speculative |
||||||||||||
SBA |
||||||||||||
SBA - PPP |
||||||||||||
Commercial and industrial |
||||||||||||
Dairy & livestock and agribusiness |
||||||||||||
Municipal lease finance receivables |
||||||||||||
SFR mortgage |
||||||||||||
Consumer and other loans |
||||||||||||
|
|
|
|
|
|
|||||||
Total gross loans |
$ |
$ |
$ |
|||||||||
|
|
|
|
|
|
(1) | As of December 31, 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 real estate |
||||||||||||||||||||||||
Owner occupied |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Non-owner occupied |
||||||||||||||||||||||||
Construction |
||||||||||||||||||||||||
Speculative (2) |
||||||||||||||||||||||||
Non-speculative |
||||||||||||||||||||||||
SBA |
||||||||||||||||||||||||
Commercial and industrial |
||||||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||||||
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 Year Ended December 31, 2019 |
||||||||||||||||||||
Recorded Investment |
Unpaid Principal Balance |
Related Allowance |
Average Recorded Investment |
Interest Income Recognized |
||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||
With no related allowance recorded: |
| |||||||||||||||||||
Commercial real estate |
||||||||||||||||||||
Owner occupied |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Non-owner occupied |
||||||||||||||||||||
Construction |
||||||||||||||||||||
Speculative |
||||||||||||||||||||
Non-speculative |
||||||||||||||||||||
SBA |
||||||||||||||||||||
Commercial and industrial |
||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||
Consumer and other loans |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
With a related allowance recorded: |
| |||||||||||||||||||
Commercial real estate |
||||||||||||||||||||
Owner occupied |
||||||||||||||||||||
Non-owner occupied |
||||||||||||||||||||
Construction |
||||||||||||||||||||
Speculative |
||||||||||||||||||||
Non-speculative |
||||||||||||||||||||
SBA |
||||||||||||||||||||
Commercial and industrial |
||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||
Consumer and other loans |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total impaired loans |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
As of and For the Year Ended December 31, 2018 (1) |
||||||||||||||||||||
Recorded Investment |
Unpaid Principal Balance |
Related Allowance |
Average Recorded Investment |
Interest Income Recognized |
||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||
With no related allowance recorded: |
||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||
Owner occupied |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Non-owner occupied |
||||||||||||||||||||
Construction |
||||||||||||||||||||
Speculative |
||||||||||||||||||||
Non-speculative |
||||||||||||||||||||
SBA |
||||||||||||||||||||
Commercial and industrial |
||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||
Consumer and other loans |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
With a related allowance recorded: |
||||||||||||||||||||
Commercial real estate |
||||||||||||||||||||
Owner occupied |
||||||||||||||||||||
Non-owner occupied |
||||||||||||||||||||
Construction |
||||||||||||||||||||
Speculative |
||||||||||||||||||||
Non-speculative |
||||||||||||||||||||
SBA |
||||||||||||||||||||
Commercial and industrial |
||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||
Consumer and other loans |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total impaired loans |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
(1) |
Excludes PCI loans. |
December 31, 2020 |
Number of Loans Dependent on Collateral |
|||||||||||||||
Real Estate |
Business Assets |
Other |
||||||||||||||
(Dollars in thousands) |
||||||||||||||||
Commercial real estate |
|
$ |
$ |
$ |
||||||||||||
Construction |
|
|||||||||||||||
SBA |
|
|||||||||||||||
SBA |
|
|||||||||||||||
Commercial and industrial |
|
|||||||||||||||
Dairy & livestock and agribusiness |
|
|||||||||||||||
Municipal lease finance receivables |
|
|||||||||||||||
SFR mortgage |
|
|||||||||||||||
Consumer and other loans |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Total collateral-dependent loans |
|
$ |
$ |
$ |
||||||||||||
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||||||
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 |
$ | $ | ||||||||||||||
|
|
|
|
For the Year Ended December 31, 2018 (2) |
||||||||||||||||||||
Number of Loans |
Pre-Modification Outstanding Recorded Investment |
Post-Modification Outstanding Recorded Investment |
Outstanding Investment at December 31, 2018 |
Financial Effect Resulting From Modifications (3) |
||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||
Commercial real estate: |
||||||||||||||||||||
Interest rate reduction |
$ | $ | $ | $ | ||||||||||||||||
Change in amortization period or maturity |
||||||||||||||||||||
Commercial and industrial: |
||||||||||||||||||||
Interest rate reduction |
||||||||||||||||||||
Change in amortization period or maturity |
||||||||||||||||||||
Dairy & livestock and agribusiness: |
||||||||||||||||||||
Interest rate reduction |
||||||||||||||||||||
Change in amortization period or maturity |
||||||||||||||||||||
SFR mortgage: |
||||||||||||||||||||
Interest rate reduction |
||||||||||||||||||||
Change in amortization period or maturity |
||||||||||||||||||||
Consumer: |
||||||||||||||||||||
Interest rate reduction |
||||||||||||||||||||
Change in amortization period or maturity |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total loans |
$ | $ | $ | $ | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
(1) |
The tables above exclude modified loans that were paid off prior to the end of the period. |
(2) |
Excludes PCI loans. |
(3) |
Financial effects resulting from modifications represent charge-offs and specific allowance recorded at modification date. |
7. |
OTHER REAL ESTATE OWNED |
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
(Dollars in thousands) |
||||||||
Balance, beginning of period |
$ | $ | ||||||
Additions |
||||||||
Dispositions |
( |
) | ( |
) | ||||
Valuation adjustments |
( |
) | ||||||
|
|
|
|
|||||
Balance, end of period |
$ | $ | ||||||
|
|
|
|
8. |
GOODWILL AND OTHER INTANGIBLE ASSETS |
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
(Dollars in thousands) |
||||||||
Balance, beginning of period |
$ | $ | ||||||
Purchase accounting adjustments |
( |
) | ||||||
|
|
|
|
|||||
Balance, end of period |
$ | $ | ||||||
|
|
|
|
Year Ended December 31, |
||||||||||||||||||||||||
2020 |
2019 |
|||||||||||||||||||||||
Gross CDI |
Accumulated |
Net CDI |
Gross CDI |
Accumulated |
Net CDI |
|||||||||||||||||||
Amount |
Amortization |
Amount |
Amount |
Amortization |
Amount |
|||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||
Balance of intangible assets, beginning of period |
$ |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
Amortization |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance of intangible assets, end of period |
$ |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
|
|
|
|
|
|
|
|
December 31, 2020 |
||||
Year: |
(Dollars in thousands) |
|||
2021 |
$ | |||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
Thereafter |
||||
|
|
|||
Total |
$ | |||
|
|
9. |
PREMISES AND EQUIPMENT |
December 31, |
||||||||
2020 |
2019 |
|||||||
(Dollars in thousands) |
||||||||
Land |
$ | $ | ||||||
Bank premises |
||||||||
Furniture and equipment |
||||||||
|
|
|
|
|||||
Premises and equipment, gross |
||||||||
Accumulated depreciation and amortization |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Premises and equipment, net |
$ | $ | ||||||
|
|
|
|
10. |
OTHER ASSETS |
December 31, |
||||||||
2020 |
2019 |
|||||||
(Dollars in thousands) |
||||||||
Prepaid expenses |
$ | $ | ||||||
Interest rate swaps |
||||||||
ROU assets |
||||||||
Affordable housing investments |
||||||||
Other investments |
||||||||
Other assets |
||||||||
|
|
|
|
|||||
Total |
$ | $ | ||||||
|
|
|
|
11. |
INCOME TAXES |
Year Ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
(Dollars in thousands) |
||||||||||||
Current provision: |
||||||||||||
Federal |
$ | $ | $ | |||||||||
State |
||||||||||||
Deferred provision: |
||||||||||||
Federal |
( |
) | ||||||||||
State |
( |
) | ||||||||||
( |
) | |||||||||||
Total |
$ |
$ | $ | |||||||||
December 31, |
||||||||
2020 |
2019 |
|||||||
(Dollars in thousands) |
||||||||
Current: |
||||||||
Federal |
$ | $ | ||||||
State |
||||||||
Deferred: |
||||||||
Federal |
||||||||
State |
||||||||
Total |
$ | $ | ||||||
December 31, |
||||||||
2020 |
2019 |
|||||||
(Dollars in thousands) |
||||||||
Deferred tax assets: |
||||||||
Bad debt and credit loss deduction |
$ | $ | ||||||
Net operating loss carryforward |
||||||||
Deferred compensation |
||||||||
PCI loans |
||||||||
California franchise tax |
||||||||
Accrued expense |
||||||||
Acquired loan discounts |
||||||||
Lease liability |
||||||||
Other, net |
||||||||
Gross deferred tax asset |
||||||||
Deferred tax liabilities: |
||||||||
Depreciation |
||||||||
Intangibles - acquisitions |
||||||||
FHLB Stock |
||||||||
Deferred income |
||||||||
Right of use asset |
||||||||
Unrealized gain on investment securities, net |
||||||||
Gross deferred tax liability |
||||||||
Net deferred tax asset |
$ | $ | |
|||||
Year Ended December 31, |
||||||||||||||||||||||||
2020 |
2019 |
2018 |
||||||||||||||||||||||
Amount |
Percent |
Amount |
Percent |
Amount |
Percent |
|||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||
Federal income tax at statutory rate |
$ |
% |
$ |
% |
$ |
% | ||||||||||||||||||
State franchise taxes, net of federal benefit |
% |
% |
% | |||||||||||||||||||||
Tax-exempt income |
( |
) |
( |
%) |
( |
) |
( |
%) |
( |
) |
( |
%) | ||||||||||||
Tax credits |
( |
) |
( |
%) |
( |
) |
( |
%) |
( |
) |
( |
%) | ||||||||||||
Other, net |
% |
% |
% | |||||||||||||||||||||
Provision for income taxes |
$ |
% |
$ |
% |
$ |
% | ||||||||||||||||||
12. |
DEPOSITS |
December 31, |
||||||||||||||||
2020 |
2019 |
|||||||||||||||
Amount |
Percent |
Amount |
Percent |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
Noninterest-bearing deposits |
$ | % | $ | % | ||||||||||||
Interest-bearing deposits |
||||||||||||||||
Investment checking |
% | % | ||||||||||||||
Money market |
% | % | ||||||||||||||
Savings |
% | % | ||||||||||||||
Time deposits |
% | % | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total deposits |
$ | |
% | $ | |
% | ||||||||||
|
|
|
|
|
|
|
|
December 31, 2020 |
||||
Year of maturity: |
(Dollars in thousands) |
|||
2021 |
$ | |||
2022 |
||||
2023 |
||||
2024 |
||||
2025 and thereafter |
||||
|
|
|||
Total |
$ | |||
|
|
13. |
BORROWINGS |
14. |
COMMITMENTS AND CONTINGENCIES |
15. |
EMPLOYEE BENEFIT PLANS |
16. |
EARNINGS PER SHARE RECONCILIATION |
Year Ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
(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 |
||||||||||||
|
|
|
|
|
|
|||||||
Diluted weighted average shares outstanding |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
$ | $ | $ | |||||||||
|
|
|
|
|
|
17. |
STOCK-BASED COMPENSATION PLANS |
Year Ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Dividend yield |
% | % | % | |||||||||
Volatility |
% | % | % | |||||||||
Risk-free interest rate |
% | % | % | |||||||||
Expected life |
|
|
|
|||||||||
Weighted average grant date fair value |
$ | $ | $ |
Number of Stock Options Outstanding |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Term |
Aggregate Intrinsic Value |
|||||||||||||
(In thousands) |
(In years) |
(In thousands) |
||||||||||||||
Outstanding at January 1, 2020 |
$ | |||||||||||||||
Granted |
||||||||||||||||
Exercised |
( |
) | ||||||||||||||
Forfeited or expired |
( |
) | ||||||||||||||
|
|
|
|
|||||||||||||
Outstanding at December 31, 2020 |
$ | $ | ||||||||||||||
|
|
|
|
|||||||||||||
Vested or expected to vest at December 31, 2020 |
$ | $ | ||||||||||||||
Exercisable at December 31, 2020 |
$ | $ |
Shares |
Weighted Average Fair Value |
|||||||
(In thousands) |
||||||||
Nonvested at January 1, 2020 |
$ | |||||||
Granted |
||||||||
Vested |
( |
) | ||||||
Forfeited |
( |
) | ||||||
|
|
|
|
|||||
Nonvested at December 31, 2020 |
$ | |||||||
|
|
|
|
18. |
REGULATORY MATTERS |
Actual |
For Capital Adequacy Purposes |
To Be Well Capitalized under Prompt Corrective Action Provisions |
||||||||||||||||||||||||||
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
|||||||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||||||
As of December 31, 2020: |
||||||||||||||||||||||||||||
Total Capital (to Risk-Weighted Assets) |
||||||||||||||||||||||||||||
Company |
$ | |
% | $ | > |
% | N/A | |||||||||||||||||||||
Bank |
$ | % | $ | > |
% | $ | |
> |
% | |||||||||||||||||||
Tier 1 Capital (to Risk-Weighted Assets) |
||||||||||||||||||||||||||||
Company |
$ | % | $ | > |
% | N/A | ||||||||||||||||||||||
Bank |
$ | % | $ | > |
% | $ | > |
% | ||||||||||||||||||||
Common equity Tier 1 capital ratio |
||||||||||||||||||||||||||||
Company |
$ | % | $ | > |
% | N/A | ||||||||||||||||||||||
Bank |
$ | % | $ | > |
% | $ | > |
% | ||||||||||||||||||||
Tier 1 Capital (to Average-Assets) |
||||||||||||||||||||||||||||
Company |
$ | % | $ | > |
% | N/A | ||||||||||||||||||||||
Bank |
$ | % | $ | > |
% | $ | > |
% | ||||||||||||||||||||
As of December 31, 2019: |
||||||||||||||||||||||||||||
Total Capital (to Risk-Weighted Assets) |
||||||||||||||||||||||||||||
Company |
$ | % | $ | > |
% | N/A | ||||||||||||||||||||||
Bank |
$ | % | $ | > |
% | $ | > |
% | ||||||||||||||||||||
Tier 1 Capital (to Risk-Weighted Assets) |
||||||||||||||||||||||||||||
Company |
$ | % | $ | > |
% | N/A | ||||||||||||||||||||||
Bank |
$ | % | $ | > |
% | $ | > |
% | ||||||||||||||||||||
Common equity Tier 1 capital ratio |
||||||||||||||||||||||||||||
Company |
$ | % | $ | > |
% | N/A | ||||||||||||||||||||||
Bank |
$ | % | $ | > |
% | $ | > |
% | ||||||||||||||||||||
Tier 1 Capital (to Average-Assets) |
||||||||||||||||||||||||||||
Company |
$ | % | $ | > |
% | N/A | ||||||||||||||||||||||
Bank |
$ | % | $ | > |
% | $ | > |
% |
19. |
FAIR VALUE INFORMATION |
• |
Level 1 — |
• |
Level 2 |
• |
Level 3 |
Carrying Value at December 31, 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 bond s |
||||||||||||||||
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 December 31, 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 Year Ended December 31, 2020 |
||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||
Description of assets |
||||||||||||||||||||
Loans: |
||||||||||||||||||||
Commercial real estate |
$ | $ | $ | $ | $ | |||||||||||||||
Construction |
||||||||||||||||||||
SBA |
|
|||||||||||||||||||
Commercial and industrial |
||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||
Consumer and other loan s |
||||||||||||||||||||
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 real estate |
$ | $ | $ | $ | $ | |||||||||||||||
Constructio n |
||||||||||||||||||||
SBA |
||||||||||||||||||||
Commercial and industrial |
||||||||||||||||||||
Dairy & livestock and agribusiness |
||||||||||||||||||||
Municipal lease finance receivables |
||||||||||||||||||||
SFR mortgage |
||||||||||||||||||||
Consumer and other loans |
||||||||||||||||||||
Other real estate owned |
||||||||||||||||||||
Asset held-for-sal e |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total assets |
$ | $ | $ | $ | $ | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
||||||||||||||||||||
Estimated Fair Value |
||||||||||||||||||||
Carrying Amount |
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 |
||||||||||||||||||||
Estimated Fair Value |
||||||||||||||||||||
Carrying Amount |
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 |
20. |
DERIVATIVE FINANCIAL INSTRUMENTS |
December 31, 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 |
||||||||||||
Year Ended December 31, |
||||||||||||||
2020 |
2019 |
2018 |
||||||||||||
(Dollars in thousands) |
||||||||||||||
Interest rate swaps |
Other income | $ | $ | $ | ||||||||||
|
|
|
|
|
|
|||||||||
Total |
$ | $ | $ | |||||||||||
|
|
|
|
|
|
21. |
OTHER COMPREHENSIVE INCOME (LOSS) |
Year Ended December 31, |
||||||||||||||||||||||||||||||||||||
2020 |
2019 |
2018 |
||||||||||||||||||||||||||||||||||
Before-tax |
Tax effect |
After-tax |
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 unrealized (losses) gains 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. |
22. |
BALANCE SHEET OFFSETTING |
Gross Amounts Recognized in the Consolidated Balance Sheets |
Gross Amounts Offset in the Consolidated Balance Sheets |
Net Amounts Presented Consolidated Balance Sheets |
Gross Amounts Not Offset in the Consolidated Balance Sheets |
Net Amount |
||||||||||||||||||||
Financial Instruments |
Collateral Pledged |
|||||||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||
December 31, 2020 |
||||||||||||||||||||||||
Financial assets: |
||||||||||||||||||||||||
Derivatives not designated as 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 |
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
23. |
LEASES |
December 31, |
||||||||
2020 |
2019 |
|||||||
(Dollars in thousands) |
||||||||
Lease Assets and Liabilities |
||||||||
ROU assets |
$ | $ | ||||||
Total lease liabilities |
Year Ended December 31, |
||||||||||
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 |
$ | |
$ | |
December 31, |
||||||||
2020 |
2019 |
|||||||
Lease Term and Discount Rate |
||||||||
Weighted average remaining lease term (years) |
||||||||
Weighted average discount rate |
% | % |
December 31, 2020 |
||||
(Dollars in thousands) |
||||
Year: |
||||
2021 |
$ | |||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
Thereafter |
||||
|
|
|||
Total future lease payments |
||||
Less: Imputed interest |
( |
) | ||
|
|
|||
Present value of lease liabilities |
$ | |||
|
|
24. |
REVENUE RECOGNITION |
Year Ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
(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 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
25. |
CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY |
December 31, |
||||||||
2020 |
2019 |
|||||||
(Dollars in thousands) |
||||||||
Assets |
||||||||
Investment in subsidiaries |
$ | $ | ||||||
Other assets, net |
||||||||
|
|
|
|
|||||
Total assets |
$ | $ | ||||||
|
|
|
|
|||||
Liabilities |
$ | $ | ||||||
Stockholders’ equity |
||||||||
|
|
|
|
|||||
Total liabilities and stockholders’ equity |
$ | |
$ | |
||||
|
|
|
|
Year Ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
(Dollars in thousands) |
||||||||||||
Equity in net earnings of subsidiaries |
$ | ( |
) | $ | $ | |||||||
Dividends from the Bank |
||||||||||||
Other expense, net |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Net earnings |
$ | |
$ | |
$ | |
||||||
|
|
|
|
|
|
Year Ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
(Dollars in thousands) |
||||||||||||
Cash Flows from Operating Activities |
||||||||||||
Net earnings |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Adjustments to reconcile net earnings to cash used in operating activities: |
||||||||||||
Earnings of subsidiaries |
( |
) | ( |
) | ( |
) | ||||||
Tax settlement received from the Bank |
||||||||||||
Stock-based compensation |
||||||||||||
Other operating activities, net |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Total adjustments |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Net cash used in operating activities |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Cash Flows from Investing Activities |
||||||||||||
Dividends received from the Bank |
||||||||||||
|
|
|
|
|
|
|||||||
Net cash provided by investing activities |
||||||||||||
|
|
|
|
|
|
|||||||
Cash Flows from Financing Activities |
||||||||||||
Cash dividends on common stock |
( |
) | ( |
) | ( |
) | ||||||
Proceeds from exercise of stock options |
||||||||||||
Repurchase of common stock |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Net cash 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 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
26. |
QUARTERLY FINANCIAL DATA (UNAUDITED) |
Three Months Ended |
||||||||||||||||
December 31, |
September 30, |
June 30, |
March 31, |
|||||||||||||
(Dollars in thousands, except per share amounts) |
||||||||||||||||
2020 |
||||||||||||||||
Net interest income |
$ | $ | $ | |
$ | |||||||||||
Provision for credit losses |
||||||||||||||||
Net earnings |
||||||||||||||||
Basic earnings per common share |
||||||||||||||||
Diluted earnings per common share |
||||||||||||||||
2019 |
||||||||||||||||
Net interest income |
$ | $ | $ | $ | ||||||||||||
Provision for loan losses |
||||||||||||||||
Net earnings |
||||||||||||||||
Basic earnings per common share |
||||||||||||||||
Diluted earnings per common share |
• | development of the commercial collective ACL methodologies |
• | development of the lifetime loss rate methodologies |
• | ongoing monitoring of the lifetime loss rate methodologies |
• | identification and determination of the key assumptions used in the lifetime loss rate methodologies |
• | development of the adjustments performed to align the life of loan loss rates with the current state of the portfolio |
• | analysis of the commercial collective ACL results, trends, and ratios. |
• | evaluating the commercial collective ACL methodologies for compliance with U.S. generally accepted accounting principles |
• | evaluating judgments made relative to the development and performance monitoring of the lifetime loss rate methodologies, including prepayments, by comparing them to Company-specific metrics and trends and the applicable industry and regulatory guidance |
• | assessing the conceptual soundness and performance of the lifetime loss rate methodologies, including their key assumptions, to determine whether the methodologies were suitable for their intended use |
• | evaluating the weighted economic forecast scenarios and underlying assumptions driving the macroeconomic variable changes, including the determination of the reasonable and supportable forecast period and weightings used by comparing it to the Company’s business environment and relevant industry practice |
• | determining whether the loan portfolio is segmented by similar risk characteristics by comparing to specific portfolio risk characteristics and trends |
• | testing individual credit risk ratings for a selection of loans by evaluating the financial performance of the borrower, sources of repayment, and any relevant guarantees or underlying collateral |
• | evaluating the methodology used to develop the adjustments and the effect of those adjustments on the commercial collective ACL compared with relevant credit risk factors and consistency with credit trends and identified limitations of the underlying pool level metrics. |
• | cumulative results of the audit procedures |
• | qualitative aspects of the Company’s accounting practices |
• | potential bias in the accounting estimates |