ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from _____ to _____ |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of Each Class | Trading symbol(s) | Name of Each Exchange on Which Registered | ||||||||||||
Large accelerated filer | ¨ | x | ||||||||||||||||||
Non-accelerated filer | ¨ | Smaller reporting company | ||||||||||||||||||
Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ¨ | |||||||||||||||||||
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. |
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Term | Definition | ||||
ALL | Allowance for loan losses | ||||
AFS | Available for sale | ||||
AOCI | Accumulated other comprehensive income (loss) | ||||
ASC | Accounting Standards Codification | ||||
ASU | Accounting Standards Update | ||||
Bank | Orrstown Bank, the commercial banking subsidiary of Orrstown Financial Services, Inc. | ||||
BHC Act | Bank Holding Company Act of 1965 | ||||
CDI | Core deposit intangible | ||||
CET1 | Common Equity Tier 1 | ||||
CFPB | Consumer Financial Protection Bureau | ||||
CMO | Collateralized mortgage obligation | ||||
CRA | Community Reinvestment Act | ||||
Dodd-Frank Act | Dodd-Frank Wall Street Reform and Consumer Protection Act | ||||
ERM | Enterprise risk management | ||||
Exchange Act | Securities Exchange Act of 1934, as amended | ||||
FASB | Financial Accounting Standards Board | ||||
FDIA | Federal Deposit Insurance Act | ||||
FDIC | Federal Deposit Insurance Corporation | ||||
FHC | Financial holding company | ||||
FHLB | Federal Home Loan Bank | ||||
FRB | Board of Governors of the Federal Reserve System | ||||
GAAP | Accounting principles generally accepted in the United States of America | ||||
GDP | Gross Domestic Product | ||||
GLB Act | Gramm-Leach-Bliley Act | ||||
GSE | United States government-sponsored enterprise | ||||
Hamilton | Hamilton Bancorp, Inc., and its wholly-owned banking subsidiary, Hamilton Bank (acquired May 1, 2019) | ||||
IRC | Internal Revenue Code of 1986, as amended | ||||
LHFS | Loans held for sale | ||||
LIBOR | London Interbank Offered Rate | ||||
MBS | Mortgage-backed securities | ||||
Mercersburg | Mercersburg Financial Corporation and its wholly-owned banking subsidiary, First Community Bank of Mercersburg (acquired October 1, 2018) | ||||
MPF Program | Mortgage Partnership Finance Program | ||||
MSR | Mortgage servicing right | ||||
NIM | Net interest margin | ||||
OCI | Other comprehensive income | ||||
OFA | Orrstown Financial Advisors, a division of the Bank that provides investment and brokerage services | ||||
OREO | Other real estate owned (foreclosed real estate) | ||||
OTTI | Other-than-temporary impairment | ||||
Parent Company | Orrstown Financial Services, Inc., the parent company of Orrstown Bank | ||||
2011 Plan | 2011 Orrstown Financial Services, Inc. Stock Incentive Plan | ||||
PCI loans | Purchased credit impaired loans | ||||
Repurchase Agreements | Securities sold under agreements to repurchase | ||||
SBA PPP | U.S. Small Business Administration Paycheck Protection Program | ||||
SEC | Securities and Exchange Commission | ||||
Securities Act | Securities Act of 1933, as amended | ||||
SOFR | Secured Overnight Financing Rate | ||||
TDR | Troubled debt restructuring | ||||
U.S. | United States of America | ||||
Wheatland | Wheatland Advisors, Inc., the former Registered Investment Advisor subsidiary of Orrstown Financial Services, Inc. | ||||
Unless the context otherwise requires, the terms “Orrstown,” “we,” “us,” “our,” and “Company” refer to Orrstown Financial Services, Inc. and its subsidiaries. | |||||
(a) | (b) | (c) | (d) | ||||||||||||||||||||
Period | Total number of shares (or units) purchased | Average price paid per share (or unit) | Total number of shares (or units) purchased as part of publicly announced plans or programs | Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs | |||||||||||||||||||
October 1, 2021 to October 31, 2021 | — | $ | — | — | 776,482 | ||||||||||||||||||
November 1, 2021 to November 30, 2021 | — | — | — | 776,482 | |||||||||||||||||||
December 1, 2021 to December 31, 2021 | 32,652 | 24.17 | 32,652 | 743,830 | |||||||||||||||||||
Total | 32,652 | $ | 24.17 | 32,652 |
Period Ending | |||||||||||||||||||||||||||||||||||
Index | 12/31/16 | 12/31/17 | 12/31/18 | 12/31/19 | 12/31/20 | 12/31/21 | |||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | 100.00 | 114.73 | 84.51 | 108.05 | 82.57 | 130.04 | |||||||||||||||||||||||||||||
S&P U.S. SmallCap Bank Index | 100.00 | 104.33 | 87.06 | 109.22 | 99.19 | 138.09 | |||||||||||||||||||||||||||||
S&P 500 Index | 100.00 | 121.83 | 116.49 | 153.17 | 181.35 | 233.41 | |||||||||||||||||||||||||||||
NASDAQ Composite Index | 100.00 | 129.64 | 125.96 | 172.18 | 249.51 | 304.85 |
2021 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Average Balance | Taxable- Equivalent Interest | Taxable- Equivalent Rate | Average Balance | Taxable- Equivalent Interest | Taxable- Equivalent Rate | Average Balance | Taxable- Equivalent Interest | Taxable- Equivalent Rate | |||||||||||||||||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal funds sold and interest-bearing bank balances | $ | 258,834 | $ | 353 | 0.14 | % | $ | 32,519 | $ | 115 | 0.35 | % | $ | 57,765 | $ | 1,331 | 2.30 | % | |||||||||||||||||||||||||||||||||||
Taxable securities | 372,461 | 6,622 | 1.78 | 438,565 | 10,458 | 2.38 | 436,174 | 14,538 | 3.33 | ||||||||||||||||||||||||||||||||||||||||||||
Tax-exempt securities (1) | 89,574 | 3,157 | 3.52 | 55,807 | 1,982 | 3.55 | 63,443 | 2,600 | 4.10 | ||||||||||||||||||||||||||||||||||||||||||||
Total investment securities | 462,035 | 9,779 | 2.12 | 494,372 | 12,440 | 2.52 | 499,617 | 17,138 | 3.43 | ||||||||||||||||||||||||||||||||||||||||||||
Loans (1)(2)(3) | 1,985,350 | 84,453 | 4.25 | 1,928,486 | 87,900 | 4.56 | 1,492,815 | 75,568 | 5.06 | ||||||||||||||||||||||||||||||||||||||||||||
Total interest-earning assets | 2,706,219 | 94,585 | 3.50 | 2,455,377 | 100,455 | 4.09 | 2,050,197 | 94,037 | 4.59 | ||||||||||||||||||||||||||||||||||||||||||||
Cash and due from banks | 30,231 | 26,954 | 25,046 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Bank premises and equipment | 34,545 | 36,627 | 40,982 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other assets | 143,479 | 143,919 | 123,362 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses | (19,659) | (17,030) | (14,466) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 2,894,815 | $ | 2,645,847 | $ | 2,225,121 | |||||||||||||||||||||||||||||||||||||||||||||||
Liabilities and Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 1,392,996 | $ | 1,287 | 0.09 | % | $ | 1,156,292 | $ | 4755 | 0.41 | % | $ | 920,025 | $ | 8,253 | 0.90 | % | |||||||||||||||||||||||||||||||||||
Savings deposits | 202,371 | 203 | 0.10 | 163,133 | 246 | 0.15 | 146,185 | 296 | 0.20 | ||||||||||||||||||||||||||||||||||||||||||||
Time deposits (4) | 360,264 | 2,709 | 0.75 | 452,298 | 7,008 | 1.55 | 542,513 | 10,761 | 1.98 | ||||||||||||||||||||||||||||||||||||||||||||
Total interest-bearing deposits | 1,955,631 | 4,199 | 0.21 | 1,771,723 | 12,009 | 0.68 | 1,608,723 | 19,310 | 1.20 | ||||||||||||||||||||||||||||||||||||||||||||
Securities sold under agreements to repurchase | 22,888 | 32 | 0.14 | 18,064 | 86 | 0.48 | 8,830 | 113 | 1.28 | ||||||||||||||||||||||||||||||||||||||||||||
FHLB Advances and other | 40,589 | 482 | 1.19 | 179,457 | 1,923 | 1.07 | 103,807 | 2,289 | 2.21 | ||||||||||||||||||||||||||||||||||||||||||||
Subordinated notes | 31,931 | 2,009 | 6.29 | 31,874 | 2,006 | 6.29 | 31,842 | 1,987 | 6.24 | ||||||||||||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 2,051,039 | 6,722 | 0.33 | 2,001,118 | 16,024 | 0.80 | 1,753,202 | 23,699 | 1.35 | ||||||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing demand deposits | 542,952 | 381,869 | 234,354 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities | 38,665 | 35,960 | 31,544 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total Liabilities | 2,632,656 | 2,418,947 | 2,019,100 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders’ Equity | 262,159 | 226,900 | 206,021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 2,894,815 | $ | 2,645,847 | $ | 2,225,121 | |||||||||||||||||||||||||||||||||||||||||||||||
Taxable-equivalent net interest income / net interest spread | 87,863 | 3.17 | % | 84,431 | 3.29 | % | 70,338 | 3.24 | % | ||||||||||||||||||||||||||||||||||||||||||||
Taxable-equivalent net interest margin | 3.25 | % | 3.44 | % | 3.43 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Taxable-equivalent adjustment | (889) | (824) | (1,043) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income | $ | 86,974 | $ | 83,607 | $ | 69,295 | |||||||||||||||||||||||||||||||||||||||||||||||
Ratio of average interest-earning assets to average interest-bearing liabilities | 132 | % | 123 | % | 117 | % |
NOTES TO ANALYSIS OF NET INTEREST INCOME: | |||||
(1) | Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 21% tax rate. | ||||
(2) | Average balances include nonaccrual loans. | ||||
(3) | Interest income on loans includes prepayment and late fees. | ||||
(4) | For the year ended December 31, 2019, expenses associated with the early redemption of brokered time deposits totaled $0.2 million and increased the cost of funds by five basis points. |
2021 Versus 2020 Increase (Decrease) Due to Change in | 2020 Versus 2019 Increase (Decrease) Due to Change in | ||||||||||||||||||||||||||||||||||
Average Volume | Average Rate | Total | Average Volume | Average Rate | Total | ||||||||||||||||||||||||||||||
Interest Income | |||||||||||||||||||||||||||||||||||
Federal funds sold and interest-bearing bank balances | $ | 800 | $ | (562) | $ | 238 | $ | (581) | $ | (633) | $ | (1,214) | |||||||||||||||||||||||
Taxable securities | (1,576) | (2,260) | (3,836) | 80 | (4,146) | (4,066) | |||||||||||||||||||||||||||||
Tax-exempt securities | 1,199 | (24) | 1,175 | (313) | (306) | (619) | |||||||||||||||||||||||||||||
Loans | 2,592 | (6,039) | (3,447) | 22,379 | (10,068) | 12,311 | |||||||||||||||||||||||||||||
Total interest income | 3,015 | (8,885) | (5,870) | 21,565 | (15,153) | 6,412 | |||||||||||||||||||||||||||||
Interest Expense | |||||||||||||||||||||||||||||||||||
Interest-bearing demand deposits | 973 | (4,441) | (3,468) | 2,126 | (5,652) | (3,526) | |||||||||||||||||||||||||||||
Savings deposits | 59 | (102) | (43) | 34 | (80) | (46) | |||||||||||||||||||||||||||||
Time deposits | (1,426) | (2,873) | (4,299) | (1,786) | (1,948) | (3,734) | |||||||||||||||||||||||||||||
Securities sold under agreements to repurchase | 23 | (77) | (54) | 118 | (145) | (27) | |||||||||||||||||||||||||||||
FHLB Advances and other | (1,488) | 47 | (1,441) | 1,672 | (2,043) | (371) | |||||||||||||||||||||||||||||
Subordinated notes | 4 | (1) | 3 | 2 | 17 | 19 | |||||||||||||||||||||||||||||
Total interest expense | (1,855) | (7,447) | (9,302) | 2,166 | (9,851) | (7,685) | |||||||||||||||||||||||||||||
Taxable-Equivalent Net Interest Income | $ | 4,870 | $ | (1,438) | $ | 3,432 | $ | 19,399 | $ | (5,302) | $ | 14,097 |
Note: | The change attributed to volume is calculated by multiplying the average change in average balance by the prior year's | ||||
average rate. The remainder is attributable to rate. |
2021 | 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||
2021-2020 | 2020-2019 | 2021-2020 | 2020-2019 | ||||||||||||||||||||||||||||||||||||||
Service charges on deposit accounts | $ | 3,047 | $ | 2,874 | $ | 3,404 | $ | 173 | $ | (530) | 6.0 | % | (15.6) | % | |||||||||||||||||||||||||||
Interchange income | 4,129 | 3,423 | 3,281 | 706 | 142 | 20.6 | 4.3 | ||||||||||||||||||||||||||||||||||
Other service charges, commissions and fees | 671 | 683 | 805 | (12) | (122) | (1.8) | (15.2) | ||||||||||||||||||||||||||||||||||
Swap fee income | 293 | 847 | 1,197 | (554) | (350) | (65.4) | (29.2) | ||||||||||||||||||||||||||||||||||
Trust and investment management income | 7,896 | 6,912 | 7,255 | 984 | (343) | 14.2 | (4.7) | ||||||||||||||||||||||||||||||||||
Brokerage income | 3,571 | 2,821 | 2,426 | 750 | 395 | 26.6 | 16.3 | ||||||||||||||||||||||||||||||||||
Mortgage banking activities | 5,909 | 5,274 | 3,047 | 635 | 2,227 | 12.0 | 73.1 | ||||||||||||||||||||||||||||||||||
Gains on sale of portfolio loans | — | 2,803 | — | (2,803) | 2,803 | (100.0) | 100.0 | ||||||||||||||||||||||||||||||||||
Income from life insurance | 2,273 | 2,261 | 2,044 | 12 | 217 | 0.5 | 10.6 | ||||||||||||||||||||||||||||||||||
Other income | 725 | 427 | 331 | 298 | 96 | 69.8 | 29.0 | ||||||||||||||||||||||||||||||||||
Subtotal before securities gains (losses) | 28,514 | 28,325 | 23,790 | 189 | 4,535 | 0.7 | 19.1 | ||||||||||||||||||||||||||||||||||
Investment securities gains (losses) | 638 | (16) | 4,749 | 654 | (4,765) | 4,087.5 | (100.3) | ||||||||||||||||||||||||||||||||||
Total noninterest income | $ | 29,152 | $ | 28,309 | $ | 28,539 | $ | 843 | $ | (230) | 3.0 | % | (0.8) | % |
$ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2019 | 2021-2020 | 2020-2019 | 2021-2020 | 2020-2019 | |||||||||||||||||||||||||||||||||||
Salaries and employee benefits | $ | 44,002 | $ | 43,350 | $ | 39,495 | $ | 652 | $ | 3,855 | 1.5 | % | 9.8 | % | |||||||||||||||||||||||||||
Occupancy | 4,731 | 4,760 | 4,325 | (29) | 435 | (0.6) | 10.1 | ||||||||||||||||||||||||||||||||||
Furniture and equipment | 5,115 | 4,756 | 4,723 | 359 | 33 | 7.5 | 0.7 | ||||||||||||||||||||||||||||||||||
Data processing | 4,061 | 3,574 | 3,599 | 487 | (25) | 13.6 | (0.7) | ||||||||||||||||||||||||||||||||||
Automated teller machine and interchange fees | 1,202 | 1,057 | 1,015 | 145 | 42 | 13.7 | 4.1 | ||||||||||||||||||||||||||||||||||
Advertising and bank promotions | 2,178 | 1,660 | 1,967 | 518 | (307) | 31.2 | (15.6) | ||||||||||||||||||||||||||||||||||
FDIC insurance | 816 | 686 | 367 | 130 | 319 | 19.0 | 86.9 | ||||||||||||||||||||||||||||||||||
Other professional services | 2,555 | 3,120 | 2,954 | (565) | 166 | (18.1) | 5.6 | ||||||||||||||||||||||||||||||||||
Directors' compensation | 865 | 921 | 1,003 | (56) | (82) | (6.1) | (8.2) | ||||||||||||||||||||||||||||||||||
Taxes other than income | 1,321 | 1,144 | 1,018 | 177 | 126 | 15.5 | 12.4 | ||||||||||||||||||||||||||||||||||
Intangible asset amortization | 1,275 | 1,569 | 1,570 | (294) | (1) | (18.7) | (0.1) | ||||||||||||||||||||||||||||||||||
Merger related and branch consolidation expenses | — | 1,310 | 8,964 | (1,310) | (7,654) | (100.0) | (85.4) | ||||||||||||||||||||||||||||||||||
Insurance claim (recovery) receivable write off | — | (486) | 615 | 486 | (1,101) | (100.0) | (179.0) | ||||||||||||||||||||||||||||||||||
Other operating expenses | 6,020 | 6,659 | 5,685 | (639) | 974 | (9.6) | 17.1 | ||||||||||||||||||||||||||||||||||
Total noninterest expenses | $ | 74,141 | $ | 74,080 | $ | 77,300 | $ | 61 | $ | (3,220) | 0.1 | % | (4.2) | % |
2021 | 2020 | 2019 | |||||||||||||||
U.S. Treasury securities | $ | 19,702 | $ | — | $ | — | |||||||||||
States and political subdivisions | 193,370 | 112,670 | 87,863 | ||||||||||||||
GSE residential MBS | 40,726 | 4,293 | — | ||||||||||||||
GSE residential CMOs | 65,922 | 58,011 | 68,154 | ||||||||||||||
Non-agency CMOs | 29,698 | 16,918 | 17,087 | ||||||||||||||
Private label commercial CMOs | — | 62,236 | 86,629 | ||||||||||||||
Asset-backed | 122,621 | 211,966 | 230,515 | ||||||||||||||
Other | 399 | 371 | 637 | ||||||||||||||
Total investment securities | $ | 472,438 | $ | 466,465 | $ | 490,885 |
Within 1 year | After 1 year but within 5 years | After 5 years but within 10 years | After 10 years | Total | |||||||||||||||||||||||||
U.S. Treasury securities | |||||||||||||||||||||||||||||
Book value | $ | — | $ | — | $ | 20,084 | $ | — | $ | 20,084 | |||||||||||||||||||
Yield | — | % | — | % | 1.05 | % | — | % | 1.05 | % | |||||||||||||||||||
Average maturity (years) | — | — | 0.1 | — | 0.1 | ||||||||||||||||||||||||
States and political subdivisions | |||||||||||||||||||||||||||||
Book value | $ | — | $ | 3,133 | $ | 58,675 | $ | 123,629 | $ | 185,437 | |||||||||||||||||||
Yield | — | % | 3.48 | % | 3.02 | % | 2.99 | % | 3.01 | % | |||||||||||||||||||
Average maturity (years) | — | 4.9 | 7.9 | 19.7 | 15.7 | ||||||||||||||||||||||||
GSE residential mortgage-backed securities | |||||||||||||||||||||||||||||
Book value | $ | — | $ | — | $ | — | $ | 41,260 | $ | 41,260 | |||||||||||||||||||
Yield | — | % | — | % | — | % | 0.89 | % | 0.89 | % | |||||||||||||||||||
Average maturity (years) | — | — | — | 0.4 | 0.4 | ||||||||||||||||||||||||
GSE residential CMOs | |||||||||||||||||||||||||||||
Book value | $ | — | $ | — | $ | — | $ | 66,430 | $ | 66,430 | |||||||||||||||||||
Yield | — | % | — | % | — | % | 1.33 | % | 1.33 | % | |||||||||||||||||||
Average maturity (years) | — | — | — | 28.6 | 28.6 | ||||||||||||||||||||||||
Non-agency CMOs | |||||||||||||||||||||||||||||
Book value | $ | — | $ | — | $ | 5,037 | $ | 25,639 | $ | 30,676 | |||||||||||||||||||
Yield | — | % | — | % | 2.39 | % | 2.38 | % | 2.38 | % | |||||||||||||||||||
Average maturity (years) | — | — | 6.0 | 33.4 | 28.9 | ||||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||||||||
Book value | $ | — | $ | 695 | $ | — | $ | 121,825 | $ | 122,520 | |||||||||||||||||||
Yield | — | % | 4.84 | % | — | % | 0.96 | % | 0.98 | % | |||||||||||||||||||
Average maturity (years) | — | 4.1 | — | 22.0 | 21.9 | ||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||
Book value | $ | — | $ | 249 | $ | — | $ | 150 | $ | 399 | |||||||||||||||||||
Yield | — | % | 2.45 | % | — | % | — | % | 1.53 | % | |||||||||||||||||||
Average maturity (years) | — | 1.4 | — | — | 1.4 | ||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||
Book value | $ | — | $ | 4,077 | $ | 83,796 | $ | 378,933 | $ | 466,806 | |||||||||||||||||||
Yield | — | % | 3.65 | % | 2.51 | % | 1.78 | % | 1.92 | % | |||||||||||||||||||
Average maturity (years) | — | 4.6 | 7.4 | 25.3 | 21.9 |
Sector | Portfolio Mix | Amortized Book | Fair Value | Credit Enhancement | AAA | AA | A | BBB | NR | Collateral Type | ||||||||||||||||||||||
Unsecured ABS | 2 | % | $ | 7,458 | $ | 7,489 | 33 | % | — | % | — | % | — | % | — | % | 100 | % | Unsecured Consumer Debt | |||||||||||||
Student Loan ABS | 2 | 8,785 | 8,762 | 26 | — | — | — | — | 100 | Seasoned Student Loans | ||||||||||||||||||||||
Federal Family Education Loan ABS | 21 | 99,631 | 99,702 | 6 | 85 | 15 | — | — | — | Federal Family Education Loan (1) | ||||||||||||||||||||||
PACE Loan ABS | 1 | 3,591 | 3,636 | 6 | 100 | — | — | — | — | PACE Loans (4) | ||||||||||||||||||||||
Non-Agency RMBS | 5 | 25,639 | 24,661 | 31 | 45 | — | — | — | 55 | Reverse Mortgages (2) | ||||||||||||||||||||||
Municipal - General Obligation | 20 | 92,895 | 97,696 | 7 | 86 | 7 | — | — | ||||||||||||||||||||||||
Municipal - Revenue | 20 | 92,542 | 95,674 | — | 73 | 16 | — | 11 | ||||||||||||||||||||||||
SBA ReRemic (5) | 2 | 8,092 | 8,068 | — | 100 | — | — | — | SBA Guarantee (3) | |||||||||||||||||||||||
Agency MBS | 23 | 107,690 | 106,649 | — | 100 | — | — | — | Residential Mortgages (3) | |||||||||||||||||||||||
U.S. Treasury securities | 4 | 20,084 | 19,702 | — | 100 | — | — | — | ||||||||||||||||||||||||
Bank CDs | — | 249 | 249 | — | — | — | — | 100 | FDIC Insured CD | |||||||||||||||||||||||
100 | % | $ | 466,656 | $ | 472,288 | 23 | % | 64 | % | 4 | % | — | % | 9 | % | |||||||||||||||||
(1) Minimum of 97% guaranteed by U.S. government | ||||||||||||||||||||||||||||||||
(2) Reverse mortgages fund over time and credit enhancement is estimated based on prior experience. | ||||||||||||||||||||||||||||||||
(3) 100% guaranteed by U.S. government agencies | ||||||||||||||||||||||||||||||||
(4) PACE acronym represents Property Assessed Clean Energy loans | ||||||||||||||||||||||||||||||||
(5) SBA ReRemic acronym represents Re-Securitization of Real Estate Mortgage Investment Conduits | ||||||||||||||||||||||||||||||||
Note: Ratings in table are the lowest of the six rating agencies (Standard & Poor's, Moody's, Morningstar, DBRS, KBRA and Fitch). Standard & Poor's rates U.S. government obligations at AA+ |
2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||
Owner-occupied | $ | 238,668 | $ | 174,908 | $ | 170,884 | $ | 129,650 | $ | 116,811 | |||||||||||||||||||
Non-owner occupied | 551,783 | 409,567 | 361,050 | 252,794 | 244,491 | ||||||||||||||||||||||||
Multi-family | 93,255 | 113,635 | 106,893 | 78,933 | 53,634 | ||||||||||||||||||||||||
Non-owner occupied residential | 106,112 | 114,505 | 120,038 | 100,367 | 77,980 | ||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||
1-4 family residential construction | 12,279 | 9,486 | 15,865 | 7,385 | 11,730 | ||||||||||||||||||||||||
Commercial and land development | 93,925 | 51,826 | 41,538 | 42,051 | 19,251 | ||||||||||||||||||||||||
Commercial and industrial (1) | 485,728 | 647,368 | 214,554 | 160,964 | 115,663 | ||||||||||||||||||||||||
Municipal | 14,989 | 20,523 | 47,057 | 50,982 | 42,065 | ||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||
First lien | 198,831 | 244,321 | 336,372 | 235,296 | 162,509 | ||||||||||||||||||||||||
Home equity – term | 6,081 | 10,169 | 14,030 | 12,208 | 11,784 | ||||||||||||||||||||||||
Home equity – lines of credit | 160,705 | 157,021 | 165,314 | 143,616 | 132,192 | ||||||||||||||||||||||||
Installment and other loans | 17,630 | 26,361 | 50,735 | 33,411 | 21,902 | ||||||||||||||||||||||||
Total loans | $ | 1,979,986 | $ | 1,979,690 | $ | 1,644,330 | $ | 1,247,657 | $ | 1,010,012 |
Balance | % of Total Loans | % of Total RBC | |||||||||||||||
Office Space | $ | 219,475 | 11.1% | 78.7% | |||||||||||||
1-4 Family rentals | 106,112 | 5.4 | 38.1 | ||||||||||||||
Hotels & Motels (including B&B) | 56,277 | 2.8 | 20.2 | ||||||||||||||
Loans outside of market area | 145,747 | 7.4 | 52.3 | ||||||||||||||
Multi-Family CRE | 99,229 | 5.0 | 35.6 | ||||||||||||||
Purchased participation | 64,778 | 3.3 | 23.2 | ||||||||||||||
Restaurants & Bars | 60,835 | 3.1 | 21.8 | ||||||||||||||
Senior Housing and Care | 61,117 | 3.1 | 21.9 | ||||||||||||||
Strip centers (retail) | 106,964 | 5.4 | 38.4 | ||||||||||||||
Warehouse | 87,420 | 4.4 | 31.4 | ||||||||||||||
Due In | |||||||||||||||||||||||||||||||||||
One Year or Less | One Year Through Five Years | Five Years Through 15 Years | After 15 Years | Total | % of Total | ||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||
Owner occupied | |||||||||||||||||||||||||||||||||||
Fixed rate | $ | 3,218 | $ | 26,771 | $ | 73,580 | $ | 8,913 | $ | 112,482 | 47 | % | |||||||||||||||||||||||
Adjustable and floating rate | 12,443 | 18,410 | 86,725 | 8,608 | 126,186 | 53 | % | ||||||||||||||||||||||||||||
15,661 | 45,181 | 160,305 | 17,521 | 238,668 | 100 | % | |||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||||||||
Fixed rate | 4,769 | 57,854 | 107,776 | 121 | 170,520 | 31 | % | ||||||||||||||||||||||||||||
Adjustable and floating rate | 11,345 | 47,793 | 310,462 | 11,663 | 381,263 | 69 | % | ||||||||||||||||||||||||||||
16,114 | 105,647 | 418,238 | 11,784 | 551,783 | 100 | % | |||||||||||||||||||||||||||||
Multi-family | |||||||||||||||||||||||||||||||||||
Fixed rate | — | 11,608 | 25,449 | 67 | 37,124 | 40 | % | ||||||||||||||||||||||||||||
Adjustable and floating rate | 93 | 9,724 | 42,255 | 4,059 | 56,131 | 60 | % | ||||||||||||||||||||||||||||
93 | 21,332 | 67,704 | 4,126 | 93,255 | 100 | % | |||||||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||||||||
Fixed rate | 623 | 15,828 | 14,137 | 3,358 | 33,946 | 32 | % | ||||||||||||||||||||||||||||
Adjustable and floating rate | 277 | 8,970 | 57,700 | 5,219 | 72,166 | 68 | % | ||||||||||||||||||||||||||||
900 | 24,798 | 71,837 | 8,577 | 106,112 | 100 | % | |||||||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||||||||
1-4 family residential construction | |||||||||||||||||||||||||||||||||||
Fixed rate | — | — | — | 2,600 | 2,600 | 21 | % | ||||||||||||||||||||||||||||
Adjustable and floating rate | 8,650 | 618 | 411 | — | 9,679 | 79 | % | ||||||||||||||||||||||||||||
8,650 | 618 | 411 | 2,600 | 12,279 | 100 | % | |||||||||||||||||||||||||||||
Commercial and land development | |||||||||||||||||||||||||||||||||||
Fixed rate | 1,202 | 4,680 | 7,419 | 121 | 13,422 | 14 | % | ||||||||||||||||||||||||||||
Adjustable and floating rate | 6,959 | 55,993 | 10,130 | 7,421 | 80,503 | 86 | % | ||||||||||||||||||||||||||||
8,161 | 60,673 | 17,549 | 7,542 | 93,925 | 100 | % | |||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||
Fixed rate | 69,407 | 213,422 | 56,480 | 969 | 340,278 | 70 | % | ||||||||||||||||||||||||||||
Adjustable and floating rate | 69,694 | 26,470 | 43,977 | 5,309 | 145,450 | 30 | % | ||||||||||||||||||||||||||||
139,101 | 239,892 | 100,457 | 6,278 | 485,728 | 100 | % | |||||||||||||||||||||||||||||
Municipal | |||||||||||||||||||||||||||||||||||
Fixed rate | 1,054 | 3,976 | 1,661 | 1,839 | 8,530 | 57 | % | ||||||||||||||||||||||||||||
Adjustable and floating rate | — | 50 | 4,375 | 2,034 | 6,459 | 43 | % | ||||||||||||||||||||||||||||
1,054 | 4,026 | 6,036 | 3,873 | 14,989 | 100 | % | |||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||||||||
Fixed rate | 244 | 2,448 | 36,301 | 100,239 | 139,232 | 70 | % | ||||||||||||||||||||||||||||
Adjustable and floating rate | 305 | 370 | 9,554 | 49,370 | 59,599 | 30 | % | ||||||||||||||||||||||||||||
549 | 2,818 | 45,855 | 149,609 | 198,831 | 100 | % | |||||||||||||||||||||||||||||
Home equity - term | |||||||||||||||||||||||||||||||||||
Fixed rate | 30 | 784 | 3,756 | 955 | 5,525 | 91 | % | ||||||||||||||||||||||||||||
Adjustable and floating rate | — | 32 | 170 | 354 | 556 | 9 | % | ||||||||||||||||||||||||||||
30 | 816 | 3,926 | 1,309 | 6,081 | 100 | % | |||||||||||||||||||||||||||||
Home equity - lines of credit | |||||||||||||||||||||||||||||||||||
Fixed rate | 73 | 5,826 | 30,523 | 8,419 | 44,841 | 28 | % | ||||||||||||||||||||||||||||
Adjustable and floating rate | 21,231 | 200 | 2,369 | 92,064 | 115,864 | 72 | % | ||||||||||||||||||||||||||||
21,304 | 6,026 | 32,892 | 100,483 | 160,705 | 100 | % | |||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||||||||
Fixed rate | 548 | 10,542 | 628 | 33 | 11,751 | 67 | % | ||||||||||||||||||||||||||||
Adjustable and floating rate | 2,611 | — | 3,245 | 23 | 5,879 | 33 | % | ||||||||||||||||||||||||||||
3,159 | 10,542 | 3,873 | 56 | 17,630 | 100 | % | |||||||||||||||||||||||||||||
$ | 214,776 | $ | 522,369 | $ | 929,083 | $ | 313,758 | $ | 1,979,986 |
2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Nonaccrual loans | $ | 6,449 | $ | 10,310 | $ | 10,657 | $ | 5,165 | $ | 9,843 | |||||||||||||||||||
OREO | — | — | 197 | 130 | 961 | ||||||||||||||||||||||||
Total nonperforming assets | 6,449 | 10,310 | 10,854 | 5,295 | 10,804 | ||||||||||||||||||||||||
Restructured loans still accruing | 804 | 934 | 979 | 1,132 | 1,183 | ||||||||||||||||||||||||
Loans past due 90 days or more and still accruing (1) | 1,201 | 554 | 2,232 | 57 | — | ||||||||||||||||||||||||
Total nonperforming and other risk assets | $ | 8,454 | $ | 11,798 | $ | 14,065 | $ | 6,484 | $ | 11,987 | |||||||||||||||||||
Loans 30-89 days past due | $ | 5,925 | $ | 10,291 | $ | 17,527 | $ | 5,186 | $ | 5,277 | |||||||||||||||||||
Asset quality ratios: | |||||||||||||||||||||||||||||
Total nonperforming loans to total loans | 0.33 | % | 0.52 | % | 0.65 | % | 0.41 | % | 0.97 | % | |||||||||||||||||||
Total nonperforming assets to total assets | 0.23 | % | 0.37 | % | 0.46 | % | 0.27 | % | 0.69 | % | |||||||||||||||||||
Total nonperforming assets to total loans and OREO | 0.33 | % | 0.52 | % | 0.66 | % | 0.42 | % | 1.07 | % | |||||||||||||||||||
Total risk assets to total loans and OREO | 0.43 | % | 0.60 | % | 0.86 | % | 0.52 | % | 1.19 | % | |||||||||||||||||||
Total risk assets to total assets | 0.30 | % | 0.43 | % | 0.59 | % | 0.34 | % | 0.77 | % | |||||||||||||||||||
Allowance for loan losses to total loans | 1.07 | % | 1.02 | % | 0.89 | % | 1.12 | % | 1.27 | % | |||||||||||||||||||
Allowance for loan losses to nonperforming loans | 328.42 | % | 195.45 | % | 137.52 | % | 271.33 | % | 130.00 | % | |||||||||||||||||||
Allowance for loan losses to nonperforming loans and restructured loans still accruing | 292.02 | % | 179.22 | % | 125.95 | % | 222.55 | % | 116.05 | % |
2021 | 2020 | ||||||||||||||||||||||||||||||||||
Nonaccrual Loans | Restructured Loans Still Accruing | Total | Nonaccrual Loans | Restructured Loans Still Accruing | Total | ||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||
Owner occupied | $ | 3,763 | $ | — | $ | 3,763 | $ | 3,232 | $ | 28 | $ | 3,260 | |||||||||||||||||||||||
Non-owner occupied residential | 122 | — | 122 | 268 | — | 268 | |||||||||||||||||||||||||||||
Acquisition and development | |||||||||||||||||||||||||||||||||||
Commercial and land development | — | — | — | 814 | — | 814 | |||||||||||||||||||||||||||||
Commercial and industrial | 250 | — | 250 | 3,639 | — | 3,639 | |||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||
First lien | 1,831 | 804 | 2,635 | 1,730 | 898 | 2,628 | |||||||||||||||||||||||||||||
Home equity – term | 7 | — | 7 | 10 | — | 10 | |||||||||||||||||||||||||||||
Home equity – lines of credit | 436 | — | 436 | 600 | 8 | 608 | |||||||||||||||||||||||||||||
Installment and other loans | 40 | — | 40 | 17 | — | 17 | |||||||||||||||||||||||||||||
$ | 6,449 | $ | 804 | $ | 7,253 | $ | 10,310 | $ | 934 | $ | 11,244 |
# of Relationships | Recorded Investment | Partial Charge-offs to Date | Specific Reserves | ||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Relationships greater than $1 million | 1 | $ | 2,535 | $ | — | $ | — | ||||||||||||||||
Relationships greater than $500 thousand but less than $1 million | 1 | 602 | 17 | — | |||||||||||||||||||
Relationships greater than $250 thousand but less than $500 thousand | 2 | 601 | — | — | |||||||||||||||||||
Relationships less than $250 thousand | 63 | 3,515 | 303 | 28 | |||||||||||||||||||
67 | $ | 7,253 | $ | 320 | $ | 28 | |||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||
Relationships greater than $1 million | 2 | $ | 5,639 | $ | — | $ | — | ||||||||||||||||
Relationships greater than $500 thousand but less than $1 million | 2 | 1,211 | 17 | — | |||||||||||||||||||
Relationships greater than $250 thousand but less than $500 thousand | 2 | 637 | — | — | |||||||||||||||||||
Relationships less than $250 thousand | 65 | 3,757 | 545 | 33 | |||||||||||||||||||
71 | $ | 11,244 | $ | 562 | $ | 33 |
Loan Type | Amount of Loans | Percent of Non-PPP Loans | ||||||||||||||||||||||||
December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | |||||||||||||||||||||||
Commercial | $ | — | $ | 15,702 | — | % | 1.4 | % | ||||||||||||||||||
Consumer Portfolio Loans | 56 | 2,504 | — | 0.6 | ||||||||||||||||||||||
Total Loans | $ | 56 | $ | 18,206 | — | % | 1.2 | % |
Pass | Special Mention | Non-Impaired Substandard | Impaired - Substandard | Doubtful | PCI Loans | Total | |||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner-occupied | $ | 219,250 | $ | 7,239 | $ | 6,087 | $ | 3,763 | $ | — | $ | 2,329 | $ | 238,668 | |||||||||||||||||||||||||||
Non-owner occupied | 528,010 | 23,297 | 166 | — | — | 310 | 551,783 | ||||||||||||||||||||||||||||||||||
Multi-family | 84,414 | 8,238 | 603 | — | — | — | 93,255 | ||||||||||||||||||||||||||||||||||
Non-owner occupied residential | 102,588 | 1,065 | 1,153 | 122 | — | 1,184 | 106,112 | ||||||||||||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||||||||||||||
1-4 family residential construction | 12,279 | — | — | — | — | — | 12,279 | ||||||||||||||||||||||||||||||||||
Commercial and land development | 92,049 | 1,385 | 491 | — | — | — | 93,925 | ||||||||||||||||||||||||||||||||||
Commercial and industrial | 470,579 | 7,917 | 4,720 | 250 | — | 2,262 | 485,728 | ||||||||||||||||||||||||||||||||||
Municipal | 14,989 | — | — | — | — | — | 14,989 | ||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||
First lien | 191,386 | — | 225 | 2,635 | — | 4,585 | 198,831 | ||||||||||||||||||||||||||||||||||
Home equity – term | 6,058 | — | — | 7 | — | 16 | 6,081 | ||||||||||||||||||||||||||||||||||
Home equity – lines of credit | 160,203 | 20 | 46 | 436 | — | — | 160,705 | ||||||||||||||||||||||||||||||||||
Installment and other loans | 17,584 | — | — | 40 | — | 6 | 17,630 | ||||||||||||||||||||||||||||||||||
$ | 1,899,389 | $ | 49,161 | $ | 13,491 | $ | 7,253 | $ | — | $ | 10,692 | $ | 1,979,986 | ||||||||||||||||||||||||||||
Pass | Special Mention | Non-Impaired Substandard | Impaired - Substandard | Doubtful | PCI Loans | Total | |||||||||||||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner-occupied | $ | 148,846 | $ | 12,491 | $ | 7,855 | $ | 3,260 | $ | — | $ | 2,456 | $ | 174,908 | |||||||||||||||||||||||||||
Non-owner occupied | 351,860 | 57,378 | — | — | — | 329 | 409,567 | ||||||||||||||||||||||||||||||||||
Multi-family | 92,769 | 20,224 | 642 | — | — | — | 113,635 | ||||||||||||||||||||||||||||||||||
Non-owner occupied residential | 107,557 | 3,948 | 1,422 | 268 | — | 1,310 | 114,505 | ||||||||||||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||||||||||||||
1-4 family residential construction | 9,101 | 385 | — | — | — | — | 9,486 | ||||||||||||||||||||||||||||||||||
Commercial and land development | 49,832 | 655 | 525 | 814 | — | — | 51,826 | ||||||||||||||||||||||||||||||||||
Commercial and industrial | 617,213 | 17,561 | 6,118 | 3,639 | — | 2,837 | 647,368 | ||||||||||||||||||||||||||||||||||
Municipal | 20,523 | — | — | — | — | — | 20,523 | ||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||
First lien | 236,381 | — | — | 2,628 | — | 5,312 | 244,321 | ||||||||||||||||||||||||||||||||||
Home equity – term | 10,076 | — | 64 | 10 | — | 19 | 10,169 | ||||||||||||||||||||||||||||||||||
Home equity – lines of credit | 156,264 | 95 | 54 | 608 | — | — | 157,021 | ||||||||||||||||||||||||||||||||||
Installment and other loans | 26,283 | — | — | 17 | — | 61 | 26,361 | ||||||||||||||||||||||||||||||||||
$ | 1,826,705 | $ | 112,737 | $ | 16,680 | $ | 11,244 | $ | — | $ | 12,324 | $ | 1,979,690 |
Average Impaired Balance | Interest Income Recognized | Interest Earned But Not Recognized | |||||||||||||||
December 31, 2021 | |||||||||||||||||
Commercial real estate: | |||||||||||||||||
Owner-occupied | $ | 3,825 | $ | 1 | $ | 1 | |||||||||||
Non-owner occupied | — | — | 20 | ||||||||||||||
Non-owner occupied residential | 225 | — | 24 | ||||||||||||||
Acquisition and development: | |||||||||||||||||
Commercial and land development | 187 | — | — | ||||||||||||||
Commercial and industrial | 3,030 | — | 36 | ||||||||||||||
Residential mortgage: | |||||||||||||||||
First lien | 2,539 | 43 | 73 | ||||||||||||||
Home equity – term | 11 | — | — | ||||||||||||||
Home equity – lines of credit | 521 | — | — | ||||||||||||||
Installment and other loans | 25 | — | — | ||||||||||||||
$ | 10,363 | $ | 44 | $ | 154 | ||||||||||||
December 31, 2020 | |||||||||||||||||
Commercial real estate: | |||||||||||||||||
Owner-occupied | $ | 4,636 | $ | 1 | $ | 172 | |||||||||||
Non-owner occupied | 83 | — | — | ||||||||||||||
Multi-family | 205 | — | — | ||||||||||||||
Non-owner occupied residential | 388 | — | 21 | ||||||||||||||
Acquisition and development: | |||||||||||||||||
Commercial and land development | 641 | — | 23 | ||||||||||||||
Commercial and industrial | 1,196 | — | 20 | ||||||||||||||
Residential mortgage: | |||||||||||||||||
First lien | 2,995 | 48 | 92 | ||||||||||||||
Home equity – term | 11 | — | 1 | ||||||||||||||
Home equity – lines of credit | 692 | 1 | 36 | ||||||||||||||
Installment and other loans | 25 | — | 1 | ||||||||||||||
$ | 10,872 | $ | 50 | $ | 366 |
Average Impaired Balance | Interest Income Recognized | Interest Earned But Not Recognized | |||||||||||||||
December 31, 2019 | |||||||||||||||||
Commercial real estate: | |||||||||||||||||
Owner-occupied | $ | 2,455 | $ | 2 | $ | 387 | |||||||||||
Non-owner occupied | 46 | — | — | ||||||||||||||
Multi-family | 152 | — | 24 | ||||||||||||||
Non-owner occupied residential | 217 | — | 21 | ||||||||||||||
Acquisition and development: | |||||||||||||||||
Commercial and land development | 21 | — | — | ||||||||||||||
Commercial and industrial | 683 | — | 130 | ||||||||||||||
Residential mortgage: | |||||||||||||||||
First lien | 2,582 | 50 | 91 | ||||||||||||||
Home equity – term | 13 | — | 1 | ||||||||||||||
Home equity – lines of credit | 750 | 2 | 64 | ||||||||||||||
Installment and other loans | 13 | — | 2 | ||||||||||||||
$ | 6,932 | $ | 54 | $ | 720 | ||||||||||||
December 31, 2018 | |||||||||||||||||
Commercial real estate: | |||||||||||||||||
Owner-occupied | $ | 1,495 | $ | 2 | $ | 156 | |||||||||||
Non-owner occupied | 1,842 | — | 236 | ||||||||||||||
Multi-family | 148 | — | 20 | ||||||||||||||
Non-owner occupied residential | 346 | — | 36 | ||||||||||||||
Acquisition and development: | |||||||||||||||||
1-4 family residential construction | 181 | — | — | ||||||||||||||
Commercial and land development | 1 | — | 1 | ||||||||||||||
Commercial and industrial | 322 | — | 29 | ||||||||||||||
Residential mortgage: | |||||||||||||||||
First lien | 3,234 | 59 | 130 | ||||||||||||||
Home equity – term | 19 | — | 2 | ||||||||||||||
Home equity – lines of credit | 657 | 2 | 52 | ||||||||||||||
Installment and other loans | 4 | — | 5 | ||||||||||||||
$ | 8,249 | $ | 63 | $ | 667 | ||||||||||||
December 31, 2017 | |||||||||||||||||
Commercial real estate: | |||||||||||||||||
Owner-occupied | $ | 1,000 | $ | 6 | $ | 114 | |||||||||||
Non-owner occupied | 392 | — | 10 | ||||||||||||||
Multi-family | 182 | — | 19 | ||||||||||||||
Non-owner occupied residential | 418 | — | 35 | ||||||||||||||
Acquisition and development: | |||||||||||||||||
1-4 family residential construction | 154 | — | 7 | ||||||||||||||
Commercial and industrial | 413 | — | 25 | ||||||||||||||
Residential mortgage: | |||||||||||||||||
First lien | 4,012 | 58 | 136 | ||||||||||||||
Home equity – term | 61 | — | 1 | ||||||||||||||
Home equity – lines of credit | 488 | 2 | 26 | ||||||||||||||
Installment and other loans | 10 | — | 3 | ||||||||||||||
$ | 7,130 | $ | 66 | $ | 376 |
Commercial | Consumer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Real Estate | Acquisition and Development | Commercial and Industrial | Municipal | Total | Residential Mortgage | Installment and Other | Total | Unallocated | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of year | $ | 11,151 | $ | 1,114 | $ | 3,942 | $ | 40 | $ | 16,247 | $ | 3,362 | $ | 324 | $ | 3,686 | $ | 218 | $ | 20,151 | |||||||||||||||||||||||||||||||||||||||
Provision for loan losses | 710 | 938 | 23 | (10) | 1,661 | (517) | (73) | (590) | 19 | 1,090 | |||||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | (293) | — | (663) | — | (956) | (92) | (70) | (162) | — | (1,118) | |||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | 469 | 10 | 512 | — | 991 | 32 | 34 | 66 | — | 1,057 | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, end of year | $ | 12,037 | $ | 2,062 | $ | 3,814 | $ | 30 | $ | 17,943 | $ | 2,785 | $ | 215 | $ | 3,000 | $ | 237 | $ | 21,180 | |||||||||||||||||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of year | $ | 7,634 | $ | 959 | $ | 2,356 | $ | 100 | $ | 11,049 | $ | 3,147 | $ | 319 | $ | 3,466 | $ | 140 | $ | 14,655 | |||||||||||||||||||||||||||||||||||||||
Provision for loan losses | 2,745 | 146 | 2,096 | (60) | 4,927 | 203 | 117 | 320 | 78 | 5,325 | |||||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | (3) | — | (748) | — | (751) | (114) | (146) | (260) | — | (1,011) | |||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | 775 | 9 | 238 | — | 1,022 | 126 | 34 | 160 | — | 1,182 | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, end of year | $ | 11,151 | $ | 1,114 | $ | 3,942 | $ | 40 | $ | 16,247 | $ | 3,362 | $ | 324 | $ | 3,686 | $ | 218 | $ | 20,151 | |||||||||||||||||||||||||||||||||||||||
December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of year | $ | 6,876 | $ | 817 | $ | 1,656 | $ | 98 | $ | 9,447 | $ | 3,753 | $ | 244 | $ | 3,997 | $ | 570 | $ | 14,014 | |||||||||||||||||||||||||||||||||||||||
Provision for loan losses | 515 | 139 | 841 | 2 | 1,497 | (347) | 180 | (167) | (430) | 900 | |||||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | (25) | — | (299) | — | (324) | (386) | (155) | (541) | — | (865) | |||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | 268 | 3 | 158 | — | 429 | 127 | 50 | 177 | — | 606 | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, end of year | $ | 7,634 | $ | 959 | $ | 2,356 | $ | 100 | $ | 11,049 | $ | 3,147 | $ | 319 | $ | 3,466 | $ | 140 | $ | 14,655 | |||||||||||||||||||||||||||||||||||||||
December 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of year | $ | 6,763 | $ | 417 | $ | 1,446 | $ | 84 | $ | 8,710 | $ | 3,400 | $ | 211 | $ | 3,611 | $ | 475 | $ | 12,796 | |||||||||||||||||||||||||||||||||||||||
Provision for loan losses | (442) | 396 | 209 | 14 | 177 | 363 | 165 | 528 | 95 | 800 | |||||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | (17) | (7) | — | — | (24) | (148) | (292) | (440) | — | (464) | |||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | 572 | 11 | 1 | — | 584 | 138 | 160 | 298 | — | 882 | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, end of year | $ | 6,876 | $ | 817 | $ | 1,656 | $ | 98 | $ | 9,447 | $ | 3,753 | $ | 244 | $ | 3,997 | $ | 570 | $ | 14,014 | |||||||||||||||||||||||||||||||||||||||
December 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of year | $ | 7,530 | $ | 580 | $ | 1,074 | $ | 54 | $ | 9,238 | $ | 2,979 | $ | 144 | $ | 3,123 | $ | 414 | $ | 12,775 | |||||||||||||||||||||||||||||||||||||||
Provision for loan losses | 38 | (167) | 333 | 30 | 234 | 531 | 174 | 705 | 61 | 1,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | (835) | — | (85) | — | (920) | (180) | (166) | (346) | — | (1,266) | |||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | 30 | 4 | 124 | — | 158 | 70 | 59 | 129 | — | 287 | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, end of year | $ | 6,763 | $ | 417 | $ | 1,446 | $ | 84 | $ | 8,710 | $ | 3,400 | $ | 211 | $ | 3,611 | $ | 475 | $ | 12,796 |
2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||
Provision for loan losses to net charge-offs (recoveries) | 1,787 | % | (3,114) | % | 347 | % | (191) | % | 102 | % | |||||||||||||||||||
Ratio of ALL to total loans outstanding at December 31 | 1.07 | % | 1.02 | % | 0.89 | % | 1.12 | % | 1.27 | % |
2021 | 2020 | ||||||||||
Commercial real estate: | |||||||||||
Net recoveries | $ | (176) | $ | (772) | |||||||
Average loans for the year | $ | 880,458 | $ | 783,882 | |||||||
Net recoveries/average loans | (0.02) | % | (0.10) | % | |||||||
Acquisition and development: | |||||||||||
Net recoveries | (10) | (9) | |||||||||
Average loans for the year | 74,786 | 57,352 | |||||||||
Net recoveries/average loans | (0.01) | % | (0.02) | % | |||||||
Commercial and industrial: | |||||||||||
Net charge-offs | 151 | 510 | |||||||||
Average loans for the year | 604,651 | 490,671 | |||||||||
Net charge-offs/average loans | 0.02 | % | 0.10 | % | |||||||
Municipal: | |||||||||||
Net charge-offs (recoveries) | — | — | |||||||||
Average loans for the year | 16,566 | 35,455 | |||||||||
Net charge-offs (recoveries)/average loans | — | % | — | % | |||||||
Residential mortgage: | |||||||||||
Net charge-offs (recoveries) | 60 | (12) | |||||||||
Average loans for the year | 379,802 | 468,318 | |||||||||
Net charge-offs (recoveries)/average loans | 0.02 | % | — | % | |||||||
Installment and other loans: | |||||||||||
Net charge-offs | 36 | 112 | |||||||||
Average loans for the year | 21,706 | 34,753 | |||||||||
Net charge-offs/average loans | 0.17 | % | 0.32 | % | |||||||
Total loans: | |||||||||||
Net charge-offs (recoveries) | $ | 61 | $ | (171) | |||||||
Average loans for the year | $ | 1,977,969 | $ | 1,870,431 | |||||||
Net charge-offs (recoveries)/average loans | — | % | (0.01) | % | |||||||
2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount | % of Loan Type to Total Loans | Amount | % of Loan Type to Total Loans | Amount | % of Loan Type to Total Loans | Amount | % of Loan Type to Total Loans | Amount | % of Loan Type to Total Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Owner-occupied | $ | 2,752 | 12 | % | $ | 2,072 | 9 | % | $ | 1,539 | 10 | % | $ | 1,491 | 10 | % | $ | 1,488 | 12 | % | |||||||||||||||||||||||||||||||||||||||
Non-owner occupied | 7,244 | 28 | % | 6,049 | 21 | % | 3,965 | 22 | % | 3,683 | 20 | % | 4,059 | 24 | % | ||||||||||||||||||||||||||||||||||||||||||||
Multi-family | 870 | 5 | % | 1,846 | 6 | % | 974 | 7 | % | 792 | 6 | % | 444 | 5 | % | ||||||||||||||||||||||||||||||||||||||||||||
Non-owner occupied residential | 1,171 | 5 | % | 1,184 | 6 | % | 1,156 | 7 | % | 910 | 8 | % | 772 | 8 | % | ||||||||||||||||||||||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1-4 family residential construction | 188 | 1 | % | 144 | 0 | % | 239 | 1 | % | 104 | 1 | % | 169 | 1 | % | ||||||||||||||||||||||||||||||||||||||||||||
Commercial and land development | 1,874 | 5 | % | 970 | 3 | % | 720 | 3 | % | 713 | 3 | % | 248 | 2 | % | ||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | 3,814 | 24 | % | 3,942 | 32 | % | 2,356 | 13 | % | 1,656 | 13 | % | 1,446 | 12 | % | ||||||||||||||||||||||||||||||||||||||||||||
Municipal | 30 | 1 | % | 40 | 1 | % | 100 | 3 | % | 98 | 4 | % | 84 | 4 | % | ||||||||||||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
First lien | 1,188 | 10 | % | 1,627 | 12 | % | 1,635 | 20 | % | 2,002 | 19 | % | 1,855 | 16 | % | ||||||||||||||||||||||||||||||||||||||||||||
Home equity - term | 31 | — | % | 63 | 1 | % | 59 | 1 | % | 109 | 1 | % | 119 | 1 | % | ||||||||||||||||||||||||||||||||||||||||||||
Home equity - lines of credit | 1,566 | 8 | % | 1,672 | 8 | % | 1,453 | 10 | % | 1,642 | 12 | % | 1,426 | 13 | % | ||||||||||||||||||||||||||||||||||||||||||||
Installment and other loans | 215 | 1 | % | 324 | 1 | % | 319 | 3 | % | 244 | 3 | % | 211 | 2 | % | ||||||||||||||||||||||||||||||||||||||||||||
Unallocated | 237 | 218 | 140 | 570 | 475 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 21,180 | 100 | % | $ | 20,151 | 100 | % | $ | 14,655 | 100 | % | $ | 14,014 | 100 | % | $ | 12,796 | 100 | % |
Commercial | Consumer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Real Estate | Acquisition and Development | Commercial and Industrial | Municipal | Total | Residential Mortgage | Installment and Other | Total | Unallocated | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans allocated by: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 3,885 | $ | — | $ | 250 | $ | — | $ | 4,135 | $ | 3,078 | $ | 40 | $ | 3,118 | $ | — | $ | 7,253 | |||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | 985,933 | 106,204 | 485,478 | 14,989 | 1,592,604 | 362,539 | 17,590 | 380,129 | — | 1,972,733 | |||||||||||||||||||||||||||||||||||||||||||||||||
$ | 989,818 | $ | 106,204 | $ | 485,728 | $ | 14,989 | $ | 1,596,739 | $ | 365,617 | $ | 17,630 | $ | 383,247 | $ | — | $ | 1,979,986 | ||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses allocated by: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 28 | $ | — | $ | 28 | $ | — | $ | 28 | |||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | 12,037 | 2,062 | 3,814 | 30 | 17,943 | 2,757 | 215 | 2,972 | 237 | 21,152 | |||||||||||||||||||||||||||||||||||||||||||||||||
$ | 12,037 | $ | 2,062 | $ | 3,814 | $ | 30 | $ | 17,943 | $ | 2,785 | $ | 215 | $ | 3,000 | $ | 237 | $ | 21,180 | ||||||||||||||||||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans allocated by: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 3,528 | $ | 814 | $ | 3,639 | $ | — | $ | 7,981 | $ | 3,246 | $ | 17 | $ | 3,263 | $ | — | $ | 11,244 | |||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | 809,087 | 60,498 | 643,729 | 20,523 | 1,533,837 | 408,265 | 26,344 | 434,609 | — | 1,968,446 | |||||||||||||||||||||||||||||||||||||||||||||||||
$ | 812,615 | $ | 61,312 | $ | 647,368 | $ | 20,523 | $ | 1,541,818 | $ | 411,511 | $ | 26,361 | $ | 437,872 | $ | — | $ | 1,979,690 | ||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses allocated by: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 33 | $ | — | $ | 33 | $ | — | $ | 33 | |||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | 11,151 | 1,114 | 3,942 | 40 | 16,247 | 3,329 | 324 | 3,653 | 218 | 20,118 | |||||||||||||||||||||||||||||||||||||||||||||||||
$ | 11,151 | $ | 1,114 | $ | 3,942 | $ | 40 | $ | 16,247 | $ | 3,362 | $ | 324 | $ | 3,686 | $ | 218 | $ | 20,151 |
2021 | 2020 | 2019 | |||||||||||||||
Demand deposits | $ | 542,952 | $ | 381,869 | $ | 234,354 | |||||||||||
Interest-bearing demand deposits | 1,392,996 | 1,156,292 | 920,025 | ||||||||||||||
Savings deposits | 202,371 | 163,133 | 138,761 | ||||||||||||||
Time deposits | 360,264 | 452,298 | 549,937 | ||||||||||||||
Total deposits | $ | 2,498,583 | $ | 2,153,592 | $ | 1,843,077 |
Three months or less | $ | 9,466 | ||||||
Over three months through six months | 16,932 | |||||||
Over six months through one year | 12,158 | |||||||
Over one year | 5,465 | |||||||
Total | $ | 44,021 |
2021 | 2020 | 2019 | |||||||||||||||
Average shareholders’ equity | $ | 262,159 | $ | 226,900 | $ | 206,021 | |||||||||||
Net income | 32,881 | 26,463 | 16,924 | ||||||||||||||
Cash dividends paid | 8,280 | 7,610 | 6,150 | ||||||||||||||
Average equity to average assets ratio | 9.06 | % | 8.58 | % | 9.26 | % | |||||||||||
Dividend payout ratio | 24.68 | % | 28.12 | % | 36.81 | % | |||||||||||
Return on average equity | 12.54 | % | 11.66 | % | 8.21 | % |
Payments Due | |||||||||||||||||||||||||||||||||||
Note Reference | Less than 1 year | 2-3 years | 4-5 years | More than 5 years | Total | ||||||||||||||||||||||||||||||
Time deposits | 11 | $ | 237,818 | $ | 53,394 | $ | 8,680 | $ | 2,193 | $ | 302,085 | ||||||||||||||||||||||||
Short-term borrowings | 13 | 23,301 | — | — | — | 23,301 | |||||||||||||||||||||||||||||
Long-term debt | 14 | 441 | 947 | 508 | — | 1,896 | |||||||||||||||||||||||||||||
Subordinated notes | 15 | — | — | — | 32,500 | 32,500 | |||||||||||||||||||||||||||||
Operating lease obligations | 6 | 1,163 | 2,462 | 2,571 | 9,687 | 15,883 | |||||||||||||||||||||||||||||
Total | $ | 262,723 | $ | 56,803 | $ | 11,759 | $ | 44,380 | $ | 375,665 |
Contract or Notional Amount | |||||
Commitments to fund: | |||||
Home equity lines of credit | $ | 261,580 | |||
1-4 family residential construction loans | 40,348 | ||||
Commercial real estate, construction and land development loans | 124,488 | ||||
Commercial, industrial and other loans | 378,996 | ||||
Standby letters of credit | 19,724 |
2021 | 2020 | 2019 | |||||||||||||||
Tangible book value per common share | |||||||||||||||||
Shareholders' equity | $ | 271,656 | $ | 246,249 | $ | 223,249 | |||||||||||
Less: Goodwill | 18,724 | 18,724 | 19,925 | ||||||||||||||
Other intangible assets | 4,183 | 5,458 | 7,180 | ||||||||||||||
Related tax effect | (878) | (1,146) | (1,508) | ||||||||||||||
Tangible common equity (non-GAAP) | $ | 249,627 | $ | 223,213 | $ | 197,652 | |||||||||||
Common shares outstanding | 11,183 | 11,201 | 11,200 | ||||||||||||||
Book value per share (most directly comparable GAAP based measure) | $ | 24.29 | $ | 21.98 | $ | 19.93 | |||||||||||
Intangible assets per share | 1.97 | 2.05 | 2.28 | ||||||||||||||
Tangible book value per share (non-GAAP) | $ | 22.32 | $ | 19.93 | $ | 17.65 |
December 31, 2021 | December 31, 2020 | ||||||||||
Allowance to Non-SBA Guaranteed Loans: | |||||||||||
Allowance for loan losses | $ | 21,180 | $ | 20,151 | |||||||
Gross loans | $ | 1,979,986 | $ | 1,979,690 | |||||||
less: SBA guaranteed loans | (195,585) | (404,205) | |||||||||
Non-SBA guaranteed loans | $ | 1,784,401 | $ | 1,575,485 | |||||||
Allowance to non-SBA guaranteed loans | 1.2 | % | 1.3 | % |
Earnings at Risk | Value at Risk | |||||||||||||||||||||||||||||||
% Change in Net Interest Income | % Change in Market Value | |||||||||||||||||||||||||||||||
Change in Market Interest Rates | December 31, 2021 | December 31, 2020 | Change in Market Interest Rates | December 31, 2021 | December 31, 2020 | |||||||||||||||||||||||||||
(100) | (1.4) | % | (0.8) | % | (100) | (43.8) | % | (99.6) | % | |||||||||||||||||||||||
100 | 3.7 | % | 1.7 | % | 100 | 25.8 | % | 70.7 | % | |||||||||||||||||||||||
200 | 6.7 | % | 2.4 | % | 200 | 41.2 | % | 116.4 | % |
2021 Quarter Ended | 2020 Quarter Ended | ||||||||||||||||||||||||||||||||||||||||||||||
December | September | June | March | December | September | June | March | ||||||||||||||||||||||||||||||||||||||||
Interest income | $ | 23,919 | $ | 22,191 | $ | 23,656 | $ | 23,929 | $ | 26,426 | $ | 24,216 | $ | 25,022 | $ | 23,967 | |||||||||||||||||||||||||||||||
Interest expense | 1,321 | 1,571 | 1,755 | 2,074 | 2,697 | 3,398 | 4,224 | 5,705 | |||||||||||||||||||||||||||||||||||||||
Net interest income | 22,598 | 20,620 | 21,901 | 21,855 | 23,729 | 20,818 | 20,798 | 18,262 | |||||||||||||||||||||||||||||||||||||||
Provision for loan losses | 1,100 | 365 | 625 | (1,000) | 300 | 2,200 | 1,900 | 925 | |||||||||||||||||||||||||||||||||||||||
Net interest income after provision for loan losses | 21,498 | 20,255 | 21,276 | 22,855 | 23,429 | 18,618 | 18,898 | 17,337 | |||||||||||||||||||||||||||||||||||||||
Investment securities gains (losses) | 3 | 479 | 11 | 145 | 28 | (13) | 9 | (40) | |||||||||||||||||||||||||||||||||||||||
Other noninterest income | 7,290 | 7,172 | 6,653 | 7,399 | 7,153 | 6,874 | 7,184 | 7,114 | |||||||||||||||||||||||||||||||||||||||
Merger related and branch consolidation expenses | — | — | — | — | — | 1,310 | — | — | |||||||||||||||||||||||||||||||||||||||
Other noninterest expenses | 20,290 | 19,035 | 17,033 | 17,783 | 18,080 | 17,955 | 18,431 | 18,304 | |||||||||||||||||||||||||||||||||||||||
Income before income tax expense | 8,501 | 8,871 | 10,907 | 12,616 | 12,530 | 6,214 | 7,660 | 6,107 | |||||||||||||||||||||||||||||||||||||||
Income tax expense | 1,795 | 1,679 | 2,131 | 2,409 | 2,471 | 1,237 | 1,301 | 1,039 | |||||||||||||||||||||||||||||||||||||||
Net income | $ | 6,706 | $ | 7,192 | $ | 8,776 | $ | 10,207 | $ | 10,059 | $ | 4,977 | $ | 6,359 | $ | 5,068 | |||||||||||||||||||||||||||||||
Per share information: | |||||||||||||||||||||||||||||||||||||||||||||||
Basic earnings per share (a) | $ | 0.61 | $ | 0.66 | $ | 0.80 | $ | 0.93 | $ | 0.92 | $ | 0.45 | $ | 0.58 | $ | 0.46 | |||||||||||||||||||||||||||||||
Diluted earnings per share (a) | 0.60 | 0.65 | 0.79 | 0.92 | 0.91 | 0.45 | 0.58 | 0.46 | |||||||||||||||||||||||||||||||||||||||
Dividends paid per share | 0.19 | 0.19 | 0.18 | 0.18 | 0.17 | 0.17 | 0.17 | 0.17 | |||||||||||||||||||||||||||||||||||||||
(a) Sum of the quarters may not equal the total year due to rounding. |
Page | |||||
Report of Crowe LLP, Independent Registered Public Accounting Firm (PCAOB ID | |||||
/s/ Thomas R. Quinn, Jr. | /s/ Neelesh Kalani | |||||||
Thomas R. Quinn, Jr. | Neelesh Kalani | |||||||
President and Chief Executive Officer | Executive Vice President and Chief Financial Officer | |||||||
March 11, 2022 |
December 31, | |||||||||||
(Dollars in thousands, except per share amounts) | 2021 | 2020 | |||||||||
Assets | |||||||||||
Cash and due from banks | $ | $ | |||||||||
Interest-bearing deposits with banks | |||||||||||
Cash and cash equivalents | |||||||||||
Restricted investments in bank stocks | |||||||||||
Securities available for sale (amortized cost of $ | |||||||||||
Loans held for sale, at fair value | |||||||||||
Loans | |||||||||||
Less: Allowance for loan losses | ( | ( | |||||||||
Net loans | |||||||||||
Premises and equipment, net | |||||||||||
Cash surrender value of life insurance | |||||||||||
Goodwill | |||||||||||
Other intangible assets, net | |||||||||||
Accrued interest receivable | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities | |||||||||||
Deposits: | |||||||||||
Noninterest-bearing | $ | $ | |||||||||
Interest-bearing | |||||||||||
Total deposits | |||||||||||
Securities sold under agreements to repurchase | |||||||||||
FHLB advances and other | |||||||||||
Subordinated notes | |||||||||||
Other liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Shareholders’ Equity | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, no par value—$ | |||||||||||
Additional paid—in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive income (loss) | |||||||||||
Treasury stock— | ( | ( | |||||||||
Total shareholders’ equity | |||||||||||
Total liabilities and shareholders’ equity | $ | $ |
Years Ended December 31, | |||||||||||||||||
(Dollars in thousands, except per share amounts) | 2021 | 2020 | 2019 | ||||||||||||||
Interest income | |||||||||||||||||
Loans | $ | $ | $ | ||||||||||||||
Investment securities - taxable | |||||||||||||||||
Investment securities - tax-exempt | |||||||||||||||||
Short term investments | |||||||||||||||||
Total interest income | |||||||||||||||||
Interest expense | |||||||||||||||||
Deposits | |||||||||||||||||
Securities sold under agreements to repurchase | |||||||||||||||||
FHLB advances and other | |||||||||||||||||
Subordinated notes | |||||||||||||||||
Total interest expense | |||||||||||||||||
Net interest income | |||||||||||||||||
Provision for loan losses | |||||||||||||||||
Net interest income after provision for loan losses | |||||||||||||||||
Noninterest income | |||||||||||||||||
Service charges on deposit accounts | |||||||||||||||||
Interchange income | |||||||||||||||||
Other service charges, commissions and fees | |||||||||||||||||
Swap fee income | |||||||||||||||||
Trust and investment management income | |||||||||||||||||
Brokerage income | |||||||||||||||||
Mortgage banking activities | |||||||||||||||||
Gain on sale of portfolio loans | |||||||||||||||||
Income from life insurance | |||||||||||||||||
Investment securities gains (losses) | ( | ||||||||||||||||
Other income | |||||||||||||||||
Total noninterest income | |||||||||||||||||
Noninterest expenses | |||||||||||||||||
Salaries and employee benefits | |||||||||||||||||
Occupancy | |||||||||||||||||
Furniture and equipment | |||||||||||||||||
Data processing | |||||||||||||||||
Automated teller and interchange fees | |||||||||||||||||
Advertising and bank promotions | |||||||||||||||||
FDIC insurance | |||||||||||||||||
Other professional services | |||||||||||||||||
Directors' compensation | |||||||||||||||||
Taxes other than income | |||||||||||||||||
Intangible asset amortization | |||||||||||||||||
Merger related and branch consolidation expenses | |||||||||||||||||
Insurance claim (recovery) receivable write-off | ( | ||||||||||||||||
Other operating expenses | |||||||||||||||||
Total noninterest expenses | |||||||||||||||||
Income before income tax expense | |||||||||||||||||
Income tax expense | |||||||||||||||||
Net income | $ | $ | $ | ||||||||||||||
Per share information: | |||||||||||||||||
Basic earnings per share | $ | $ | $ | ||||||||||||||
Diluted earnings per share | |||||||||||||||||
Dividends paid per share |
Years Ended December 31, | |||||||||||||||||
(Dollars in thousands) | 2021 | 2020 | 2019 | ||||||||||||||
Net income | $ | $ | $ | ||||||||||||||
Other comprehensive income, net of tax: | |||||||||||||||||
Unrealized gains on securities available for sale arising during the period | |||||||||||||||||
Reclassification adjustment for (gains) losses realized in net income | ( | ( | |||||||||||||||
Net unrealized gains on securities available for sale | |||||||||||||||||
Tax effect | ( | ( | ( | ||||||||||||||
Total other comprehensive income, net of tax and reclassification adjustments on securities available for sale | |||||||||||||||||
Unrealized gains (losses) on interest rate swaps used in cash flow hedges | ( | ||||||||||||||||
Reclassification adjustment for losses realized in net income | |||||||||||||||||
Net unrealized gains (losses) on interest rate swaps used in cash flow hedges | ( | ||||||||||||||||
Tax effect | ( | ||||||||||||||||
Total other comprehensive gain (loss), net of tax and reclassification adjustments on interest rate swaps | ( | ||||||||||||||||
Total other comprehensive income, net of tax and reclassification adjustments | |||||||||||||||||
Total comprehensive income | $ | $ | $ |
Years Ended December 31, 2021, 2020 and 2019 | |||||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Shareholders’ Equity | |||||||||||||||||||||||||||||
Balance, January 1, 2019 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Total other comprehensive loss, net of taxes | — | — | — | — | |||||||||||||||||||||||||||||||
Cash dividends ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Issuance of stock ( | — | — | — | ||||||||||||||||||||||||||||||||
Share-based compensation plans: | |||||||||||||||||||||||||||||||||||
— | — | ( | ( | ||||||||||||||||||||||||||||||||
Balance, December 31, 2019 | ( | ( | |||||||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Total other comprehensive income, net of taxes | — | — | — | — | |||||||||||||||||||||||||||||||
Cash dividends ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Share-based compensation plans: | |||||||||||||||||||||||||||||||||||
— | — | ( | |||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | ( | ||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Total other comprehensive income, net of taxes | — | — | — | — | |||||||||||||||||||||||||||||||
Cash dividends ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Share-based compensation plans: | |||||||||||||||||||||||||||||||||||
— | — | ( | ( | ||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | $ | $ | $ | $ | $ | ( | $ |
Years Ended December 31, | ||||||||||||||||||||
(Dollars in thousands) | 2021 | 2020 | 2019 | |||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||
Net income | $ | $ | $ | |||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
Net discount accretion | ( | ( | ( | |||||||||||||||||
Depreciation and amortization expense | ||||||||||||||||||||
Impairment of intangibles | ||||||||||||||||||||
Provision for loan losses | ||||||||||||||||||||
Share-based compensation | ||||||||||||||||||||
Gains on sales of loans originated for sale | ( | ( | ( | |||||||||||||||||
Mortgage loans originated for sale | ( | ( | ( | |||||||||||||||||
Proceeds from sales of loans originated for sale | ||||||||||||||||||||
Gains on sale of portfolio loans | ( | |||||||||||||||||||
Net (gain) loss on disposal of OREO and premises held for sale | ( | ( | ||||||||||||||||||
Writedown of OREO and premises held for sale | ||||||||||||||||||||
Net loss on disposal of premises and equipment | ||||||||||||||||||||
Deferred income taxes | ( | |||||||||||||||||||
Investment securities (gains) losses | ( | ( | ||||||||||||||||||
Loss (gain) on derivative terminations | ( | |||||||||||||||||||
Income from life insurance | ( | ( | ( | |||||||||||||||||
Decrease (increase) in accrued interest receivable | ( | |||||||||||||||||||
Increase (decrease) in accrued interest payable and other liabilities | ( | |||||||||||||||||||
Other, net | ( | |||||||||||||||||||
Net cash provided by operating activities | ||||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||
Proceeds from sales of AFS securities | ||||||||||||||||||||
Maturities, repayments and calls of AFS securities | ||||||||||||||||||||
Purchases of AFS securities | ( | ( | ( | |||||||||||||||||
Net cash and cash equivalents received from acquisitions | ||||||||||||||||||||
Net redemptions (purchases) of restricted investments in bank stocks | ( | |||||||||||||||||||
Net decrease (increase) in loans | ( | ( | ||||||||||||||||||
Proceeds from sales of portfolio loans | ||||||||||||||||||||
Purchases of bank premises and equipment | ( | ( | ( | |||||||||||||||||
Proceeds from disposal of OREO and premises held for sale | ||||||||||||||||||||
Purchases of bank owned life insurance | ( | ( | ||||||||||||||||||
Death benefit proceeds from life insurance contracts | ||||||||||||||||||||
Net cash (used in) provided by investing activities | ( | ( | ||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||
Net increase (decrease) in deposits | ( | |||||||||||||||||||
Net increase (decrease) in borrowings with original maturities less than 90 days | ( | |||||||||||||||||||
Proceeds from other short-term borrowings | ||||||||||||||||||||
Payments on other short-term borrowings | ( | ( | ( | |||||||||||||||||
Settlement of terminated derivatives | ( | |||||||||||||||||||
Payment of subordinated notes issuance costs | ( | |||||||||||||||||||
Dividends paid | ( | ( | ( | |||||||||||||||||
Acquisition of treasury stock | ( | ( | ||||||||||||||||||
Treasury shares repurchased for employee taxes associated with restricted stock vesting | ( | ( | ( | |||||||||||||||||
Proceeds from issuance of stock for option exercises and employee stock purchase plan | ||||||||||||||||||||
Net cash provided by (used in) financing activities | ( | |||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | ( | |||||||||||||||||||
Cash and cash equivalents at beginning of year | ||||||||||||||||||||
Cash and cash equivalents at end of year | $ | $ | $ | |||||||||||||||||
Years Ended December 31, | |||||||||||||||||
(Dollars in thousands) | 2021 | 2020 | 2019 | ||||||||||||||
Supplemental disclosure of cash flow information: | |||||||||||||||||
Cash paid during the year for: | |||||||||||||||||
Interest | $ | $ | $ | ||||||||||||||
Income taxes | |||||||||||||||||
Supplemental schedule of noncash investing and financing activities: | |||||||||||||||||
OREO acquired in settlement of loans | |||||||||||||||||
Premises and equipment transferred to held for sale | |||||||||||||||||
Lease liabilities arising from obtaining ROU assets | |||||||||||||||||
The Notes to Consolidated Financial Statements are an integral part of these statements. |
Fair value of consideration transferred: | |||||
Cash | $ | ||||
Common stock issued | |||||
Total consideration transferred | $ | ||||
Estimated fair values of assets acquired and liabilities assumed: | |||||
Cash and cash equivalents | $ | ||||
Securities available for sale | |||||
Restricted investments in bank stocks | |||||
Loans | |||||
Premises and equipment | |||||
Core deposit intangible | |||||
Goodwill | |||||
Cash surrender value of life insurance | |||||
Deferred tax asset, net | |||||
ROU lease asset | |||||
Other assets | |||||
Total assets acquired | $ | ||||
Deposits | $ | ( | |||
Borrowings | ( | ||||
Other liabilities | ( | ||||
Total liabilities assumed | $ | ( |
Performing | PCI | Total | |||||||||||||||
Commercial real estate: | |||||||||||||||||
Owner-occupied | $ | $ | $ | ||||||||||||||
Non-owner occupied | |||||||||||||||||
Multi-family | |||||||||||||||||
Acquisition and development: | |||||||||||||||||
1-4 family residential construction | |||||||||||||||||
Commercial and land development | |||||||||||||||||
Commercial and industrial | |||||||||||||||||
Residential mortgage: | |||||||||||||||||
First lien | |||||||||||||||||
Home-equity - term | |||||||||||||||||
Home equity - lines of credit | |||||||||||||||||
Installment and other loans | |||||||||||||||||
Total loans acquired | $ | $ | $ |
Gross amortized cost basis at acquisition | $ | ||||
Market rate adjustment | ( | ||||
Credit fair value adjustment on non-credit impaired loans | ( | ||||
Credit fair value adjustment on impaired loans | ( | ||||
Estimated fair value of acquired loans | $ |
Contractually required principal and interest at acquisition | $ | ||||
Contractual cash flows not expected to be collected (nonaccretable discount) | ( | ||||
Expected cash flows at acquisition | |||||
Interest component of expected cash flows (accretable discount) | ( | ||||
Estimated fair value of acquired PCI loans | $ |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | $ | |||||||||||||||||||
States and political subdivisions | |||||||||||||||||||||||
GSE residential MBSs | |||||||||||||||||||||||
GSE residential CMOs | |||||||||||||||||||||||
Non-agency CMOs | |||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Totals | $ | $ | $ | $ | |||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||
States and political subdivisions | $ | $ | $ | $ | |||||||||||||||||||
GSE residential MBSs | |||||||||||||||||||||||
GSE residential CMOs | |||||||||||||||||||||||
Non-agency CMOs | |||||||||||||||||||||||
Private label commercial CMOs | |||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Totals | $ | $ | $ | $ |
Less Than 12 Months | 12 Months or More | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||
# of Securities | Fair Value | Unrealized Losses | # of Securities | Fair Value | Unrealized Losses | # of Securities | Fair Value | Unrealized Losses | |||||||||||||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
States and political subdivisions | |||||||||||||||||||||||||||||||||||||||||||||||||||||
GSE residential MBSs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
GSE residential CMOs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-agency CMOs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Totals | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
States and political subdivisions | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
GSE residential CMOs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Private label commercial CMOs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Totals | $ | $ | $ | $ | $ | $ |
Amortized Cost | Fair Value | ||||||||||
Due in one year or less | $ | $ | |||||||||
Due after one year through five years | |||||||||||
Due after five years through ten years | |||||||||||
Due after ten years | |||||||||||
CMOs and MBSs | |||||||||||
Asset-backed | |||||||||||
$ | $ |
2021 | 2020 | 2019 | |||||||||||||||
Proceeds from sale of investment securities | $ | $ | $ | ||||||||||||||
Gross gains | |||||||||||||||||
Gross losses |
2021 | 2020 | ||||||||||
Commercial real estate: | |||||||||||
Owner-occupied | $ | $ | |||||||||
Non-owner occupied | |||||||||||
Multi-family | |||||||||||
Non-owner occupied residential | |||||||||||
Acquisition and development: | |||||||||||
1-4 family residential construction | |||||||||||
Commercial and land development | |||||||||||
Commercial and industrial (1) | |||||||||||
Municipal | |||||||||||
Residential mortgage: | |||||||||||
First lien | |||||||||||
Home equity – term | |||||||||||
Home equity – lines of credit | |||||||||||
Installment and other loans | |||||||||||
Total loans | $ | $ |
Pass | Special Mention | Non-Impaired Substandard | Impaired - Substandard | Doubtful | PCI Loans | Total | |||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner-occupied | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||||||||||||||
Multi-family | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||||||||||||||
1-4 family residential construction | |||||||||||||||||||||||||||||||||||||||||
Commercial and land development | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Municipal | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||||||||||||||
Home equity – term | |||||||||||||||||||||||||||||||||||||||||
Home equity – lines of credit | |||||||||||||||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner-occupied | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||||||||||||||
Multi-family | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||||||||||||||
1-4 family residential construction | |||||||||||||||||||||||||||||||||||||||||
Commercial and land development | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Municipal | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||||||||||||||
Home equity – term | |||||||||||||||||||||||||||||||||||||||||
Home equity – lines of credit | |||||||||||||||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ |
Impaired Loans with a Specific Allowance | Impaired Loans with No Specific Allowance | ||||||||||||||||||||||||||||
Recorded Investment (Book Balance) | Unpaid Principal Balance (Legal Balance) | Related Allowance | Recorded Investment (Book Balance) | Unpaid Principal Balance (Legal Balance) | |||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||
Owner-occupied | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||
Home equity—term | |||||||||||||||||||||||||||||
Home equity—lines of credit | |||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | |||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||
Owner-occupied | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||
Commercial and land development | |||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||
Home equity—term | |||||||||||||||||||||||||||||
Home equity—lines of credit | |||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||
$ | $ | $ | $ | $ |
2021 | 2020 | 2019 | |||||||||||||||||||||||||||||||||
Average Impaired Balance | Interest Income Recognized | Average Impaired Balance | Interest Income Recognized | Average Impaired Balance | Interest Income Recognized | ||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||
Owner-occupied | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||||||||
Multi-family | |||||||||||||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||||||||
Commercial and land development | |||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||||||||
Home equity – term | |||||||||||||||||||||||||||||||||||
Home equity – lines of credit | |||||||||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ |
2021 | 2020 | ||||||||||||||||||||||
Number of Contracts | Recorded Investment | Number of Contracts | Recorded Investment | ||||||||||||||||||||
Accruing: | |||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||
Owner-occupied | $ | $ | |||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||
First lien | |||||||||||||||||||||||
Home equity - lines of credit | |||||||||||||||||||||||
Nonaccruing: | |||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||
First lien | |||||||||||||||||||||||
$ | $ |
Number of Contracts | Pre- Modification Investment Balance | Post- Modification Investment Balance | |||||||||||||||
December 31, 2019 | |||||||||||||||||
Commercial real estate: | |||||||||||||||||
Owner-occupied | $ | $ | |||||||||||||||
Days Past Due | |||||||||||||||||||||||||||||||||||||||||
Current | 30-59 | 60-89 | 90+ (still accruing) | Total Past Due | Non- Accrual | Total Loans | |||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner-occupied | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||||||||||||||
Multi-family | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||||||||||||||
1-4 family residential construction | |||||||||||||||||||||||||||||||||||||||||
Commercial and land development | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Municipal | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||||||||||||||
Home equity – term | |||||||||||||||||||||||||||||||||||||||||
Home equity – lines of credit | |||||||||||||||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||||||||||||||
Subtotal | |||||||||||||||||||||||||||||||||||||||||
Loans acquired with credit deterioration: | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner-occupied | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||||||||||||||
Home equity – term | |||||||||||||||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||||||||||||||
Subtotal | |||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ |
Days Past Due | |||||||||||||||||||||||||||||||||||||||||
Current | 30-59 | 60-89 | 90+ (still accruing) | Total Past Due | Non- Accrual | Total Loans | |||||||||||||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner-occupied | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||||||||||||||
Multi-family | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||||||||||||||
Acquisition and development: | |||||||||||||||||||||||||||||||||||||||||
1-4 family residential construction | |||||||||||||||||||||||||||||||||||||||||
Commercial and land development | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Municipal | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||||||||||||||
Home equity – term | |||||||||||||||||||||||||||||||||||||||||
Home equity – lines of credit | |||||||||||||||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||||||||||||||
Subtotal | |||||||||||||||||||||||||||||||||||||||||
Loans acquired with credit deterioration: | |||||||||||||||||||||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||||||||||||
Owner-occupied | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied | |||||||||||||||||||||||||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||||||||||||||||||||
First lien | |||||||||||||||||||||||||||||||||||||||||
Home equity – term | |||||||||||||||||||||||||||||||||||||||||
Installment and other loans | |||||||||||||||||||||||||||||||||||||||||
Subtotal | |||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ |
Commercial | Consumer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Real Estate | Acquisition and Development | Commercial and Industrial | Municipal | Total | Residential Mortgage | Installment and Other | Total | Unallocated | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of year | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Provision for loan losses | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, end of year | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of year | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Provision for loan losses | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, end of year | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of year | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Provision for loan losses | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, end of year | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ |
Commercial | Consumer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial Real Estate | Acquisition and Development | Commercial and Industrial | Municipal | Total | Residential Mortgage | Installment and Other | Total | Unallocated | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans allocated by: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses allocated by: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans allocated by: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses allocated by: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | $ | $ |
2021 | 2020 | ||||||||||
Accretable yield, beginning of period | $ | $ | |||||||||
Additions (1) | |||||||||||
Accretion of income | ( | ( | |||||||||
Reclassifications from nonaccretable difference due to improvement in expected cash flows | |||||||||||
Other changes, net (2) | ( | ||||||||||
Accretable yield, end of period | $ | $ |
2021 | 2020 | ||||||||||
Land | $ | $ | |||||||||
Buildings and improvements | |||||||||||
Leasehold improvements | |||||||||||
Furniture and equipment | |||||||||||
Construction in progress | |||||||||||
Less accumulated depreciation | |||||||||||
$ | $ |
December 31, 2021 | December 31, 2020 | ||||||||||
Operating lease ROU assets | $ | $ | |||||||||
Operating lease ROU liabilities | |||||||||||
Weighted-average remaining lease term (in years) | |||||||||||
Weighted-average discount rate | % | % |
December 31, 2021 | December 31, 2020 | ||||||||||
Cash paid for operating lease liabilities | $ | $ | |||||||||
Operating lease expense |
2022 | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
Less: imputed interest | |||||
Total lease liabilities | $ |
2021 | 2020 | ||||||||||
Balance, beginning of year | $ | $ | |||||||||
Adjustments to acquired goodwill (1) | ( | ||||||||||
Balance, end of year | $ | $ |
2021 | 2020 | ||||||||||
Balance, beginning of year | $ | $ | |||||||||
Amortization expense | ( | ( | |||||||||
Impairment | ( | ||||||||||
Balance, end of year | $ | $ |
2021 | 2020 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||||||||||
Amortized intangible assets: | |||||||||||||||||||||||
Core deposit intangibles | $ | $ | $ | $ | |||||||||||||||||||
Other client relationship intangibles | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
2022 | $ | |||||||
2023 | ||||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
Thereafter | ||||||||
$ |
2021 | 2020 | 2019 | |||||||||||||||
Current expense | $ | $ | $ | ||||||||||||||
Deferred expense (benefit) | ( | ||||||||||||||||
Income tax expense | $ | $ | $ |
2021 | 2020 | 2019 | |||||||||||||||
Statutory federal tax rate | % | % | % | ||||||||||||||
Increase (decrease) resulting from: | |||||||||||||||||
State taxes, net of federal benefit | ( | ||||||||||||||||
Tax exempt interest income | ( | ( | ( | ||||||||||||||
Income from life insurance | ( | ( | ( | ||||||||||||||
Disallowed interest expense | |||||||||||||||||
Low-income housing credits and related expense | ( | ( | ( | ||||||||||||||
Merger related | |||||||||||||||||
Other | ( | ||||||||||||||||
Effective income tax rate | % | % | % |
2021 | 2020 | ||||||||||
Deferred tax assets: | |||||||||||
Allowance for loan losses | $ | $ | |||||||||
Deferred compensation | |||||||||||
Retirement and salary continuation plans | |||||||||||
Share-based compensation | |||||||||||
Off-balance sheet reserves | |||||||||||
Nonaccrual loan interest | |||||||||||
Deferred loan fees | |||||||||||
Net unrealized losses on interest rate swaps | |||||||||||
Purchase accounting adjustments | |||||||||||
Bonus accrual | |||||||||||
ROU liability | |||||||||||
Net operating loss carryforward | |||||||||||
Other | |||||||||||
Total deferred tax assets | |||||||||||
Deferred tax liabilities: | |||||||||||
Depreciation | |||||||||||
Net unrealized gains on securities available for sale | |||||||||||
Mortgage servicing rights | |||||||||||
Purchase accounting adjustments | |||||||||||
ROU Asset | |||||||||||
Other | |||||||||||
Total deferred tax liabilities | |||||||||||
Net deferred tax asset, included in other assets | $ | $ |
Shares | Weighted Average Grant Date Fair Value | ||||||||||
Nonvested shares, beginning of year | $ | ||||||||||
Granted | |||||||||||
Forfeited | ( | ||||||||||
Vested | ( | ||||||||||
Nonvested shares, end of year | $ |
2021 | 2020 | 2019 | |||||||||||||||
Restricted share award expense | $ | $ | $ | ||||||||||||||
Restricted share award federal tax benefit | |||||||||||||||||
Fair value of shares vested |
2021 | 2020 | 2019 | |||||||||||||||
Shares purchased | |||||||||||||||||
Weighted average price of shares purchased | $ | $ | $ | ||||||||||||||
Compensation expense recognized | $ | $ | $ | ||||||||||||||
2021 | 2020 | ||||||||||
Noninterest-bearing demand deposits | $ | $ | |||||||||
Interest-bearing demand deposits | |||||||||||
Savings | |||||||||||
Time ($250,000 or less) | |||||||||||
Time (over $250,000) | |||||||||||
Total | $ | $ |
2022 | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
$ |
Balance, beginning of year | $ | ||||
New loans | |||||
Repayments | ( | ||||
Director and officer relationship changes | ( | ||||
Balance, end of year | $ |
2021 | 2020 | 2019 | |||||||||||||||
Balance at year-end | $ | $ | $ | ||||||||||||||
Weighted average interest rate at year-end | % | % | % | ||||||||||||||
Average balance during the year | $ | $ | $ | ||||||||||||||
Average interest rate during the year | % | % | % | ||||||||||||||
Maximum month-end balance during the year | $ | $ | $ |
2021 | 2020 | 2019 | |||||||||||||||
Balance at year-end | $ | $ | $ | ||||||||||||||
Weighted average interest rate at year-end | % | % | % | ||||||||||||||
Average balance during the year | $ | $ | $ | ||||||||||||||
Average interest rate during the year | % | % | % | ||||||||||||||
Maximum month-end balance during the year | $ | $ | $ | ||||||||||||||
Fair value of securities underlying the agreements at year-end |
Amount | Weighted Average rate | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Total FHLB amortizing advance requiring monthly principal and interest payments, maturing: | |||||||||||||||||||||||
2025 | $ | $ | % | % | |||||||||||||||||||
2022 | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
$ |
December 31, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||||||||
Notional Amount | Balance Sheet Location | Fair Value | Notional Amount | Balance Sheet Location | Fair Value | ||||||||||||||||||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||||||||||||||||||||||
Interest rate swaps - balance sheet hedge | $ | $ | $ | Other liabilities | $ | ( | |||||||||||||||||||||||||||||
Total derivatives designated as hedging instruments | $ | $ | ( | ||||||||||||||||||||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||||||||||||||||||||
Interest rate swap - commercial borrower | $ | Other assets | $ | $ | Other assets | $ | |||||||||||||||||||||||||||||
Interest rate swap - counterparty | Other liabilities | ( | Other liabilities | ( | |||||||||||||||||||||||||||||||
Risk participation | Other liabilities | ( | |||||||||||||||||||||||||||||||||
Interest rate lock commitments with customers | Other assets | Other assets | |||||||||||||||||||||||||||||||||
Forward sale commitment | Other assets | Other liabilities | ( | ||||||||||||||||||||||||||||||||
Total derivatives not designated as hedging instruments | $ | $ |
Amount of Gain (Loss) Recognized in OCI on Derivative | ||||||||||||||
2021 | 2020 | |||||||||||||
Derivatives in cash flow hedging relationships: | ||||||||||||||
Interest rate products | $ | $ | ( | |||||||||||
Total | $ | $ | ( |
Amount of Loss Reclassified from AOCI into Income | Location of Loss Recognized from AOCI into Income | |||||||||||||||||||
2021 | 2020 | |||||||||||||||||||
Derivatives in cash flow hedging relationships: | ||||||||||||||||||||
Interest rate products | $ | ( | $ | ( | Interest expense / Other operating expenses(1) | |||||||||||||||
Total | $ | ( | $ | ( |
Amount of (Loss) Gain Recognized in Income | Location of Gain (Loss) Recognized in Income | |||||||||||||||||||
2021 | 2020 | |||||||||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||
Interest rate products | $ | $ | ( | Other operating expenses | ||||||||||||||||
Risk participation agreement | ( | Other operating expenses | ||||||||||||||||||
Interest rate lock commitments with customers | ( | Mortgage banking activities | ||||||||||||||||||
Forward sale commitment | ( | Mortgage banking activities | ||||||||||||||||||
Total | $ | ( | $ |
December 31, 2020 | ||||||||
Weighted average pay rate | % | |||||||
Weighted average receive rate | % | |||||||
Weighted average maturity in years |
Actual | For Capital Adequacy Purposes (includes applicable capital conservation buffer) | To Be Well Capitalized Under Prompt Corrective Action Regulations | |||||||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||
Total risk-based capital: | |||||||||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | $ | % | $ | % | n/a | n/a | |||||||||||||||||||||||||||||
Orrstown Bank | % | % | $ | % | |||||||||||||||||||||||||||||||
Tier 1 risk-based capital: | |||||||||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | % | % | n/a | n/a | |||||||||||||||||||||||||||||||
Orrstown Bank | % | % | % | ||||||||||||||||||||||||||||||||
Tier 1 common equity risk-based capital: | |||||||||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | % | % | n/a | n/a | |||||||||||||||||||||||||||||||
Orrstown Bank | % | % | % | ||||||||||||||||||||||||||||||||
Tier 1 leverage capital: | |||||||||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | % | % | n/a | n/a | |||||||||||||||||||||||||||||||
Orrstown Bank | % | % | % | ||||||||||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||
Total risk-based capital: | |||||||||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | $ | % | $ | % | n/a | n/a | |||||||||||||||||||||||||||||
Orrstown Bank | % | % | $ | % | |||||||||||||||||||||||||||||||
Tier 1 risk-based capital: | |||||||||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | % | % | n/a | n/a | |||||||||||||||||||||||||||||||
Orrstown Bank | % | % | % | ||||||||||||||||||||||||||||||||
Tier 1 common equity risk-based capital: | |||||||||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | % | % | n/a | n/a | |||||||||||||||||||||||||||||||
Orrstown Bank | % | % | % | ||||||||||||||||||||||||||||||||
Tier 1 leverage capital: | |||||||||||||||||||||||||||||||||||
Orrstown Financial Services, Inc. | % | % | n/a | n/a | |||||||||||||||||||||||||||||||
Orrstown Bank | % | % | % |
2021 | 2020 | 2019 | |||||||||||||||
Net income | $ | $ | $ | ||||||||||||||
Weighted average shares outstanding - basic | |||||||||||||||||
Dilutive effect of share-based compensation | |||||||||||||||||
Weighted average shares outstanding - diluted | |||||||||||||||||
Per share information: | |||||||||||||||||
Basic earnings per share | $ | $ | $ | ||||||||||||||
Diluted earnings per share |
2021 | 2020 | ||||||||||
Commitments to fund: | |||||||||||
Home equity lines of credit | $ | $ | |||||||||
1-4 family residential construction loans | |||||||||||
Commercial real estate, construction and land development loans | |||||||||||
Commercial, industrial and other loans | |||||||||||
Standby letters of credit |
Level 1 | Level 2 | Level 3 | Total Fair Value Measurements | ||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||
Investment securities: | |||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | $ | |||||||||||||||||||
States and political subdivisions | |||||||||||||||||||||||
GSE residential MBSs | |||||||||||||||||||||||
GSE residential CMOs | |||||||||||||||||||||||
Non-agency CMOs | |||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||
Derivatives | |||||||||||||||||||||||
Totals | $ | $ | $ | $ | |||||||||||||||||||
Financial Liabilities | |||||||||||||||||||||||
Derivatives | $ | $ | $ | $ | |||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||
Investment securities: | |||||||||||||||||||||||
States and political subdivisions | $ | $ | $ | $ | |||||||||||||||||||
GSE residential MBSs | |||||||||||||||||||||||
GSE residential CMOs | |||||||||||||||||||||||
Non-agency CMOs | |||||||||||||||||||||||
Private label commercial CMOs | |||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||
Derivatives | |||||||||||||||||||||||
Totals | $ | $ | $ | $ | |||||||||||||||||||
Financial Liabilities | |||||||||||||||||||||||
Derivatives | $ | $ | $ | $ | |||||||||||||||||||
Investment securities: | |||||||||||
2021 | 2020 | ||||||||||
Balance, beginning of year | $ | $ | |||||||||
Unrealized gain (loss) included in OCI | ( | ||||||||||
Net discount accretion | |||||||||||
Principal payments | ( | ( | |||||||||
Sold | ( | ||||||||||
Transfers into Level 3 | |||||||||||
Balance, end of year | $ | $ |
Interest rate lock commitments on residential mortgages: | |||||||||||
2021 | 2020 | ||||||||||
Balance, beginning of year | $ | $ | |||||||||
Total (loss) gain included in earnings | ( | ||||||||||
Balance, end of year | $ | $ |
Level 1 | Level 2 | Level 3 | Total Fair Value Measurements | ||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Impaired loans | |||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||
Owner-occupied | $ | $ | $ | $ | |||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||
First lien | |||||||||||||||||||||||
Home equity - lines of credit | |||||||||||||||||||||||
Total impaired loans | $ | $ | $ | $ | |||||||||||||||||||
Mortgage servicing rights | $ | $ | $ | $ | |||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||
Impaired loans | |||||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||
Owner-occupied | $ | $ | $ | $ | |||||||||||||||||||
Non-owner occupied residential | |||||||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||
Residential mortgage: | |||||||||||||||||||||||
First lien | |||||||||||||||||||||||
Home equity - lines of credit | |||||||||||||||||||||||
Total impaired loans | $ | $ | $ | $ | |||||||||||||||||||
Mortgage servicing rights | $ | $ | $ | $ |
Fair Value Estimate | Valuation Techniques | Unobservable Input | Range | ||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Impaired loans | $ | Appraisal of collateral | Management adjustments on appraisals for property type and recent activity | ||||||||||||||||||||
- Management adjustments for liquidation expenses | |||||||||||||||||||||||
Mortgage servicing rights | Discounted cash flows | Weighted average CPR | |||||||||||||||||||||
Discount rate | |||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||
Impaired loans | $ | Appraisal of collateral | Management adjustments on appraisals for property type and recent activity | ||||||||||||||||||||
- Management adjustments for liquidation expenses | |||||||||||||||||||||||
Mortgage servicing rights | Discounted cash flows | Weighted average CPR | |||||||||||||||||||||
Discount rate |
Carrying Amount | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||||||||
Cash and due from banks | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Interest-bearing deposits with banks | |||||||||||||||||||||||||||||
Restricted investments in bank stock | n/a | n/a | n/a | n/a | |||||||||||||||||||||||||
Investment securities | |||||||||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||||||||
Loans, net of allowance for loan losses | |||||||||||||||||||||||||||||
Derivatives | |||||||||||||||||||||||||||||
Accrued interest receivable | |||||||||||||||||||||||||||||
Financial Liabilities | |||||||||||||||||||||||||||||
Deposits | |||||||||||||||||||||||||||||
Securities sold under agreements to repurchase | |||||||||||||||||||||||||||||
FHLB advances and other | |||||||||||||||||||||||||||||
Subordinated notes | |||||||||||||||||||||||||||||
Derivatives | |||||||||||||||||||||||||||||
Accrued interest payable | |||||||||||||||||||||||||||||
Off-balance sheet instruments | |||||||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||
Financial Assets | |||||||||||||||||||||||||||||
Cash and due from banks | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Interest-bearing deposits with banks | |||||||||||||||||||||||||||||
Restricted investments in bank stock | n/a | n/a | n/a | n/a | |||||||||||||||||||||||||
Investment securities | |||||||||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||||||||
Loans, net of allowance for loan losses | |||||||||||||||||||||||||||||
Derivatives | |||||||||||||||||||||||||||||
Accrued interest receivable | |||||||||||||||||||||||||||||
Financial Liabilities | |||||||||||||||||||||||||||||
Deposits | |||||||||||||||||||||||||||||
Securities sold under agreements to repurchase | |||||||||||||||||||||||||||||
FHLB advances and other | |||||||||||||||||||||||||||||
Subordinated notes | |||||||||||||||||||||||||||||
Derivatives | |||||||||||||||||||||||||||||
Accrued interest payable | |||||||||||||||||||||||||||||
Off-balance sheet instruments |
2021 | 2020 | 2019 | |||||||||||||||
Noninterest income | |||||||||||||||||
Service charges on deposit accounts and ATM fees | $ | $ | $ | ||||||||||||||
Swap referral fee income | |||||||||||||||||
Trust and investment management income | |||||||||||||||||
Brokerage income | |||||||||||||||||
Interchange income | |||||||||||||||||
Revenue from contracts with clients | |||||||||||||||||
Other service charges | |||||||||||||||||
Mortgage banking activities | |||||||||||||||||
Gain on sale of commercial loans | |||||||||||||||||
Income from life insurance | |||||||||||||||||
Swap dealer fee income | |||||||||||||||||
Other income | |||||||||||||||||
Investment securities gains | ( | ||||||||||||||||
Total noninterest income | $ | $ | $ |
December 31, | |||||||||||
2021 | 2020 | ||||||||||
Assets | |||||||||||
Cash in Orrstown Bank | $ | $ | |||||||||
Investment in Orrstown Bank | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities | |||||||||||
Subordinated notes | $ | $ | |||||||||
Accrued interest and other liabilities | |||||||||||
Total liabilities | |||||||||||
Shareholders’ Equity | |||||||||||
Common stock | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive income | |||||||||||
Treasury stock | ( | ( | |||||||||
Total shareholders’ equity | |||||||||||
Total liabilities and shareholders’ equity | $ | $ |
For the Years Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
Income | |||||||||||||||||
Dividends from bank subsidiary | $ | $ | $ | ||||||||||||||
Interest income from bank subsidiary | |||||||||||||||||
Other income | |||||||||||||||||
Total income | |||||||||||||||||
Expenses | |||||||||||||||||
Interest on subordinated notes | |||||||||||||||||
Share-based compensation | |||||||||||||||||
Management fee to bank subsidiary | |||||||||||||||||
Merger related expenses | |||||||||||||||||
Other expenses | |||||||||||||||||
Total expenses | |||||||||||||||||
Income (loss) before income tax benefit and equity in undistributed income of subsidiaries | ( | ||||||||||||||||
Income tax benefit | ( | ( | ( | ||||||||||||||
Income (loss) before equity in undistributed income of subsidiaries | ( | ||||||||||||||||
Equity in undistributed income of subsidiaries | |||||||||||||||||
Net income | $ | $ | $ |
For the Years Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||||
Net income | $ | $ | $ | ||||||||||||||
Adjustments to reconcile net income to cash provided by (used in) operating activities: | |||||||||||||||||
Amortization | |||||||||||||||||
Deferred income taxes | ( | ( | |||||||||||||||
Equity in undistributed income of subsidiaries | ( | ( | ( | ||||||||||||||
Share-based compensation | |||||||||||||||||
Net change in other liabilities | ( | ( | ( | ||||||||||||||
Net change in other assets | ( | ||||||||||||||||
Net cash provided by (used in) operating activities | ( | ||||||||||||||||
Cash flows from investing activities: | |||||||||||||||||
Capital contributed to subsidiaries | ( | ||||||||||||||||
Net cash paid for acquisitions | ( | ( | |||||||||||||||
Net cash used in investing activities | ( | ( | |||||||||||||||
Cash flows from financing activities: | |||||||||||||||||
Dividends paid | ( | ( | ( | ||||||||||||||
Proceeds from issuance of common stock | |||||||||||||||||
Payments to repurchase common stock | ( | ( | ( | ||||||||||||||
Other, net | ( | ||||||||||||||||
Net cash used in financing activities | ( | ( | ( | ||||||||||||||
Net increase (decrease) in cash | ( | ||||||||||||||||
Cash, beginning | |||||||||||||||||
Cash, ending | $ | $ | $ |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||||||||||||
(a) | (b) | (c) | |||||||||||||||
Equity compensation plan approved by security holders | — | n/a | 248,770 | ||||||||||||||
Total | — | n/a | 248,770 |
2.10 | ||||||||
3.1 | ||||||||
3.2 | ||||||||
4.1 | ||||||||
4.2 | ||||||||
4.3 | ||||||||
4.4 | ||||||||
4.5 | ||||||||
10.1 | ||||||||
10.2 | ||||||||
10.3 | ||||||||
10.4 | ||||||||
10.5 | ||||||||
10.6 | ||||||||
10.7 | ||||||||
10.8 | ||||||||
10.9 | ||||||||
10.10 | ||||||||
10.11 | ||||||||
10.12 | ||||||||
10.13 | ||||||||
10.14 | ||||||||
10.15 | ||||||||
10.16 | ||||||||
10.17 | ||||||||
10.18 | ||||||||
10.19 | ||||||||
10.20 | ||||||||
10.21 | ||||||||
10.22 | ||||||||
10.23 | ||||||||
10.24 | ||||||||
10.25 | ||||||||
10.26 | ||||||||
10.27 | ||||||||
14 | Code of Ethics Policy for Senior Financial Officers posted on Registrant’s website. | |||||||
21 | ||||||||
23.1 | ||||||||
31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
32.2 |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | |||||||
101.INS | XBRL Instance Document | |||||||
101.SCH | XBRL Taxonomy Extension Schema | |||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
ORRSTOWN FINANCIAL SERVICES, INC. (Registrant) | |||||||||||
Dated: March 11, 2022 | By: | /s/ Thomas R. Quinn, Jr. | |||||||||
Thomas R. Quinn, Jr., President and Chief Executive Officer |
Signature | Title | Date | ||||||||||||
/s/ Thomas R. Quinn, Jr. | President and Chief Executive Officer (Principal Executive Officer) and Director | March 11, 2022 | ||||||||||||
Thomas R. Quinn, Jr. | ||||||||||||||
/s/ Neelesh Kalani | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | March 11, 2022 | ||||||||||||
Neelesh Kalani | ||||||||||||||
/s/ Sean P. Mulcahy | Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) | March 11, 2022 | ||||||||||||
Sean P. Mulcahy | ||||||||||||||
/s/ Joel R. Zullinger | Chairman of the Board and Director | March 11, 2022 | ||||||||||||
Joel R. Zullinger | ||||||||||||||
/s/ Cindy J. Joiner | Director | March 11, 2022 | ||||||||||||
Cindy J. Joiner | ||||||||||||||
/s/ Mark K. Keller | Director | March 11, 2022 | ||||||||||||
Mark K. Keller | ||||||||||||||
/s/ Thomas D. Longenecker | Director | March 11, 2022 | ||||||||||||
Thomas D. Longenecker | ||||||||||||||
/s/ Andrea Pugh | Director | March 11, 2022 | ||||||||||||
Andrea Pugh | ||||||||||||||
/s/ Michael J. Rice | Director | March 11, 2022 | ||||||||||||
Michael J. Rice | ||||||||||||||
/s/ Eric A. Segal | Director | March 11, 2022 | ||||||||||||
Eric A. Segal | ||||||||||||||
/s/ Glenn W. Snoke | Director | March 11, 2022 | ||||||||||||
Glenn W. Snoke | ||||||||||||||
/s/ Floyd E. Stoner | Director | March 11, 2022 | ||||||||||||
Floyd E. Stoner | ||||||||||||||
Date: March 11, 2022 | By: | /s/ Thomas R. Quinn, Jr. | ||||||||||||
Thomas R. Quinn, Jr. | ||||||||||||||
President and Chief Executive Officer | ||||||||||||||
(Principal Executive Officer) |
Date: March 11, 2022 | By: | /s/ Neelesh Kalani | ||||||||||||
Neelesh Kalani | ||||||||||||||
Executive Vice President and Chief Financial Officer | ||||||||||||||
(Principal Financial Officer) |
Date: March 11, 2022 | By: | /s/ Thomas R. Quinn, Jr. | ||||||||||||
Thomas R. Quinn, Jr. | ||||||||||||||
President and Chief Executive Officer |
Date: March 11, 2022 | By: | /s/ Neelesh Kalani | ||||||||||||
Neelesh Kalani | ||||||||||||||
Executive Vice President and Chief Financial Officer | ||||||||||||||
(Principal Financial Officer) |
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Audit Information |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Audit Information [Abstract] | |
Auditor Firm ID | 173 |
Auditor Name | Crowe LLP |
Auditor Location | Washington, D.C. |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Securities available-for-sale, amortized cost | $ 466,806 | $ 460,999 |
Preferred stock, par value (in dollars per share) | $ 1.25 | $ 1.25 |
Preferred stock authorized (in shares) | 500,000 | 500,000 |
Preferred stock issued (in shares) | 0 | 0 |
Preferred stock outstanding (in shares) | 0 | 0 |
Common stock, stated value (in dollars per share) | $ 0.05205 | $ 0.05205 |
Common stock authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock issued (in shares) | 11,258,167 | 11,257,046 |
Common stock outstanding (in shares) | 11,183,050 | 11,201,317 |
Treasury stock (in shares) | 75,117 | 55,729 |
Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Statement of Stockholders' Equity [Abstract] | |||
Cash dividends per share (in usd per share) | $ 0.74 | $ 0.68 | $ 0.60 |
Shares of common stock issued for acquisition (in shares) | 1,765,704 | ||
Issuance of stock including compensation expense (in shares) | 1,121 | 36,442 | 15,645 |
Acquisition of treasury stock (in shares) | 19,388 | 34,999 | 11,699 |
Issuance of stock, compensation expense | $ 1,949 | $ 2,092 | $ 1,586 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES See the Glossary of Defined Terms at the beginning of this Report for terms used throughout the consolidated financial statements and related notes of this Form 10-K. Nature of Operations – Orrstown Financial Services, Inc. is a financial holding company that operates Orrstown Bank, a commercial bank providing banking and financial advisory services in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry and York Counties, Pennsylvania, and in Anne Arundel, Baltimore, Howard and Washington Counties, Maryland. The Company operates in the community banking segment and engages in lending activities, including commercial, residential, commercial mortgages, construction, municipal, and various forms of consumer lending, and deposit services, including checking, savings, time, and money market deposits. The Company also provides fiduciary services, investment advisory, insurance and brokerage services. Effective July 31, 2020, Wheatland Advisors, Inc., a registered investment advisor non-bank subsidiary, headquartered in Lancaster County, Pennsylvania was discontinued. The Company and the Bank are subject to regulation by certain federal and state agencies and undergo periodic examinations by such regulatory authorities. Basis of Presentation – The accompanying consolidated financial statements include the accounts of Orrstown Financial Services, Inc. and its wholly owned subsidiary, the Bank. The accounting and reporting policies of the Company conform to GAAP and, where applicable, to accounting and reporting guidelines prescribed by bank regulatory authorities. All significant intercompany transactions and accounts have been eliminated. Certain reclassifications have been made to prior year amounts to conform with current year classifications. These reclassifications did not have a material impact on the Company's consolidated financial condition or results of operations. In May 2019, the Company acquired Hamilton Bancorp, Inc., and its wholly-owned subsidiary, Hamilton Bank, based in Towson, Maryland. The results of operations and assets acquired and liabilities assumed from acquired entities are included only from the date of acquisition. The comparability of the Company's results of operations for the years ended December 31, 2021, to 2020 and 2019 have been impacted by these acquisitions. The Company's management has evaluated all activity of the Company and concluded that subsequent events are properly reflected in the Company's consolidated financial statements and notes as required by GAAP. To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. Concentration of Credit Risk – The Company grants commercial, residential, construction, municipal, and various forms of consumer lending to clients primarily in its market area in south central Pennsylvania and in the greater Baltimore region and Washington County, Maryland. Therefore, the Company's exposure to credit risk is significantly affected by changes in the economy in those areas. Although the Company maintains a diversified loan portfolio, a significant portion of its clients’ ability to honor their contracts is dependent upon economic sectors for commercial real estate, including office space, retail strip centers, sales finance, sub-dividers and developers, and multi-family, hospitality, and residential building operators. Management evaluates each clients' creditworthiness on a case-by-case basis. The amount of collateral obtained upon the extension of credit is based on management’s credit evaluation of the client. Types of collateral held varies, but generally include real estate and equipment. The types of securities the Company invests in are included in Note 3, Investment Securities, and the types of lending the Company engages in are included in Note 4, Loans and Allowance for Loan Losses. Cash and Cash Equivalents – Cash and cash equivalents include cash, balances due from banks, federal funds sold and interest-bearing deposits due on demand, all of which have original maturities of 90 days or less. Net cash flows are reported for client loan and deposit transactions, loans held for sale, redemption (purchases) of restricted investments in bank stocks, and short-term borrowings. Under the FRB regulations, the Bank generally had been required to maintain cash reserves against specified deposit liabilities. Under an interim rule, the reserve requirement was reduced to zero as of March 26, 2020. The FRB issued the final rule on December 22, 2020 that amended Regulation D by lowering the reserve requirement on transaction accounts maintained at depository institutions to 0%. Balances with correspondent banks may, at times, exceed federally insured limits. The Company considers this to be a normal business risk and reviews the financial condition of its correspondent banks on a quarterly basis. Restricted Investments in Bank Stocks – Restricted investments in bank stocks consist of Federal Reserve Bank of Philadelphia stock, FHLB of Pittsburgh stock and Atlantic Community Bankers Bank stock. Federal law requires a member institution of the district Federal Reserve Bank and FHLB to hold stock according to predetermined formulas. Atlantic Community Bankers Bank requires its correspondent banking institutions to hold stock as a condition of membership. The restricted investment in bank stocks is carried at cost. On a quarterly basis, management evaluates the bank stocks for impairment based on assessment of the ultimate recoverability of cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of cost is influenced by criteria such as operating performance, liquidity, funding and capital positions, stock repurchase history, dividend history, and impact of legislative and regulatory changes. Investment Securities – The Company typically classifies debt securities as available-for-sale ("AFS") on the date of purchase. At December 31, 2021 and 2020, the Company had no held to maturity or trading securities. AFS securities are reported at fair value. Interest income and dividends on debt securities are recognized in interest income on an accrual basis. Purchase premiums and discounts on debt securities are amortized to interest income using the interest method over the terms of the securities and approximate the level yield method. Changes in unrealized gains and losses, net of related deferred taxes, for AFS securities are recorded in AOCI. Realized gains and losses on securities are recorded on the trade date using the specific identification method and are included in noninterest income on the consolidated statements of income. AFS securities include investments that management intends to use as part of its asset/liability management strategy. Securities may be sold in response to changes in interest rates, changes in prepayment rates and other factors. The Company does not have the intent to sell any of its AFS securities that are in an unrealized loss position and it is more likely than not that the Company will not be required to sell these securities before recovery of their amortized cost. Management evaluates securities for OTTI on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as an impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components: OTTI related to other factors, which is recognized in OCI, and the remaining OTTI, which is recognized in earnings. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The Company’s securities are exposed to various risks, such as interest rate risk, market risk, and credit risk. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is at least reasonably possible that changes in risks in the near term would materially affect investment assets reported in the consolidated financial statements. Loans Held for Sale – The Company has elected to record the mortgage loans held for sale portfolio at fair market value as opposed to the lower of cost or market. The Company economically hedges its residential loans held for sale portfolio with forward sale agreements, which are reported at fair value. A lower of cost or market accounting treatment would not allow the Company to record the excess of the fair market value over book value, but would require the Company to record the corresponding reduction in value on the hedges. Both the loans and related hedges are carried at fair value, which reduces earnings volatility as the amounts more closely offset, particularly in environments when interest rates are declining. For loans held for sale for which the fair value option has been elected, the aggregate fair value exceeded the aggregate principal balance by $150 thousand. There were no loans held for sale that were nonaccrual or 90 or more days past due as of December 31, 2021. In previous periods, loans originated and intended for sale in the secondary market were carried at the lower of aggregate cost or fair value. Gains and losses on loan sales (sales proceeds minus carrying value) are recorded in noninterest income. Interest income on these loans is recognized in interest and fees on loans in the consolidated statements of income. Loans – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances adjusted for charge-offs, the ALL, and any corresponding deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and amortized as a yield adjustment over the respective term of the loan using the interest method. For SBA PPP loans, the loan origination fees, net of certain direct origination costs, are deferred and accreted into interest income as a yield adjustment under the effective yield method over the estimated life of the PPP loans, with any unamortized net fees being recognized as interest income at the time of forgiveness. For purchased loans that are not deemed impaired at the acquisition date, premiums and discounts are amortized or accreted as adjustments to interest income using the effective yield method. For all classes of loans, the accrual of interest income on loans, including impaired loans, ceases when principal or interest is past due 90 days or more or immediately if, in the opinion of management, full collection is unlikely. Interest will continue to accrue on loans past due 90 days or more if the collateral is adequate to cover principal and interest, and the loan is in the process of collection. Interest accrued, but not collected, at the date of placement on nonaccrual status, is reversed and charged against interest income, unless fully collateralized. Subsequent payments received are either applied to the outstanding principal balance or recorded as interest income, depending upon management’s assessment of the ultimate collectability of principal. Loans are returned to accrual status, for all loan classes, when all the principal and interest amounts contractually due are brought current, the loan has performed in accordance with the contractual terms of the note for a reasonable period of time, generally six months, and the ultimate collectability of the total contractual principal and interest is reasonably assured. Past due status is based on the contractual terms of the loan. Loans, the terms of which are modified, are classified as TDRs if a concession was granted in connection with the modification, for legal or economic reasons, related to the debtor’s financial difficulties. Concessions granted under a TDR typically involve a temporary deferral of scheduled loan payments, an extension of a loans' stated maturity date, a temporary reduction in interest rates, or granting of an interest rate below market rates given the risk of the transaction. If a modification occurs while the loan is on accrual status, it will continue to accrue interest under the modified terms. Nonaccrual TDRs may be restored to accrual status if scheduled principal and interest payments, under the modified terms, are current for six months after modification, and the borrower continues to demonstrate its ability to meet the modified terms. TDRs are evaluated individually for impairment on a quarterly basis including monitoring of performance according to their modified terms. In an effort to assist clients that were negatively impacted by the COVID-19 pandemic, the Bank offered various mitigation options, including a loan payment deferral program. Under this program, most commercial deferrals were for a 90-day period, while most consumer deferrals were for a 180-day period. In accordance with the revised Interagency Statement on Loan Modifications by Financial Institutions Working with Customers Affected by the Coronavirus issued by the federal bank regulatory agencies on April 7, 2020, these deferrals are exempt from TDR status as they meet the specified requirements. Allowance for Loan Losses – The ALL is evaluated on at least a quarterly basis, as losses are estimated to be probable and incurred, and, if deemed necessary, is increased or decreased through the provision for loan losses on the consolidated statements of income. Loan losses are charged against the ALL when management determines that all or a portion of the loan is uncollectible. Recoveries on previously charged-off loans are credited to the ALL when received. The ALL is allocated to loan portfolio classes on a quarterly basis, but the entire balance is available to cover losses from any of the portfolio classes when those losses are confirmed. Management uses internal policies and bank regulatory guidance in periodically evaluating loans for collectability and incorporates historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. See Note 4, Loans and Allowance for Loan Losses, for additional information. Acquired Loans - Loans acquired in connection with business combinations are recorded at fair value with no carryover of any allowance for loan losses. Fair value of the loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. The excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable discount and is recognized into interest income over the remaining life of the loan. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable discount. These loans are accounted for under ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality ("ASC 310-30"). The nonaccretable discount includes estimated future credit losses expected to be incurred over the life of the loan. Subsequent decreases in expected cash flows will require us to evaluate the need for an addition to the allowance for loan losses. Subsequent improvement in expected cash flows will result in the reversal of a corresponding amount of the nonaccretable discount, which we will then reclassify as accretable discount to be recognized into interest income over the remaining life of the loan. Loans acquired through business combinations that do meet the specific criteria of ASC 310-30 are individually evaluated each period to analyze expected cash flows. To the extent that the expected cash flows of a loan have decreased due to credit deterioration, the Company establishes an allowance. Loans acquired through business combinations that do not meet the specific criteria of ASC 310-30 are accounted for under ASC 310-20, Receivables - Nonrefundable Fees and Other Costs. These loans are initially recorded at fair value, and include credit and interest rate marks associated with acquisition accounting adjustments. Purchase premiums or discounts are subsequently amortized as an adjustment to yield over the estimated contractual lives of the loans. There is no allowance for loan losses established at the acquisition date for acquired performing loans. An allowance for loan losses is recorded for any credit deterioration in these loans subsequent to acquisition. Acquired loans that meet the criteria for impairment or nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the client is contractually delinquent if the Company expects to fully collect the new carrying value (i.e., fair value) of the loans. As such, the Company may no longer consider the loan to be nonperforming and may accrue interest on these loans, including the impact of any accretable discount. In addition, charge-offs on such loans would be first applied to the nonaccretable difference portion of the fair value adjustment. Loan Commitments and Related Financial Instruments – Financial instruments include off-balance sheet credit commitments issued to meet client financing needs, such as commitments to make loans and commercial letters of credit. These financial instruments are recorded when they are funded. The face amount represents the exposure to loss, before considering client collateral or ability to repay. The Company maintains a reserve for probable losses on off-balance sheet commitments which is included in other liabilities on the consolidated balance sheets. Loans Serviced – The Bank administers secondary market mortgage programs available through the FHLB and the Federal National Mortgage Association and offers residential mortgage products and services to clients. The Bank originates single-family residential mortgage loans for immediate sale in the secondary market and retains the servicing of those loans. At December 31, 2021 and 2020, the balance of loans serviced for others totaled $502.5 million and $441.1 million, respectively. Transfers of Financial Assets – Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. Cash Surrender Value of Life Insurance – The Company has purchased life insurance policies on certain employees. Life insurance is recorded at the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Derivatives - FASB ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company's objectives in using interest rate derivatives are to add stability to interest income and to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of fixed amounts from a counterparty in exchange for the Company making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. Changes to the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged transaction affects earnings. The Company discontinues cash flow hedge accounting if it is probable the forecasted hedged transactions will not occur in the initially identified time period due to circumstances, such as the impact of the COVID-19 pandemic. Upon discontinuance, the associated gains and losses deferred in accumulated other comprehensive income (loss) are reclassified immediately into earnings and subsequent changes in the fair value of the cash flow hedge are recognized in earnings. Such derivatives were used to hedge the variable cash flows associated with overnight borrowings. During 2021, the Company terminated its interest rate derivative, with a notional amount of $50.0 million, which was designated as a cash flow hedge. Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers. The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings. At December 31, 2021 and 2020, the Company had interest rate swaps not designated as hedges with total notional value of $75.8 million and $61.3 million, respectively. Premises and Equipment – Buildings, improvements, equipment, and furniture and fixtures are carried at cost less accumulated depreciation and amortization. Land is carried at cost. Depreciation and amortization has been recognized generally on the straight-line method and is computed over the estimated useful lives of the various assets as follows: buildings and improvements, including leasehold improvements – 10 to 40 years; and furniture and equipment – 3 to 15 years. Leasehold improvements are amortized over the shorter of the lease term or the indicated life. Repairs and maintenance are charged to operations as incurred, while additions and improvements are typically capitalized. Gains or losses on the retirement or disposal of individual assets is recorded as income or expense in the period of retirement or disposal. Premises no longer in use and held for sale are included in other assets on the consolidated balance sheets at the lower of carrying value or fair value and no depreciation is charged on them. At December 31, 2021 and 2020, premises held for sale totaled $321 thousand and $1.1 million, respectively. Leases - The Company evaluates its contracts at inception to determine if an arrangement either is a lease or contains one. Operating lease ROU assets are included in other assets and operating lease liabilities in accrued interest payable and other liabilities in the consolidated balance sheets. The Company had no finance leases at December 31, 2021. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent an obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company's leases do not provide an implicit rate, so the Company's incremental borrowing rate is used, which approximates its fully collateralized borrowing rate, based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is reevaluated upon lease modification. The operating lease ROU asset also includes any initial direct costs and prepaid lease payments made less any lease incentives. In calculating the present value of lease payments, the Company may include options to extend the lease when it is reasonably certain that it will exercise that option. In accordance with ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), the Company keeps leases with an initial term of 12 months or less off of the balance sheet. The Company recognizes these lease payments in the consolidated statements of income on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components and has elected the practical expedient to account for them as a single lease component. The Company's operating leases relate primarily to bank branches and office space. The difference between the lease assets and lease liabilities primarily consists of deferred rent liabilities reclassified upon adoption to reduce the measurement of the lease assets. The standard did not materially impact the Company's consolidated net income and had no impact on cash flows upon adoption on January 1, 2019. Goodwill and Other Intangible Assets – Goodwill is calculated as the purchase premium, if any, after adjusting for the fair value of net assets acquired in purchase transactions. Goodwill is not amortized but is reviewed for potential impairment on at least an annual basis, with testing between annual tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit. Other intangible assets represent purchased assets that can be distinguished from goodwill because of contractual or other legal rights. The Company’s other intangible assets have finite lives and are amortized on either an accelerated amortization method or straight line basis over their estimated lives, generally 10 years for deposit premiums and 10 to 15 years for other client relationship intangibles. Mortgage Servicing Rights – The estimated fair value of MSRs related to loans sold and serviced by the Company is recorded as an asset upon the sale of such loans. MSRs are amortized as a reduction to servicing income over the estimated lives of the underlying loans. MSRs are evaluated periodically for impairment by comparing the carrying amount to estimated fair value. Fair value is determined periodically through a discounted cash flow valuation performed by a third party. Significant inputs to the valuation include expected servicing income, net of expense, the discount rate and the expected life of the underlying loans. To the extent the amortized cost of the MSRs exceeds their estimated fair values, a valuation allowance is established for such impairment through a charge against servicing income on the consolidated statements of income. If the Company determines, based on subsequent valuations, that the impairment no longer exists or is reduced, the valuation allowance is reduced through a credit to earnings. MSRs, net of the valuation allowance, totaled $4.0 million and $2.8 million at December 31, 2021 and December 31, 2020, respectively, and are included in other assets on the consolidated balance sheets. Foreclosed Real Estate – Real estate acquired through foreclosure or other means is initially recorded at the fair value of the related real estate collateral at the transfer date less estimated selling costs, and subsequently at the lower of its carrying value or fair value less estimated costs to sell. Fair value is determined based on an independent third party appraisal of the property or, when appropriate, a recent sales offer. Costs to maintain such real estate are expensed as incurred. Costs that significantly improve the value of the properties are capitalized. Real estate acquired through foreclosure or other means totaled zero at both December 31, 2021 and 2020, and is included in other assets on the consolidated balance sheets. Investments in Real Estate Partnerships – The Company has a 99% limited partnership interest in several real estate partnerships in central Pennsylvania. These investments are affordable housing projects, which entitle the Company to tax deductions and credits that expire through 2025. The Company accounts for its investments in affordable housing projects under the proportional amortization method when the criteria are met, which is limited to one investment at December 31, 2021. There are five other investments accounted for under the equity method of accounting. The investment in these real estate partnerships, included in other assets on the consolidated balance sheets, totaled $2.6 million and $3.1 million at December 31, 2021 and 2020, respectively, of which $921 thousand and $1.1 million are accounted for under the proportional amortization method. Equity method losses totaled $272 thousand, $299 thousand and $55 thousand for the years ended December 31, 2021, 2020 and 2019, respectively, and are included in other noninterest income on the consolidated statements of income. Proportional amortization method losses totaled $214 thousand for the years ended December 31, 2021, 2020 and 2019, and are included in income tax expense on the consolidated statements of income. During 2021, 2020 and 2019, the Company recognized federal tax credits from these projects totaling $315 thousand, $460 thousand and $460 thousand, respectively, which are included in income tax expense on the consolidated statements of income. Advertising – The Company expenses advertising as incurred. Advertising expense totaled $677 thousand, $392 thousand and $577 thousand for the years ended December 31, 2021, 2020 and 2019, respectively. Repurchase Agreements – The Company enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities which are included in short-term borrowings on the consolidated balance sheets. Under these agreements, the Company may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Company to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing arrangements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability on the Company’s consolidated balance sheets, while the securities underlying the repurchase agreements remaining are reflected in AFS securities. The repurchase obligation and underlying securities are not offset or netted as the Company does not enter into reverse repurchase agreements. The right of setoff for a repurchase agreement resembles a secured borrowing, whereby the collateral would be used to settle the fair value of the repurchase agreement should the Company be in default (e.g., fail to make an interest payment to the counterparty). For the repurchase agreements, the collateral is held by the Company in a segregated custodial account under a third party agreement. Repurchase agreements are secured by U.S. government or government-sponsored debt securities and mature overnight. Stock Compensation Plans – The Company has stock compensation plans that cover employees and non-employee directors. Compensation expense relating to share-based payment transactions is measured based on the grant date fair value of the share award, including a Black-Scholes model for stock options. Compensation expense for all stock awards is calculated and recognized over the employees’ or non-employee directors' service period, generally defined as the vesting period. Income Taxes – Income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of enacted tax law to taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more likely than not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more likely than not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance when, based on the weight of available evidence, it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company recognizes interest and penalties, if any, on income taxes as a component of income tax expense. Loss Contingencies – Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Treasury Stock – Common stock shares repurchased are recorded as treasury stock, at cost on the consolidated balance sheets, on a settlement date basis. Earnings Per Share – Basic earnings per share represents income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Restricted stock awards are included in weighted average common shares outstanding as they are earned. Diluted earnings per share includes additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued by the Company relate solely to outstanding stock options and restricted stock awards and are determined using the treasury stock method. Treasury shares are not deemed outstanding for earnings per share calculations. Comprehensive Income – Comprehensive income consists of net income and OCI. Unrealized gains (losses) on securities available for sale and interest rate swaps used in cash flow hedges, net of tax, were the components of AOCI at December 31, 2021 and 2020. Fair Value – Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in the Note 20 to the consolidated financial statements. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates. Segment Reporting – The Company operates in one segment – Community Banking. The Company’s non-community banking activities are insignificant to the consolidated financial statements. Recent Accounting Pronouncements - ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). The amendments in this update require an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Additionally, the amendments in this update amend the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. For certain public companies, this update was effective for interim and annual periods beginning after December 15, 2019. The Company delayed the adoption of ASU 2016-13 as noted below. ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates ("ASU 2019-10"), extended the implementation deadline of ASU 2016-13 for smaller reporting and other companies until the fiscal year and interim periods beginning after December 15, 2022. The Company meets the requirements to be considered a smaller reporting company under SEC Regulation S-K and SEC Rule 405, and will adopt ASU 2016-13 effective January 1, 2023. The Company is evaluating the impact of the delay for adoption of ASU 2016-13, and is working with a third-party vendor solution to assist with the application of ASU 2016-13 and finalizing the loss estimation models to be used. Once management determines which methods will be utilized, a third party will be contracted to perform a model validation prior to adoption. While the Company anticipates the allowance for loan losses will increase under its current assumptions, it expects the impact of adopting ASU 2016-13 will be influenced by the composition, characteristics and quality of its loan and investment securities portfolios, as well as general economic conditions and forecasts at the adoption date. The other provisions of ASU 2019-10 were not applicable to the Company. ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The update simplifies how all entities assess goodwill for impairment by eliminating Step 2 from the goodwill impairment test. As amended, the goodwill impairment test will consist of one step comparing the fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The adoption of this guidance, effective January 1, 2020, did not have a material impact on the Company's consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). ASU 2020-04 contains optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The optional expedients apply consistently to all contracts or transactions within the scope of this topic, while the optional expedients for hedging relationships can be elected on an individual basis. The Company has formed a cross-functional working group to lead the transition from LIBOR to a planned adoption of an alternate index. The Company has elected to replace LIBOR with the 30-Day Average SOFR or Term SOFR in its loan agreements. The Company is in the process of implementing fallback language for loans that will mature after 2021. The Company expects to adopt the LIBOR transition relief allowed under this standard, and is currently evaluating the potential impact of this guidance on its financial statements.
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MERGERS AND ACQUISITIONS AND BRANCH CONSOLIDATIONS | MERGERS AND ACQUISITIONS AND BRANCH CONSOLIDATIONS Hamilton Bancorp, Inc. On May 1, 2019, the Company acquired 100% of the outstanding common shares of Hamilton Bancorp, Inc., and its wholly-owned subsidiary, Hamilton Bank, based in Towson, Maryland. The Company acquired Hamilton to introduce our banking and financial services into the greater Baltimore area of Maryland. Pursuant to the merger agreement, the Company issued 1,765,704 shares of its common stock and paid $14.2 million in cash for all outstanding shares of Hamilton stock and options vesting upon acquisition. Based on the Company's closing stock price of $20.74 on Tuesday, April 30, 2019, the consideration paid to acquire Hamilton totaled $50.8 million. The fair value of assets acquired, excluding goodwill, totaled $494.0 million, including loans totaling $347.1 million. The fair value of liabilities assumed totaled $449.4 million, including deposits totaling $388.2 million. Goodwill represents consideration transferred in excess of the fair value of the net assets acquired. At May 1, 2019, the Company recognized $6.1 million in goodwill associated with the Hamilton acquisition. The goodwill resulting from the acquisition represents the value expected from the expansion of our market in the greater Baltimore area and the enhancement of our operations through client synergies and efficiencies, thereby providing enhanced client service. Goodwill acquired in the Hamilton acquisition is not deductible for tax purposes. The Hamilton acquisition was accounted for using the acquisition method of accounting and, accordingly, purchased assets, including identifiable intangible assets, and assumed liabilities were recorded at their respective acquisition date fair values. The fair value measurements of assets acquired and liabilities assumed are subject to refinement for up to one year after the closing date of the acquisition as additional information relative to closing date fair values becomes available. The Company finalized the fair values of loans, intangible assets, other assets, income taxes and liabilities associated with Hamilton as of May 1, 2020. Measurement period adjustments made from the date of acquisition through May 1, 2020 are summarized in Note 7 - Goodwill and Other Intangible Assets. The results of operations for the Company include Hamilton's results from and after May 1, 2019. The following table summarizes the consideration paid for Hamilton and the estimated fair values of the assets acquired and liabilities assumed at the acquisition date.
The determination of estimated fair values of the acquired loans required the Company to make certain estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature. Based on such factors as past due status, nonaccrual status, bankruptcy status, and credit risk ratings, the acquired loans were divided into loans with evidence of credit quality deterioration, which are accounted for under ASC 310-30 (purchased credit impaired), and loans that do not meet these criteria, which are accounted for under ASC 310-20 (purchased non-impaired). Expected cash flows, both principal and interest, were estimated based on key assumptions covering such factors as prepayments, default rates and severity of loss given default. These assumptions were developed using both Hamilton's historical experience and the portfolio characteristics as of the acquisition date as well as available market research. The fair value estimates for acquired loans were based on the amount and timing of expected principal, interest and other cash flows, including expected prepayments, discounted at prevailing market interest rates applicable to the types of acquired loans, which the Company considered to be level 3 fair value measurements. Deposit liabilities assumed in the Hamilton acquisition were segregated into two categories: time-deposits (i.e., deposit accounts with a stated maturity) and demand deposits, both using level 2 fair value measurements. In determining fair value of time deposits, the Company discounted the contractual cash flows of the deposit accounts using prevailing market interest rates for time deposit accounts of similar type and duration. For demand deposits, the acquisition date outstanding balance of the assumed demand deposit accounts approximates fair value. Acquisition date fair values for securities available for sale were determined using Level 1 or Level 2 inputs consistent with the methods discussed further in Note 20 - Fair Value. The remaining acquisition date fair values represent either Level 2 or Level 3 fair value measurements (premises and equipment and core deposit intangible). The Company recognized a core deposit intangible of $4.6 million, which is being amortized using an accelerated method over a 10-year amortization period, consistent with expected future cash flows. Loans acquired from Hamilton were measured at fair value at the acquisition date with no carryover of any ALL. Loans were segregated into those loans considered to be performing and those considered PCI. The following table presents performing and PCI loans acquired, by loan class, at May 1, 2019. Upon completion of the Hamilton acquisition, the Company sold the acquired investment portfolio and paid off acquired borrowings at the indicated fair value amounts in conjunction with its asset/liability management strategies.
The following table presents the fair value adjustments made to the amortized cost basis of loans acquired at May 1, 2019.
The market rate adjustment represents the movement in market interest rates, irrespective of credit adjustments, compared to the contractual rates of the acquired loans. The credit fair value adjustment made on non-credit impaired loans represents the changes in credit quality of the underlying borrowers from loan inception to the acquisition date. The credit fair value adjustment on PCI loans is derived in accordance with ASC 310-30 and represents the portion of the loan balance that has been deemed uncollectible based on our expectations of future cash flows for each respective loan. The following table provides information about acquired PCI loans at May 1, 2019.
Unaudited pro forma net income for the year ended December 31, 2019, would have totaled $20.9 million, and revenues would have totaled $102.5 million for the same period had the Hamilton acquisitions occurred January 1, 2019. In connection with the acquisitions, the Company incurred merger related expenses that totaled $8.0 million for the year ended December 31, 2019. The expenses consisted primarily of $2.0 million of investment banking, legal and consulting fees; $3.9 million of information systems expense, including canceling of contracts, and $2.1 million of other expenses, including payout of employee termination contracts, for the year ended December 31, 2019. Branch Consolidation During the year ended December 31, 2020, the Company recognized charges associated with the consolidation of six branch locations, the discontinuance of three loan production offices, a reduction in back-office real estate and staffing model adjustments. These actions were initiated due to evolving client preferences for the digital delivery of products and services. A charge of $1.6 million was recorded in the year ended December 31, 2020, which included $1.3 million related to branch consolidations. In October, 2019, the Company announced the consolidation of five branches in Franklin and Perry Counties, Pennsylvania, into other, larger branches of the Bank, as part of its ongoing evaluation of branch profitability. The Company also announced the sale/leaseback of an operations center facility to eliminate approximately 50,000 square feet of excess back office space. The branch consolidations were completed in January 2020, and the sale of the operations center facility was completed in the second quarter of 2020. In conjunction with the consolidation and operations center facility sale/leaseback, the Company recorded $988 thousand in expenses in the fourth quarter of 2019, consisting of $762 thousand in fixed asset write downs, $126 thousand in lease termination costs, and $100 thousand in severance and other costs. At December 31, 2019, fixed assets included in this consolidation, with an estimated fair value of $4.9 million, were held for sale and carried in other assets on the consolidated balances sheets.
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT SECURITIES | INVESTMENT SECURITIES At December 31, 2021 and 2020, all investment securities were classified as AFS. The following table summarizes amortized cost and fair value of AFS securities, and the corresponding amounts of gross unrealized gains and losses recognized in AOCI at December 31, 2021 and 2020.
The following table summarizes investment securities with unrealized losses at December 31, 2021 and 2020, aggregated by major security type and length of time in a continuous unrealized loss position.
The Company determines whether unrealized losses are temporary in nature in accordance with FASB ASC 320-10, Investments - Overall, (“FASB ASC 320-10”) and FASB ASC 325-40, Investments – Beneficial Interests in Securitized Financial Assets, when applicable. The evaluation is based upon factors such as the creditworthiness of the underlying borrowers, performance of the underlying collateral, if applicable, and the level of credit support in the security structure. Management also evaluates other factors and circumstances that may be indicative of an OTTI condition. This includes, but is not limited to, an evaluation of the type of security, length of time and extent to which the fair value has been less than cost and near-term prospects of the issuer. FASB ASC 320-10 requires the Company to assess if an OTTI exists by considering whether the Company has the intent to sell the security or it is more likely than not that it will be required to sell the security before recovery. If either of these situations applies, the guidance requires the Company to record an OTTI charge to earnings on debt securities for the difference between the amortized cost basis of the security and the fair value of the security. If neither of these situations applies, the Company is required to assess whether it is expected to recover the entire amortized cost basis of the security. If the Company is not expected to recover the entire amortized cost basis of the security, the guidance requires the Company to bifurcate the identified OTTI into a credit loss component and a component representing loss related to other factors. A discount rate is applied which equals the effective yield of the security. The difference between the present value of the expected flows and the amortized book value is considered a credit loss, which would be recorded through earnings as an OTTI charge. When a market price is not readily available, the market value of the security is determined using the same expected cash flows; the discount rate is a rate the Company determines from the open market and other sources as appropriate for the security. The difference between the market value and the present value of cash flows expected to be collected is recognized in accumulated other comprehensive loss on the consolidated statements of financial condition. As of December 31, 2021, the Company had no cumulative OTTI. There were no OTTI charges recognized in earnings as a result of credit losses on investments in the years ended December 31, 2021, 2020 and 2019. During 2020, unrealized losses were substantially higher due to market uncertainty brought about by the COVID-19 pandemic. The sudden and desperate need for liquidity from many institutional pools of capital, combined with the global economic implications of the COVID-19 pandemic, caused significant widening of spreads. Market conditions improved in the second half of 2020 and into 2021 as the uncertainty dissipated with economies re-opening and the distribution of vaccines. U.S. Treasury Securities. The unrealized losses presented in the table above have been caused by an increase in rates from the time these securities were purchased. Management considers the full faith and credit of the U.S. government in determining whether a security is OTTI. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be OTTI at December 31, 2021. The Company did not hold U.S. Treasury Securities at December 31, 2020. States and Political Subdivisions. The unrealized losses presented in the table above have been caused by a widening of spreads and/or a rise in interest rates from the time these securities were purchased. Management considers the investment rating, the state of the issuer of the security and other credit support in determining whether the security is OTTI. As of December 31, 2021 and 2020, management concluded that an OTTI did not exist on any of the aforementioned securities based upon its assessment. Management also concluded that it does not intend to sell nor will it be required to sell the securities, before their recovery, which may be maturity, and management expects to recover the entire amortized cost basis of these securities. GSE Residential CMOs and GSE Residential MBS. The unrealized losses presented in the table above have been caused by a widening of spreads and/or a rise in interest rates from the time these securities were purchased. The contractual terms of these securities do not permit the issuer to settle the securities at a price less than its par value basis. As of December 31, 2021 and 2020, management concluded that an OTTI did not exist on any of the aforementioned securities based upon its assessment. Management also concluded that it does not intend to sell nor will it be required to sell the securities, before their recovery, which may be maturity, and management expects to recover the entire amortized cost basis of these securities. Non-agency CMOs. The unrealized losses presented in the table above were caused by a widening of spreads and/or a rise in interest rates from the time the securities were purchased. As of December 31, 2021, management concluded that an OTTI did not exist on any of the aforementioned securities based upon its assessment. Management also concluded that it does not intend to sell nor will it be required to sell the securities, before their recovery, which may be maturity, and management expects to recover the entire amortized cost basis of these securities. The Company did not hold non-agency CMOs at December 31, 2020. Private Label Commercial CMOs and Asset-backed. The unrealized losses presented in the table above have been caused by a widening of spreads from the time the securities were purchased. Management considers the investment rating and other credit support in determining whether a security is other-than-temporarily impaired. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be OTTI at December 31, 2021 and 2020. The Company did not hold private label commercial CMOs at December 31, 2021. The following table summarizes amortized cost and fair value of investment securities by contractual maturity at December 31, 2021. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.
The following table summarizes proceeds from sales of investment securities and gross gains and gross losses for the years ended December 31, 2021, 2020 and 2019. During the year ended December 31, 2021, net investment security gains of $638 thousand were recorded compared to a net loss of $16 thousand recorded to adjust an equity security to market value for year ended December 31, 2020 and net investment security gains of $4.7 million for year ended December 31, 2019. Investment securities with a fair value of $295.6 million and $398.7 million at December 31, 2021 and 2020, respectively, were pledged to secure public funds and for other purposes as required or permitted by law.
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LOANS AND ALLOWANCE FOR LOAN LOSSES |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS AND ALLOWANCE FOR LOAN LOSSES | LOANS AND ALLOWANCE FOR LOAN LOSSES Consistent with ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Loan Losses, the Company's loan portfolio is grouped into segments, which are further broken down into classes to allow management to monitor the performance by the borrower and to monitor the yield on the portfolio. The risks associated with lending activities differ among the various loan classes and are subject to the impact of changes in interest rates, market conditions of collateral securing the loans, and general economic conditions. All of these factors may adversely impact both the borrower’s ability to repay its loans and associated collateral. The Company has various types of commercial real estate loans, which have differing levels of credit risk. Owner occupied commercial real estate loans are generally dependent upon the successful operation of the borrower’s business, with the cash flows generated from the business being the primary source of repayment of the loan. If the business suffers a downturn in sales or profitability, the borrower’s ability to repay the loan could be in jeopardy. Non-owner occupied and multi-family commercial real estate loans and non-owner occupied residential loans present a different credit risk to the Company than owner occupied commercial real estate loans, as the repayment of the loan is dependent upon the borrower’s ability to generate a sufficient level of occupancy to produce rental income that exceeds debt service requirements and operating expenses. Lower occupancy or lease rates may result in a reduction in cash flows, which hinders the ability of the borrower to meet debt service requirements, and may result in lower collateral values. The Company generally recognizes that greater risk is inherent in these credit relationships as compared to owner occupied loans mentioned above. Acquisition and development loans consist of 1-4 family residential construction and commercial and land development loans. The risk of loss on these loans is largely dependent on the Company’s ability to assess the property’s value at the completion of the project, which should exceed the property’s construction costs. During the construction phase, a number of factors could potentially negatively impact the collateral value, including cost overruns, delays in completing the project, competition, and real estate market conditions which may change based on the supply of similar properties in the area. In the event the collateral value at the completion of the project is not sufficient to cover the outstanding loan balance, the Company must rely upon other repayment sources, if any, including the guarantors of the project or other collateral securing the loan. Commercial and industrial loans include advances to local and regional businesses for general commercial purposes and include permanent and short-term working capital, machinery and equipment financing, and may be either in the form of lines of credit or term loans. Although commercial and industrial loans may be unsecured to our highest-rated borrowers, the majority of these loans are secured by the borrower’s accounts receivable, inventory and machinery and equipment. In a significant number of these loans, the collateral also includes the business real estate or the business owner’s personal real estate or assets. Commercial and industrial loans present credit exposure to the Company, as they are more susceptible to risk of loss during a downturn in the economy as borrowers may have greater difficulty in meeting their debt service requirements and the value of the collateral may decline. The Company attempts to mitigate this risk through its underwriting standards, including evaluating the creditworthiness of the borrower and, to the extent available, credit ratings on the business. Additionally, monitoring of the loans through annual renewals and meetings with the borrowers are typical. However, these procedures cannot eliminate the risk of loss associated with commercial and industrial lending. At December 31, 2021 and 2020, commercial and industrial loans include $189.9 million and $403.3 million, respectively, of loans, net of deferred fees and costs, originated through the SBA PPP. Municipal loans consist of extensions of credit to municipalities and school districts within the Company’s market area. These loans generally present a lower risk than commercial and industrial loans, as they are generally secured by the municipality’s full taxing authority, by revenue obligations, or by its ability to raise assessments on its clients for a specific utility. The Company originates loans to its retail clients, including fixed-rate and adjustable first lien mortgage loans with the underlying 1-4 family owner occupied residential property securing the loan. The Company’s risk exposure is minimized in these types of loans through the evaluation of the creditworthiness of the borrower, including credit scores and debt-to-income ratios, and underwriting standards which limit the loan-to-value ratio to generally no more than 80% upon loan origination, unless the borrower obtains private mortgage insurance. Home equity loans, including term loans and lines of credit, present a slightly higher risk to the Company than 1-4 family first liens, as these loans can be first or second liens on 1-4 family owner occupied residential property, but can have loan-to-value ratios of no greater than 85% of the value of the real estate taken as collateral. The creditworthiness of the borrower is considered including credit scores and debt-to-income ratios. Installment and other loans’ credit risk are mitigated through prudent underwriting standards, including evaluation of the creditworthiness of the borrower through credit scores and debt-to-income ratios and, if secured, the collateral value of the assets. These loans can be unsecured or secured by assets the value of which may depreciate quickly or may fluctuate, and may present a greater risk to the Company than 1-4 family residential loans. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted. The CARES Act established the SBA PPP. The SBA PPP is intended to provide economic relief to small businesses nationwide adversely impacted under the COVID-19 Emergency Declaration issued on March 13, 2020. The SBA PPP, which began on April 3, 2020, provided small businesses with funds to cover up to 24 weeks of payroll costs and other expenses, including benefits. It also provides for forgiveness of up to the full principal amount of qualifying loans. Through December 31, 2020, the Bank closed and funded almost 3,200 loans for a total gross loan amount of $467.7 million. These loans resulted in net processing fees of $13.5 million to be recognized through net interest income over the life of the loans, which is between and years. For the year ended December 31, 2021, the Bank closed and funded almost 3,300 PPP loans for a total loan amount of $231.7 million. In total, the Bank closed and funded almost 6,500 PPP loans for a total gross loan amount of $699.4 million. The loans originated in 2021 resulted in net processing fees of $12.3 million. At December 31, 2021, the Bank has $5.5 million of net deferred SBA PPP fees remaining to be recognized through net interest income over the life of the loans. The timing of the recognition of these fees is dependent upon the loan forgiveness process established by the SBA. As these loans are 100% guaranteed by the SBA, there is no associated allowance for loan losses at December 31, 2021. In an effort to assist clients that were negatively impacted by the COVID-19 pandemic, the Bank offered various mitigation options, including a loan payment deferral program. Under this program, most commercial deferrals were for a 90-day period, while most consumer deferrals were for a 180-day period. Commercial and consumer deferrals totaled zero and $56 thousand, respectively, at December 31, 2021 and $15.7 million and $2.5 million, respectively, at December 31, 2020. In accordance with the revised Interagency Statement on Loan Modifications by Financial Institutions Working with Customers Affected by the Coronavirus issued by the federal bank regulatory agencies on April 7, 2020, these deferrals are exempt from TDR status as they meet the specified requirements. The following table presents the loan portfolio by segment and class, excluding residential LHFS, at December 31, 2021 and December 31, 2020.
(1) This balance includes $189.9 million and $403.3 million of SBA PPP loans, net of deferred fees and costs, at December 31, 2021 and December 31, 2020, respectively. In order to monitor ongoing risk associated with its loan portfolio and specific loans within the segments, management uses an internal grading system. The first several rating categories, representing the lowest risk to the Bank, are combined and given a “Pass” rating. Management generally follows regulatory definitions in assigning criticized ratings to loans, including "Special Mention," "Substandard," "Doubtful" or "Loss." The Special Mention category includes loans that have potential weaknesses that may, if not monitored or corrected, weaken the asset or inadequately protect the Bank's position at some future date. These assets pose elevated risk, but their weakness does not yet justify a more severe, or classified rating. Substandard loans are classified as they have a well-defined weakness, or weaknesses that jeopardize liquidation of the debt. These loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Substandard loans include loans that management has determined not to be impaired, as well as loans considered to be impaired. A Doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as Loss is deferred. Loss loans are considered uncollectible, as the borrowers are often in bankruptcy, have suspended debt repayments, or have ceased business operations. Once a loan is classified as Loss, there is little prospect of collecting the loan’s principal or interest and it is charged-off. The Company has a loan review policy and program, which is designed to identify and monitor risk in the lending function. The Management ERM Committee, comprised of executive and senior officers and loan department personnel, is charged with the oversight of overall credit quality and risk exposure of the Company's loan portfolio. This includes the monitoring of the lending activities of all Company personnel with respect to underwriting and processing new loans and the timely follow-up and corrective action for loans showing signs of deterioration in quality. A loan review program provides the Company with an independent review of the commercial loan portfolio on an ongoing basis. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as extended delinquencies, bankruptcy, repossession or death of the borrower occurs, which heightens awareness as to a possible credit event. Internal loan reviews are completed annually on all commercial relationships with a committed loan balance in excess of $1.0 million, which includes confirmation of risk rating by an independent credit officer. In addition, all commercial relationships greater than $500 thousand rated substandard, doubtful or loss are reviewed quarterly and corresponding risk ratings are changed or reaffirmed by the Company's Problem Loan Committee, with subsequent reporting to the Management ERM Committee and the Board of Directors. The following summarizes the Company’s loan portfolio ratings based on its internal risk rating system at December 31, 2021 and 2020:
For commercial real estate, acquisition and development, and commercial and industrial loans, a loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Generally, loans that are more than 90 days past due are deemed impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed to determine if the loan should be placed on nonaccrual status. Nonaccrual loans in the commercial and commercial real estate portfolios and any TDRs are, by definition, deemed to be impaired. Impairment is measured on a loan-by-loan basis for commercial, construction and restructured loans by either the present value of the expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. A loan is collateral dependent if the repayment of the loan is expected to be provided solely by the underlying collateral. For loans that are deemed to be impaired for extended periods of time, periodic updates on fair values are obtained, which may include updated appraisals. Updated fair values are incorporated into the impairment analysis in the next reporting period. Loan charge-offs, which may include partial charge-offs, are taken on an impaired loan that is collateral dependent if the loan’s carrying balance exceeds its collateral’s appraised value, the loan has been identified as uncollectible, and it is deemed to be a confirmed loss. Typically, impaired loans with a charge-off or partial charge-off will continue to be considered impaired, unless the note is split into two, and management expects the performing note to continue to perform and is adequately secured. The second, or non-performing note, would be charged-off. Generally, an impaired loan with a partial charge-off may continue to have an impairment reserve on it after the partial charge-off, if factors warrant. At December 31, 2021 and 2020, nearly all of the Company’s loan impairments were measured based on the estimated fair value of the collateral securing the loan, except for TDRs. By definition, TDRs are considered impaired. All TDR impairment analyses are initially based on discounted cash flows for those loans. For real estate loans, collateral generally consists of commercial real estate, but in the case of commercial and industrial loans, it could also consist of accounts receivable, inventory, equipment or other business assets. Commercial and industrial loans may also have real estate collateral. Updated appraisals are generally required every 18 months for classified commercial loans in excess of $250 thousand. The “as is" value provided in the appraisal is often used as the fair value of the collateral in determining impairment, unless circumstances, such as subsequent improvements, approvals, or other circumstances, dictate that another value than that provided by the appraiser is more appropriate. Generally, impaired commercial loans secured by real estate, other than performing TDRs, are measured at fair value using certified real estate appraisals that had been completed within the last 18 months. Appraised values are discounted for estimated costs to sell the property and other selling considerations to arrive at the property’s fair value. In those situations, in which it is determined an updated appraisal is not required for loans individually evaluated for impairment, fair values are based on either an existing appraisal or a discounted cash flow analysis as determined by management. The approaches are discussed below: •Existing appraisal – if the existing appraisal provides a strong loan-to-value ratio (generally 70% or lower) and, after consideration of market conditions and knowledge of the property and area, it is determined by the Credit Administration staff that there has not been a significant deterioration in the collateral value, the existing certified appraised value may be used. Discounts to the appraised value, as deemed appropriate for selling costs, are factored into the fair value. •Discounted cash flows – in limited cases, discounted cash flows may be used on projects in which the collateral is liquidated to reduce the borrowings outstanding, and is used to validate collateral values derived from other approaches. Collateral on certain impaired loans is not limited to real estate, and may consist of accounts receivable, inventory, equipment or other business assets. Estimated fair values a determined based on borrowers’ financial statements, inventory ledgers, accounts receivable agings or appraisals from individuals with knowledge in the business. Stated balances are generally discounted for the age of the financial information or the quality of the assets. In determining fair value, liquidation discounts are applied to this collateral based on existing loan valuation policies. The Company distinguishes substandard loans on both an impaired and non-impaired basis, as it places less emphasis on a loan’s classification, and increased reliance on whether the loan was performing in accordance with the contractual terms. A substandard classification does not automatically meet the definition of impaired. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual extensions of credit classified as substandard. As a result, the Company’s methodology includes an evaluation of certain accruing commercial real estate, acquisition and development, and commercial and industrial loans rated substandard to be collectively evaluated for impairment. Although the Company believes these loans meet the definition of substandard, they are generally performing and management has concluded that it is likely the Company will be able to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Larger groups of smaller balance homogeneous loans are collectively evaluated for impairment. Generally, the Company does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower. The following table, which excludes accruing PCI loans, summarizes impaired loans by segment and class, segregated by those for which a specific allowance was required and those for which a specific allowance was not required at December 31, 2021 and 2020. The recorded investment in loans excludes accrued interest receivable due to insignificance. Related allowances established generally pertain to those loans in which loan forbearance agreements were in the process of being negotiated or updated appraisals were pending and any partial charge-off will be recorded when final information is received.
The following table, which excludes accruing PCI loans, summarizes the average recorded investment in impaired loans and related recognized interest income for the years ended December 31, 2021, 2020 and 2019.
The following table presents impaired loans that are TDRs, with the recorded investment at December 31, 2021 and 2020.
The following table presents the number of loans modified as TDRs, and their pre-modification and post-modification investment balances for the year ended December 31, 2019. There were no loans modified as TDRs during 2021 and 2020.
The loans presented in the table above were considered TDRs as a result of the Company agreeing to below market interest rates given the risk of the transaction; allowing the loan to remain on interest only status; or a reduction in interest rates, in order to give the borrowers an opportunity to improve their cash flows. For new and accruing TDRs, impairment is generally assessed using a discounted cash flow analysis. For TDRs in default of their modified terms, impairment is generally determined on a collateral dependent approach. Certain loans modified during a period may no longer be outstanding at the end of the period if the loan was paid off. Management further monitors the performance and credit quality of the loan portfolio by analyzing the length of time a portfolio is past due, by aggregating loans based on their delinquencies. The following table presents the classes of the loan portfolio summarized by aging categories of performing loans and nonaccrual loans at December 31, 2021 and 2020.
The Company maintains its ALL at a level management believes adequate for probable incurred credit losses. The ALL is established and maintained through a provision for loan losses charged to earnings. On a quarterly basis, management assesses the adequacy of the ALL utilizing a defined methodology which considers specific credit evaluation of impaired loans as discussed above, historical loan loss experience, and qualitative factors. Management believes its approach properly addresses relevant accounting guidance for loans individually identified as impaired and for loans collectively evaluated for impairment, and other bank regulatory guidance. In connection with its quarterly evaluation of the adequacy of the ALL, management reviews its methodology to determine if it properly addresses the current risk in the loan portfolio. For each loan class, general allowances based on quantitative factors, principally historical loss trends, are provided for loans that are collectively evaluated for impairment. An adjustment to historical loss factors may be incorporated for delinquency and other potential risk not elsewhere defined within the ALL methodology. In addition to this quantitative analysis, adjustments to the ALL requirements are allocated on loans collectively evaluated for impairment based on additional qualitative factors, including: Nature and Volume of Loans – including loan growth in the current and subsequent quarters based on the Company’s targeted growth and strategic plan, coupled with the types of loans booked based on risk management and credit culture; the number of exceptions to loan policy; and supervisory loan to value exceptions. Concentrations of Credit and Changes within Credit Concentrations – including the composition of the Company’s overall portfolio makeup and management's evaluation related to concentration risk management and the inherent risk associated with the concentrations identified. Underwriting Standards and Recovery Practices – including changes to underwriting standards and perceived impact on anticipated losses; trends in the number of exceptions to loan policy; supervisory loan to value exceptions; and administration of loan recovery practices. Delinquency Trends – including delinquency percentages noted in the portfolio relative to economic conditions; severity of the delinquencies; and whether the ratios are trending upwards or downwards. Classified Loans Trends – including internal loan ratings of the portfolio; severity of the ratings; whether the loan segment’s ratings show a more favorable or less favorable trend; and underlying market conditions and impact on the collateral values securing the loans. Experience, Ability and Depth of Management/Lending staff – including the years’ experience of senior and middle management and the lending staff; turnover of the staff; and instances of repeat criticisms of ratings. Quality of Loan Review – including the years of experience of the loan review staff; in-house versus outsourced provider of review; turnover of staff and the perceived quality of their work in relation to other external information. National and Local Economic Conditions – including trends in the consumer price index, unemployment rates, the housing price index, housing statistics compared to the prior year, bankruptcy rates, regulatory and legal environment risks and competition. During the year ended December 31, 2020, this factor was increased for the commercial and consumer portfolios to account for the negative economic impact of the COVID-19 pandemic, and subsequently reduced during the year ended December 31, 2021. All factors noted above were evaluated and remained unchanged during the year ended December 31, 2021, except for reductions in Classified Loans Trends to unwind the adjustment from 2020 for commercial loans previously downgraded and National and Local Economic Conditions to reverse the adjustment from 2020 applied to consumer portfolios, both negatively impacted by the COVID-19 pandemic. These decreases were partially offset by an increase in Concentrations of Credit and Changes within Credit Concentrations caused by significant growth in commercial real estate loans during the year ended December 31, 2021. COVID-19 – during 2020, a qualitative allocation was implemented associated with the potential impact of the COVID-19 pandemic on the Company's commercial loan portfolio. The factor assumes downgrades of loans which were granted deferrals or forbearances based upon identified hardships resulting from the economic shutdown driven by the pandemic. The qualitative reserve on these loans was reduced over time as sustained performance was demonstrated after the loans were removed from deferral status or the forbearance period has ended. For the year ended December 31, 2021, this qualitative reserve was reduced by $2.7 million to zero. The following table presents activity in the ALL for the years ended December 31, 2021, 2020 and 2019.
The following table summarizes the ending loan balances individually evaluated for impairment based upon loan segment, as well as the related ALL loss allocation for each at December 31, 2021 and 2020. Accruing PCI loans are excluded from loans individually evaluated for impairment.
The following table provides activity for the accretable yield of purchased impaired loans for the years ended December 31, 2021 and 2020.
(1) The amount for the year ended December 31, 2020 reflects a measurement period adjustment for Hamilton loans that should have been in the PCI pool at the acquisition date. (2) The amount for the year ended December 31, 2020 represents the impact of purchased credit impaired loans sold during that year.
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PREMISES AND EQUIPMENT | PREMISES AND EQUIPMENT The following table summarizes premises and equipment at December 31, 2021 and 2020.
Depreciation expense totaled $2.3 million, $3.2 million, and $2.7 million for the years ended December 31, 2021, 2020 and 2019, respectively.
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES A lease provides the lessee the right to control the use of an identified asset for a period of time in exchange for consideration. The Company has primarily entered into operating leases for branches and office space. Most of the Company's leases contain renewal options, which the Company is reasonably certain to exercise. Including renewal options, the Company's leases range from 6 to 31 years. Operating lease right-of-use assets and lease liabilities are included in other assets and accrued interest and other liabilities on the Company's consolidated balance sheets. The Company uses its incremental borrowing rate to determine the present value of the lease payments, as the rate implicit in the Company's leases is not readily determinable. Lease agreements that contain non-lease components are generally accounted for as a single lease component, while variable costs, such as common area maintenance expenses and property taxes, are expensed as incurred. The following table summarizes the Company's right-of-use assets and related lease liabilities for the year ended December 31, 2021 and 2020.
The following table presents information related to the Company's operating leases for the years ended December 31, 2021 and 2020: The following table presents maturities of the Company's lease liabilities by year.
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GOODWILL AND OTHER INTANGIBLE ASSETS |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS The following table presents changes in goodwill for the years ended December 31, 2021 and 2020.
(1) The Company finalized its purchase accounting adjustments associated with Hamilton as of May 1, 2020. Goodwill is not amortized, but is reviewed for potential impairment on at least an annual basis, with testing between annual tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit. The Company completes its annual goodwill impairment assessment as of November 30. The Company conducted its last annual goodwill impairment test as of November 30, 2021 using generally accepted valuation methods. As a result of that impairment test, no goodwill impairment was identified. No changes occurred that would impact the results of that analysis through December 31, 2021. The following tables present changes in and components of other intangible assets for the years ended December 31, 2021 and 2020.
No impairment charge was recorded on other intangible assets during the year ended December 31, 2021. During the year ended December 31, 2020, other client relationship intangibles with a gross carrying amount of $149 thousand were fully amortized and there was a further reduction of the gross carrying amount of $350 thousand due to the dissolution of Wheatland, which resulted in an impairment charge of $153 thousand. The following table presents future estimated aggregate amortization expense at December 31, 2021.
The Company incurred amortization expense of $1.3 million, $1.6 million and $1.6 million, respectively, in the years ending December 31, 2021, 2020 and 2019.
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INCOME TAXES |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES The Company files income tax returns in the U.S. federal jurisdiction, the Commonwealth of Pennsylvania and the State of Maryland. The Company is no longer subject to tax examination by tax authorities for years before 2018. The following table summarizes income tax expense for the years ended December 31, 2021, 2020 and 2019.
The following table reconciles the Company's effective income tax rate to its statutory federal rate for the years ended December 31, 2021, 2020 and 2019.
Income tax expense includes $134 thousand related to net security gains for the year ended December 31, 2021, $3 thousand related to net security losses for the year ended December 31, 2020, and $997 thousand related to net security gains for the year ended December 31, 2019. The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the results of operations. There were no penalties or interest related to income taxes recorded in the consolidated statements of income for the years ended December 31, 2021, 2020 and 2019 and no amounts accrued for penalties at December 31, 2021 and 2020. The following table summarizes the Company's deferred tax assets and liabilities at December 31, 2021, and 2020.
At December 31, 2021, the Company had acquired federal and state net operating loss carryforwards of $10.1 million each, subject to annual loss limitation limits, that expire beginning in 2033. A deferred tax asset is recognized for these carryforwards because the benefit is more likely than not to be realized. FASB ASC 740, Income Taxes, (“ASC 740”) clarifies the accounting for income taxes by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. The minimum threshold is defined in ASC 740 as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740 was applied to all existing tax positions upon initial adoption. There was no liability for uncertain tax positions and no known unrecognized tax benefits at December 31, 2021 or 2020.
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RETIREMENT PLANS |
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Retirement Benefits [Abstract] | |
RETIREMENT PLANS | RETIREMENT PLANS The Company maintains a 401(k) profit-sharing plan for all qualified employees. Employees are eligible to participate in the 401(k) profit-sharing plan following completion of one month of service and attaining age 18. Pursuant to the 401(k) profit-sharing plan, employees can contribute up to the lesser of $58 thousand, or 100% of their compensation. Substantially all of the Company’s employees are covered by the plan, which contains limited match or safe harbor provisions. The Company will match 50% of the first 6% of the base contribution that an employee contributes. The Company’s match is immediately vested and paid at the end of the year. Employer contributions to the plan are based on the performance of the Company and are at the discretion of the Board of Directors. Employer contribution expense totaled $669 thousand, $626 thousand and $590 thousand for the years ended December 31, 2021, 2020 and 2019, respectively. The Company has deferred compensation agreements with certain present and former directors, whereby a director or his beneficiaries will receive a monthly retirement benefit beginning at age 65. The arrangement is funded by an amount of life insurance on the participating director, which is calculated to meet the Company’s obligations under the compensation agreement. The cash value of the life insurance policies is an unrestricted asset of the Company. The estimated present value of future benefits to be paid totaled $36 thousand and $53 thousand at December 31, 2021 and 2020, respectively. Expense for this plan totaled $5 thousand, $7 thousand and $8 thousand for the years ended December 31, 2021, 2020 and 2019, respectively. The Company also has supplemental discretionary deferred compensation plans for directors and executive officers. The plans are funded annually with director fees and salary reductions which are either placed in a trust account invested by the Bank’s OFA division or recognized as a liability. The trust account balance totaled $2.3 million and $2.5 million at December 31, 2021 and 2020, respectively, and is directly offset in other liabilities. Expense for these plans totaled $61 thousand for each of the years ended December 31, 2021, 2020 and 2019. In addition, the Company has two supplemental retirement and salary continuation plans for directors and executive officers. These plans are funded with single premium life insurance on the plan participants. The cash value of the life insurance policies is an unrestricted asset of the Company. The estimated present value of future benefits to be paid on these plans totaled $12.3 million and $11.4 million at December 31, 2021 and 2020, respectively. Expense for these plans totaled $1.7 million, $1.5 million and $1.0 million, for the years ended December 31, 2021, 2020 and 2019, respectively. The Company has promised a continuation of life insurance coverage to certain persons post-retirement. The estimated present value of future benefits to be paid totaled $1.6 million, and $1.5 million at December 31, 2021 and 2020, respectively. Expense for this plan totaled $104 thousand, $25 thousand and $22 thousand for the years ended December 31, 2021, 2020 and 2019, respectively. Trust account balances, and estimated present values of future benefits and deferred compensation liabilities, noted above are included in other assets and other liabilities, respectively, on the consolidated balance sheets.
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SHARE-BASED COMPENSATION PLANS |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION PLANS | SHARE-BASED COMPENSATION PLANS The Company maintains share-based compensation plans under the shareholder-approved 2011 Plan. The purpose of the share-based compensation plans is to provide officers, employees, and non-employee members of the Board of Directors of the Company with additional incentive to further the success of the Company. At December 31, 2021, 881,920 shares of the common stock of the Company were reserved to be issued and 248,770 shares were available to be issued. The 2011 Plan incentive awards may consist of grants of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, deferred stock units and performance shares. All employees and members of the Board of Directors of the Company and its subsidiaries, are eligible to participate in the 2011 Plan. The 2011 Plan allows for the Compensation Committee of the Board of Directors to determine the type of incentive to be awarded, its term, manner of exercise, vesting and restrictions on shares. Generally, awards are nonqualified under the IRC, unless the awards are deemed to be incentive awards to employees at the Compensation Committee’s discretion. The following table presents a summary of nonvested restricted shares activity for 2021.
The following table presents restricted shares compensation expense, with tax benefit information, and fair value of shares vested at December 31, 2021, 2020 and 2019.
At December 31, 2021, 2020 and 2019, unrecognized compensation expense related to the share awards totaled $2.3 million, $2.0 million, and $2.2 million, respectively. The unrecognized compensation expense at December 31, 2021 is expected to be recognized over a weighted-average period of 1.8 years. There were no outstanding and exercisable stock options at December 31, 2021 and 2020. The Company maintains an employee stock purchase plan to provide employees of the Company an opportunity to purchase Company common stock. Eligible employees may purchase shares in an amount that does not exceed 10% of their annual salary at the lower of 95% of the fair market value of the shares on the semi-annual offering date, or related purchase date. The Company reserved 350,000 shares of its common stock to be issued under the employee stock purchase plan. At December 31, 2021, 151,480 shares were available to be issued. The following table presents information for the employee stock purchase plan for years ended December 31, 2021, 2020 and 2019.
The Company issues new shares or treasury shares, depending on market conditions, in its share-based compensation plans.
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DEPOSITS |
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DEPOSITS | DEPOSITS The following table summarizes deposits by type at December 31, 2021 and 2020.
The following table summarizes scheduled future maturities of time deposits as of December 31, 2021.
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RELATED PARTY TRANSACTIONS |
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RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Directors and executive officers of the Company, including their immediate families and companies in which they have a direct or indirect material interest, are considered to be related parties. In the ordinary course of business, the Company engages in various related party transactions, including extending credit, taking deposits and bank service transactions. The Company relies on the directors and executive officers for the identification of their associates. Federal banking regulations require that any extensions of credit to insiders and their related interests not be offered on terms more favorable than would be offered to non-related borrowers of similar creditworthiness. The following table presents the aggregate activity in loans to related parties during 2021.
None of these loans are past due, on nonaccrual status or have been restructured to provide a reduction or deferral of interest or principal because of deterioration in the financial position of the borrower. There were no loans to a related party that were considered classified loans at December 31, 2021 or 2020. At December 31, 2021 and 2020, the Company had approximately $4.7 million and $7.7 million, respectively, in deposits from related parties, including directors and certain executive officers.
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SHORT-TERM BORROWINGS |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHORT-TERM BORROWINGS | SHORT-TERM BORROWINGS The Company has short-term borrowing capability from the FHLB, federal funds purchased and the FRB discount window. The following table summarizes these short-term borrowings at and for the years ended December 31, 2021, 2020 and 2019. At December 31, 2021, short-term borrowings were zero due to repayments and maturities of overnight borrowings.
The Company also enters into borrowing arrangements with certain of its deposit clients by agreements to repurchase ("repurchase agreements") under which the Company pledges investment securities owned and under its control as collateral against the borrowing arrangement, which generally matures within one day from the transaction date. The Company is required to hold U.S. Treasury, U.S. Agency or U.S. GSE securities as underlying securities for repurchase agreements. The following table provides additional details for repurchase agreements at and for the years ended December 31, 2021, 2020 and 2019.
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LONG-TERM DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM DEBT | LONG-TERM DEBT The following table presents components of the Company’s long-term debt at December 31, 2021, and 2020.
There were no new long term borrowings in 2021, and during the year ended December 31, 2020, $20,000,000 of borrowings was prepaid and $40,350,000 of borrowings matured. The following table summarizes the future annual principal payments required on these borrowings at December 31, 2021.
The Bank is a member of the FHLB of Pittsburgh and has access to the FHLB program of overnight and term advances. Under terms of a blanket collateral agreement for advances, lines and letters of credit from the FHLB, collateral for all outstanding advances, lines and letters of credit consisted of 1-4 family mortgage loans and other real estate secured loans totaling $873.1 million at December 31, 2021. The Bank had additional availability of $814.1 million at the FHLB on December 31, 2021 based on its qualifying collateral, net of short-term borrowings and long-term debt detailed above, deposit letters of credit totaling $56.0 million and non-deposit letters of credit totaling $1.1 million at December 31, 2021. At December 31, 2021 and 2020, the Company had availability under FHLB lines totaling $150.0 million and $94.3 million, respectively. The Bank has available unsecured lines of credit, with interest based on the daily Federal Funds rate, with two correspondent banks totaling $30.0 million, at December 31, 2021. There were no borrowings under these lines of credit at December 31, 2021 and 2020.
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SUBORDINATED NOTES |
12 Months Ended |
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Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
SUBORDINATED NOTES | SUBORDINATED NOTESThe Company has unsecured subordinated notes payable, which mature on December 30, 2028. At December 31, 2021 and 2020, subordinated notes payable outstanding totaled $32.0 million and $31.9 million, respectively, which qualified for Tier 2 capital. The notes are recorded on the consolidated balance sheets net of remaining debt issuance costs totaling $537 thousand and $597 thousand at December 31, 2021 and 2020, respectively, which are amortized over a 10-year period on an effective yield basis. The subordinated notes have a fixed interest rate of 6.0% through December 30, 2023, which then converts to a variable rate, equivalent to three-month LIBOR, or any replacement reference rate, period plus 3.16% through maturity. The Company may, at its option, redeem the notes, in whole or in part, on any interest payment date on or after December 30, 2023, and at any time upon the occurrence of certain events. As of December 31, 2021, the Company was in compliance with the covenants contained in the subordinated notes payable agreement. |
DERIVATIVE FINANCIAL INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used as risk management tools by the Company to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings and are not used for trading or speculative purposes. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company, however, discontinues cash flow hedge accounting if it is probable the forecasted hedged transactions will not occur in the initially identified time period due to circumstances, such as the impact of the COVID-19 pandemic. Upon discontinuance, the associated gains and losses deferred in accumulated other comprehensive income (loss) are reclassified immediately into earnings and subsequent changes in the fair value of the cash flow hedge are recognized in earnings. For the year ended December 31, 2021, the Company terminated its interest rate derivative of $50.0 million that was designated as a cash flow hedge of interest-rate risk associated with overnight borrowings due to the unprecedented nature and impact of the COVID-19 pandemic, and reclassified $398.0 thousand of the realized losses from AOCI to current earnings because the hedged forecasted transaction was determined to be no longer probable of occurring. At December 31, 2021, the Company had zero interest rate derivatives designated as a hedging instrument. The Company had one interest rate derivative designated as a hedging instrument with an aggregate notional amount of $50.0 million at December 31, 2020. Such derivatives were used to hedge the variable cash flows associated with the Company's borrowings. The Company enters into interest rate swaps that allow its commercial loan customers to effectively convert a variable-rate commercial loan agreement to a fixed-rate commercial loan agreement. Under these agreements, the Company enters into a variable-rate loan agreement with a customer in addition to an interest rate swap agreement, which serves to effectively swap the customer’s variable-rate loan into a fixed-rate loan. The Company then enters into a corresponding swap agreement with a third party in order to economically hedge its exposure through the customer agreement. The interest rate swaps with both the customers and third parties are not designated as hedges and are marked through earnings. At December 31, 2021, the Company had 12 customer and 12 corresponding third-party broker interest rate derivatives not designated as a hedging instrument with an aggregate notional amount of $75.8 million. The Company had $61.3 million such derivative instruments at December 31, 2020. At December 31, 2021 and 2020, the Company provided cash collateral of $260 thousand and $1.7 million with a counterparty for these derivatives, respectively. At December 31, 2021 and 2020, the Company received cash collateral of $490 thousand and zero from a counterparty for these derivatives, respectively. The Company entered into a risk participation agreement with a financial institution counterparty (the “Agent Bank”) for an interest rate derivative contract related to a loan in which the Company is a participant. The risk participation agreement provides credit protection to the Agent Bank should the borrower fail to perform on its interest rate derivative contracts with the Agent Bank. The Company received an upfront fee of $53 thousand upon entry into the risk participation agreement for the year ended December 31, 2021. The Company manages its credit risk on the risk participation agreement by monitoring the creditworthiness of the borrower, which is based on the same credit review process as though the Company had entered into the derivative instruments directly with the borrower. The notional amount of such risk participation agreement reflects the Company’s pro-rata share of the derivative instrument, consistent with its share of the related participated loan. As of December 31, 2021 and 2020, the total notional amount of the risk participation agreement was $15.9 million and zero, respectively. As a part of its normal residential mortgage operations, the Company will enter into an interest rate lock commitment with a potential borrower. The Company enters into a corresponding commitment to an investor to sell that loan at a specific price shortly after origination. In accordance with FASB ASC 820, adjustments are recorded through earnings to account for the net change in fair value of these transactions for the held for sale pipeline. The following table summarizes the notional values and fair value of the Company's derivative instruments at December 31, 2021 and December 31, 2020:
The following tables summarize the effect of the Company's derivative financial instruments on OCI and net income at December 31, 2021 and 2020:
(1) Includes $514 thousand recorded to other operating expenses due to the loss from the termination of an interest rate swap designated as a cash flow hedge for the year ended December 31, 2021.
The following table is a summary of interest rate swap components at December 31, 2021 and 2020. During the year ended December 31, 2021, the Company terminated its remaining interest rate derivative of $50.0 million.
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SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL | SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Under the Basel Committee on Banking Supervision's capital guidelines for U.S. Banks ("Basel III rules"), an entity must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The Company and the Bank have elected not to include net unrealized gain or loss included in accumulated other comprehensive income in computing regulatory capital. The consolidated asset limit on small bank holding companies is $3.0 billion, and a company with assets under that limit is not subject to the FRB consolidated capital rules, but may file reports that include capital amounts and ratios. The Company has elected to file those reports. Management believes, at December 31, 2021 and 2020, that the Parent Company and the Bank met all capital adequacy requirements to which they are subject. Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At December 31, 2021, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank's classification. The following table presents capital amounts and ratios at December 31, 2021 and 2020.
The Company maintains a stockholder dividend reinvestment and stock purchase plan. Under the plan, shareholders may purchase additional shares of the Company’s common stock at the prevailing market prices with reinvestment dividends and voluntary cash payments. The Company reserved 1,045,000 shares of its common stock to be issued under the dividend reinvestment and stock purchase plan. At December 31, 2021, approximately 665,000 shares were available to be issued under the plan. In September 2015, the Board of Directors of the Company authorized a share repurchase program under which the Company may repurchase up to 5% of the Company's outstanding shares of common stock, or approximately 416,000 shares, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. On April 19, 2021, the Board of Directors authorized the additional future repurchase of up to 562,000 shares of its outstanding common stock. When and if appropriate, repurchases may be made in open market or privately negotiated transactions, depending on market conditions, regulatory requirements and other corporate considerations, as determined by management. Share repurchases may not occur and may be discontinued at any time. At December 31, 2021, 234,170 shares had been repurchased under the program at a total cost of $4.5 million, or $19.08 per share. On January 19, 2022, the Board declared a cash dividend of $0.19 per common share, which was paid on February 8, 2022 to shareholders of record on February 1, 2022. Banking regulations limit the ability of the Bank to pay dividends or make loans or advances to the Parent Company. Dividends that may be paid in any calendar year are limited to the current year's net profits, combined with the retained net profits of the preceding two years. At December 31, 2021, dividends from the Bank available to be paid to the Parent Company, without prior approval of the Bank's regulatory agency, totaled $56.3 million, subject to the Bank meeting or exceeding regulatory capital requirements. The Parent Company's principal source of funds for dividend payments to shareholders is dividends received from the Bank.At December 31, 2021, there were no loans from the Bank to any nonbank affiliate, including the Parent Company. The Bank's loans to a single affiliate may not exceed 10%, and loans to all affiliates may not exceed 20%, of the Bank’s capital stock, surplus, and undivided profits, plus the ALL (as defined by regulation). Loans from the Bank to nonbank affiliates, including the Parent Company, are also required to be collateralized according to regulatory guidelines. At December 31, 2021, the maximum amount the Bank had available to loan to a nonbank affiliate was $27.9 million.
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EARNINGS PER SHARE |
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EARNINGS PER SHARE | EARNINGS PER SHARE The following table presents earnings per share for the years ended December 31, 2021, 2020 and 2019.
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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK |
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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK | FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its clients. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit and financial guarantees written is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The following table presents these contractual, or notional, amounts at December 31, 2021, and 2020.
Commitments to extend credit are agreements to lend to a client as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each client’s credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the client. Collateral varies but may include accounts receivable, inventory, equipment, residential real estate, and income-producing commercial properties. Standby letters of credit and financial guarantees written are conditional commitments issued by the Company to guarantee the performance of a client to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to clients. The Company holds collateral supporting those commitments when deemed necessary by management. The liability, at December 31, 2021 and 2020, for guarantees under standby letters of credit issued was not considered to be material. The Company maintains a reserve, based on historical loss experience of the related loan class, for off-balance sheet credit exposures that currently are not funded, in other liabilities on the condensed consolidated balance sheets. This reserve totaled $1.6 million and $1.5 million at December 31, 2021 and 2020, respectively. The net amount expensed for this off-balance sheet credit exposures reserve was $57 thousand, $511 thousand and $39 thousand for the years ended December 31, 2021, 2020 and 2019, respectively. The Company may sell loans to the FHLB of Chicago as part of its MPF Program. Under the terms of the MPF Program, there is limited recourse back to the Company for loans that do not perform in accordance with the terms of the loan agreement. Each loan that is sold under the program is “credit enhanced” such that the individual loan’s rating is raised to a minimum “BBB,” as determined by the FHLB of Chicago. Outstanding loans sold under the MPF Program totaled $13.5 million and $18.9 million at December 31, 2021 and 2020, respectively, with limited recourse back to the Company on these loans of $714 thousand and $777 thousand at December 31, 2021 and 2020, respectively. Many of the loans sold under the MPF Program have primary mortgage insurance, which reduces the Company’s overall exposure. The net amount expensed or recovered for the Company's estimate of losses under its recourse exposure for loans foreclosed, or in the process of foreclosure, is recorded in other operating expenses on the consolidated statements of income. These amounts were not material for the years ended December 31, 2021, 2020 and 2019.
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FAIR VALUE |
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FAIR VALUE | FAIR VALUE Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Certain financial instruments and all non-financial instruments are excluded from disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are: Level 1 – quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access at the measurement date. Level 2 – significant other observable inputs other than Level 1 prices such as prices for similar assets and liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 – at least one significant unobservable input that reflects a company's own assumptions about the assumptions that market participants would use in pricing an asset or liability. In instances in which multiple levels of inputs are used to measure fair value, hierarchy classification is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The Company used the following methods and significant assumptions to estimate fair value for financial instruments measured on a recurring basis: Where quoted prices are available in an active market, investment securities are classified within Level 1 of the valuation hierarchy. Level 1 investment securities include highly liquid government bonds, mortgage products and exchange traded equities. If quoted market prices are not available, investment securities are classified within Level 2 and fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flow. Level 2 investment securities include U.S. agency securities, mortgage-backed securities, obligations of states and political subdivisions and certain corporate, asset backed and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, investment securities are classified within Level 3 of the valuation hierarchy. All of the Company’s investment securities are classified as available for sale. The fair values of interest rate swaps and risk participation derivatives are determined using models that incorporate readily observable market data into a market standard methodology. This methodology nets the discounted future cash receipts and the discounted expected cash payments. The discounted variable cash receipts and payments are based on expectations of future interest rates derived from observable market interest rate curves. In addition, fair value is adjusted for the effect of nonperformance risk by incorporating credit valuation adjustments for the Company and its counterparties. These assets and liabilities are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. The following table summarizes assets and liabilities measured at fair value on a recurring basis at December 31, 2021 or 2020.
The Company had municipal bonds and CMOs measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at December 31, 2021 and 2020. The Level 3 valuation is based on a non-executable broker quote, which is considered a significant unobservable input. Such quotes are updated as available and may remain constant for a period of time for certain broker-quoted securities that do not move with the market or that are not interest rate sensitive as a result of their structure or overall attributes. The Company’s residential mortgage loans held-for-sale were recorded at fair value utilizing Level 2 measurements. This fair value measurement is determined based upon third party quotes obtained on similar loans. The adoption of this accounting election resulted in an increase of $226 thousand in gain on sale of loans in the consolidated statements of income for the year ended December 31, 2019. For loans held-for-sale for which the fair value option has been elected, the aggregate fair value exceeded the aggregate principal balance by $150 thousand and $436 thousand as of December 31, 2021 and 2020, respectively. The determination of the fair value of interest rate lock commitments on residential mortgages is based on agreed upon pricing with the respective investor on each loan and includes a pull through percentage. The pull through percentage represents an estimate of loans in the pipeline to be delivered to an investor versus the total loans committed for delivery. Significant changes in this input could result in a significantly higher or lower fair value measurement. As the pull through percentage is a significant unobservable input, this is deemed a Level 3 valuation input. The average pull through percentage, which is based upon historical experience, was 89% as of December 31, 2021. An increase or decrease of 5% in the pull through assumption would result in a positive or negative change of $19 thousand in the fair value of interest rate lock commitments at December 31, 2021. The following provides details of the Level 3 fair value measurement activity for the years ended December 31, 2021 or 2020.
The transfers into Level 3 for 2020 noted above relate to two CMO investment securities and one municipal bond for which trading was substantially limited during that year due to the COVID-19 pandemic. As such, older trades or trades of similar securities were utilized to approximate fair value. There were no transfers into or out of Level 3 at December 31, 2021.
Certain financial assets are measured at fair value on a nonrecurring basis. Adjustments to the fair value of these assets usually results from the application of lower-of-cost-or-market accounting or write-downs of individual assets. The Company used the following methods and significant assumptions to estimate fair value for these financial assets. Impaired Loans Loans are designated as impaired when, in the judgment of management and based on current information and events, it is probable that all amounts due, according to the contractual terms of the loan agreement, will not be collected. The measurement of loss associated with impaired loans for all loan classes can be based on either the observable market price of the loan, the fair value of the collateral, or discounted cash flows using the rate of return implicit in the original loan for TDRs. For collateral-dependent loans, fair value is measured based on the value of the collateral securing the loan, less estimated costs to sell. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The value of the real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company using observable market data (Level 2). However, if the collateral is a house or building in the process of construction, or if management adjusts the appraisal value, then the fair value is considered Level 3. The value of business equipment is based upon an outside appraisal, if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivable collateral are based on financial statement balances or aging reports (Level 3). Impaired loans with an allocation to the ALL are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for loan losses on the consolidated statements of income. Changes in the fair value of impaired loans for those still held at December 31 considered in the determination of the provision for loan losses totaled $(247) thousand, $244 thousand and $77 thousand for the years ended December 31, 2021, 2020 and 2019, respectively. Foreclosed Real Estate OREO property acquired through foreclosure is initially recorded at the fair value of the property at the transfer date less estimated selling cost. Subsequently, OREO is carried at the lower of its carrying value or the fair value less estimated selling cost. Fair value is usually determined based upon an independent third-party appraisal of the property or occasionally upon a recent sales offer. The Company had no OREO balances at December 31, 2021 and 2020. Mortgage Servicing Rights The MSR fair value is estimated to be equal to its carrying value, unless the quarterly valuation model calculates the present value of the estimated net servicing income is less than its carrying value, in which case an impairment charge is taken. At December 31, 2021 and 2020, an impairment reserve of $79 thousand and $1.1 million, respectively, existed on the mortgage servicing right portfolio. For the years ended December 31, 2021 and 2020, an impairment valuation allowance reversal of $987 thousand and an impairment charge of $997 thousand were included, respectively, in mortgage banking activities on the consolidated statement of income. The impairment charges in 2020 resulted from rapidly declining market rates caused by the COVID-19 pandemic. The reversal for the year-ended December 31, 2021 was due to a subsequent increase in market rates. The following table summarizes assets measured at fair value on a nonrecurring basis at December 31, 2021 and 2020.
The following table presents additional qualitative information about assets measured on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value.
Fair values of financial instruments GAAP requires disclosure of the fair value of financial assets and liabilities, including those that are not measured and reported at fair value on a recurring or nonrecurring basis. The following table presents the carrying amounts and estimated fair values of financial assets and liabilities at December 31, 2021, and 2020.
In accordance with the Company's adoption of ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, the methods utilized to measure the fair value of financial instruments at December 31, 2021 and 2020 represents an approximation of exit price; however, an actual exit price may differ.
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REVENUE FROM CONTRACTS WITH CLIENTS |
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REVENUE FROM CONTRACTS WITH CLIENTS | REVENUE FROM CONTRACTS WITH CLIENTS On January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all subsequent amendments (collectively “ASC 606”). The update implements a common revenue standard that clarifies the principles for recognizing revenue. The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The majority of the Company's revenue comes from interest income, including loans and securities, that are outside the scope of ASC 606. The Company's services that fall within the scope of ASC 606 are presented within noninterest income on the consolidated statements of income and are recognized as revenue as the Company satisfies its obligation to the client. Services within the scope of ASC 606 include service charges on deposit accounts, income from trust and investment management and brokerage activities and interchange fees from service charges on ATM and debit card transactions. ASC 606 did not result in a change to the accounting for any in-scope revenue streams; as such, no cumulative effect adjustment was recorded. Descriptions of revenue generating activities that are within the scope of ASC 606 are as follows: Service Charges on Deposit Accounts - The Company earns fees from its deposit clients for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the client's request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the client's account balance. Interchange Income - The Company earns interchange fees from debit/credit cardholder transactions conducted through the MasterCard payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. Interchange income is presented net of cardholder rewards. Swap Referral Fee Income - During 2019 and through May 2020, the Company earned fees from a third-party service provider for loan hedging referrals provided to lending clients. The Company acted as an agent in arranging the relationship between our client and the third-party service provider. The Company was paid and recognized income upon completion of the loan hedge between our client and the third-party service provider. Trust and Investment Management Income - The Company earns wealth management and investment brokerage fees from its contracts with trust and wealth management clients to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as the Company provides the contracted services and are generally assessed based on a tiered scale of the market value of assets under management. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e., the trade date. Other related services provided included financial planning services and the associated fees the Company earns, which are based on a fixed fee schedule, are recognized when the services are rendered. Services are generally billed in arrears and a receivable is recorded until fees are paid. Brokerage Income - The Company earns fees from investment management and brokerage services provided to its clients through a third-party service provider. The Company receives commissions from the third-party service provider and recognizes income on a weekly basis based upon client activity. As the Company acts as an agent in arranging the relationship between the client and the third-party service provider and does not control the services rendered to the clients, brokerage income is presented net of related costs. At December 31, 2021, 2020 and 2019, the Company had receivables from trust and wealth management clients totaling $702 thousand, $661 thousand and $719 thousand, respectively. The following table presents the Company's noninterest income disaggregated by revenue source for the years ended December 31, 2021, 2020 and 2019.
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ORRSTOWN FINANCIAL SERVICES, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL INFORMATION |
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Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ORRSTOWN FINANCIAL SERVICES, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL INFORMATION | ORRSTOWN FINANCIAL SERVICES, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL INFORMATION Condensed Balance Sheets
Condensed Statements of Income
Condensed Statements of Cash Flows
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CONTINGENCIES |
12 Months Ended |
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Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES The nature of the Company’s business generates a certain amount of litigation involving matters arising out of the ordinary course of business. Except as described below, in the opinion of management, there are no legal proceedings that might have a material effect on the results of operations, liquidity, or the financial position of the Company at this time. On March 5, 2019, Paul Parshall, a purported individual stockholder of Hamilton, filed, on behalf of himself and all of Hamilton’s stockholders other than the named defendants and their affiliates (the “Purported Class”), a derivative and putative class action complaint in the Circuit Court for Baltimore City, Maryland, captioned Paul Parshall v. Carol Coughlin et. al., naming each Hamilton director, Orrstown, and Hamilton as defendants (the “Action”). The Action alleged, among other things, that Hamilton’s directors breached their fiduciary duties to the Purported Class in connection with the merger, and that the Proxy Statement/Prospectus omitted certain material information regarding the merger. Orrstown was alleged to have aided and abetted the Hamilton directors’ alleged breaches of their fiduciary duties. The Action sought, among other remedies, to enjoin the merger or, in the event the merger was completed, rescission of the merger or rescissory damages; unspecified damages; and costs of the lawsuit, including attorneys’ and experts’ fees. A settlement was reached on the Action in March 2020 which resulted in a payment by the Company of $135 thousand in mootness fees to the defendants in April 2020. On May 25, 2012, SEPTA filed a putative class action complaint in the U.S. District Court for the Middle District of Pennsylvania against the Company, the Bank and certain current and former directors and officers (collectively, the “Orrstown Defendants”). The complaint alleged, among other things, that (i) in connection with the Company’s Registration Statement on Form S-3 dated February 23, 2010 and its Prospectus Supplement dated March 23, 2010, and (ii) during the purported class period of March 24, 2010 through October 27, 2011, the Company issued materially false and misleading statements regarding the Company’s lending practices and financial results, including misleading statements concerning the stringent nature of the Bank’s credit practices and underwriting standards, the quality of its loan portfolio, and the intended use of the proceeds from the Company’s March 2010 public offering of common stock. The complaint asserted claims under Sections 11, 12(a) and 15 of the Securities Act of 1933, Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and sought class certification, unspecified money damages, interest, costs, fees and equitable or injunctive relief. Under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), the Court appointed SEPTA Lead Plaintiff on August 20, 2012. On March 4, 2013, SEPTA filed an amended complaint. The amended complaint expanded the list of defendants in the action to include the Company’s former independent registered public accounting firm, Smith Elliott Kearns & Company, LLC (“SEK”), and the underwriters of the Company’s March 2010 public offering of common stock. In addition, among other things, the amended complaint extended the purported 1934 Exchange Act class period from March 15, 2010 through April 5, 2012. On June 22, 2015, in a 96-page Memorandum, the Court dismissed without prejudice SEPTA’s amended complaint against all defendants, finding that SEPTA failed to state a claim under either the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. On February 8, 2016, the Court granted SEPTA’s motion for leave to amend again and SEPTA filed its second amended complaint that same day. On December 7, 2016, the Court issued an Order and Memorandum granting in part and denying in part defendants’ motions to dismiss SEPTA’s second amended complaint. The Court granted the motions to dismiss the Securities Act claims against all defendants, and granted the motions to dismiss the Exchange Act Section 10(b) and Rule 10b-5 claims against all defendants except Orrstown Financial Services, Inc., Orrstown Bank, Thomas R. Quinn, Jr., Bradley S. Everly, and Jeffrey W. Embly. The Court also denied the motions to dismiss the Exchange Act Section 20(a) claims against Quinn, Everly, and Embly. On December 15, 2017, the Orrstown Defendants and SEPTA exchanged expert reports in opposition to and in support of class certification, respectively. On January 15, 2018, the parties exchanged expert rebuttal reports. SEPTA has not yet filed a motion for class certification. On August 9, 2018, SEPTA filed a motion to compel the production of Confidential Supervisory Information (CSI) of non-parties the Board of Governors of the FRB and the Pennsylvania Department of Banking and Securities, in the possession of Orrstown and third parties. On August 30, 2018, the FRB filed an unopposed motion to intervene in the Action for the purpose of opposing SEPTA’s motion to compel. On February 12, 2019, the Court denied SEPTA’s motion to compel the production of CSI on the ground that SEPTA had failed to exhaust its administrative remedies. On April 11, 2019, SEPTA filed a motion for leave to file a third amended complaint. The proposed third amended complaint seeks to reassert the Securities Act claims that the Court dismissed as to all defendants on December 7, 2016, when the Court granted in part and denied in part defendants’ motions to dismiss SEPTA’s second amended complaint. The proposed third amended complaint also seeks to reassert the Exchange Act claims against those defendants that the Court dismissed from the case on December 7, 2016. On June 13, 2019, Orrstown filed a motion for protective order to stay discovery pending resolution of SEPTA’s motion for leave to file a third amended complaint. On July 17, 2019, the Court entered an Order partially granting Orrstown’s motion for protective order, ruling that all deposition discovery in the case was stayed pending a decision on SEPTA’s motion for leave to file a third amended complaint. Party and non-party document discovery in the case has largely been completed. On February 14, 2020, the Court issued an Order and Memorandum granting SEPTA’s motion for leave to file a third amended complaint. The third amended complaint is now the operative complaint. It reinstates the Orrstown Defendants, as well as SEK and the underwriter defendants, previously dismissed from the case on December 7, 2016. The third amended complaint also revives the previously dismissed Securities Act claim against the Orrstown Defendants, SEK, and the underwriter defendants. Defendants filed their motions to dismiss the third amended complaint on April 24, 2020. SEPTA’s opposition was filed on July 8, 2020, and Orrstown’s reply brief was filed on August 12, 2020. Additionally, on February 24, 2020, the Orrstown Defendants, and the underwriter defendants and SEK, separately filed motions under 28 U.S.C. § 1292(b) asking the District Court to certify its February 14, 2020 Order granting leave to file the third amended complaint for interlocutory appeal to the Third Circuit Court of Appeals. The District Court granted those motions on July 17, 2020, and defendants filed their Petition for Permission to Appeal with the Third Circuit on July 27, 2020. The Third Circuit granted permission to appeal the Order pursuant to 28 U.S.C. § 1292(b) on August 13, 2020. Defendants filed their joint Opening Brief in the Third Circuit on November 2, 2020, asking the Court to reverse the district court’s Order. SEPTA filed its responsive brief on December 2, 2020 and defendants filed their reply brief on December 23, 2020. Oral argument was held on February 10, 2021. On September 2, 2021, the Third Circuit affirmed the District Court's February 14, 2020 Order granting SEPTA leave to file a third amended complaint. Defendants' motions to dismiss the third amended complaint are still pending in the District Court. The Company believes that SEPTA’s allegations and claims against the defendants are without merit, and the Company intends to defend itself vigorously against those claims. It is not possible at this time to reasonably estimate possible losses, or even a range of reasonably possible losses, in connection with the litigation.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Nature of Operations | Nature of Operations – Orrstown Financial Services, Inc. is a financial holding company that operates Orrstown Bank, a commercial bank providing banking and financial advisory services in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry and York Counties, Pennsylvania, and in Anne Arundel, Baltimore, Howard and Washington Counties, Maryland. The Company operates in the community banking segment and engages in lending activities, including commercial, residential, commercial mortgages, construction, municipal, and various forms of consumer lending, and deposit services, including checking, savings, time, and money market deposits. The Company also provides fiduciary services, investment advisory, insurance and brokerage services. Effective July 31, 2020, Wheatland Advisors, Inc., a registered investment advisor non-bank subsidiary, headquartered in Lancaster County, Pennsylvania was discontinued. The Company and the Bank are subject to regulation by certain federal and state agencies and undergo periodic examinations by such regulatory authorities. |
Basis of Presentation | Basis of Presentation – The accompanying consolidated financial statements include the accounts of Orrstown Financial Services, Inc. and its wholly owned subsidiary, the Bank. The accounting and reporting policies of the Company conform to GAAP and, where applicable, to accounting and reporting guidelines prescribed by bank regulatory authorities. All significant intercompany transactions and accounts have been eliminated. Certain reclassifications have been made to prior year amounts to conform with current year classifications. These reclassifications did not have a material impact on the Company's consolidated financial condition or results of operations. In May 2019, the Company acquired Hamilton Bancorp, Inc., and its wholly-owned subsidiary, Hamilton Bank, based in Towson, Maryland. The results of operations and assets acquired and liabilities assumed from acquired entities are included only from the date of acquisition. The comparability of the Company's results of operations for the years ended December 31, 2021, to 2020 and 2019 have been impacted by these acquisitions. The Company's management has evaluated all activity of the Company and concluded that subsequent events are properly reflected in the Company's consolidated financial statements and notes as required by GAAP. To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.
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Concentration of Credit Risk | Concentration of Credit Risk – The Company grants commercial, residential, construction, municipal, and various forms of consumer lending to clients primarily in its market area in south central Pennsylvania and in the greater Baltimore region and Washington County, Maryland. Therefore, the Company's exposure to credit risk is significantly affected by changes in the economy in those areas. Although the Company maintains a diversified loan portfolio, a significant portion of its clients’ ability to honor their contracts is dependent upon economic sectors for commercial real estate, including office space, retail strip centers, sales finance, sub-dividers and developers, and multi-family, hospitality, and residential building operators. Management evaluates each clients' creditworthiness on a case-by-case basis. The amount of collateral obtained upon the extension of credit is based on management’s credit evaluation of the client. Types of collateral held varies, but generally include real estate and equipment. The types of securities the Company invests in are included in Note 3, Investment Securities, and the types of lending the Company engages in are included in Note 4, Loans and Allowance for Loan Losses.
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Cash and Cash Equivalents | Cash and Cash Equivalents – Cash and cash equivalents include cash, balances due from banks, federal funds sold and interest-bearing deposits due on demand, all of which have original maturities of 90 days or less. Net cash flows are reported for client loan and deposit transactions, loans held for sale, redemption (purchases) of restricted investments in bank stocks, and short-term borrowings. Under the FRB regulations, the Bank generally had been required to maintain cash reserves against specified deposit liabilities. Under an interim rule, the reserve requirement was reduced to zero as of March 26, 2020. The FRB issued the final rule on December 22, 2020 that amended Regulation D by lowering the reserve requirement on transaction accounts maintained at depository institutions to 0%. Balances with correspondent banks may, at times, exceed federally insured limits. The Company considers this to be a normal business risk and reviews the financial condition of its correspondent banks on a quarterly basis.
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Restricted Investments in Bank Stocks | Restricted Investments in Bank Stocks – Restricted investments in bank stocks consist of Federal Reserve Bank of Philadelphia stock, FHLB of Pittsburgh stock and Atlantic Community Bankers Bank stock. Federal law requires a member institution of the district Federal Reserve Bank and FHLB to hold stock according to predetermined formulas. Atlantic Community Bankers Bank requires its correspondent banking institutions to hold stock as a condition of membership. The restricted investment in bank stocks is carried at cost. On a quarterly basis, management evaluates the bank stocks for impairment based on assessment of the ultimate recoverability of cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of cost is influenced by criteria such as operating performance, liquidity, funding and capital positions, stock repurchase history, dividend history, and impact of legislative and regulatory changes. |
Securities | Investment Securities – The Company typically classifies debt securities as available-for-sale ("AFS") on the date of purchase. At December 31, 2021 and 2020, the Company had no held to maturity or trading securities. AFS securities are reported at fair value. Interest income and dividends on debt securities are recognized in interest income on an accrual basis. Purchase premiums and discounts on debt securities are amortized to interest income using the interest method over the terms of the securities and approximate the level yield method. Changes in unrealized gains and losses, net of related deferred taxes, for AFS securities are recorded in AOCI. Realized gains and losses on securities are recorded on the trade date using the specific identification method and are included in noninterest income on the consolidated statements of income. AFS securities include investments that management intends to use as part of its asset/liability management strategy. Securities may be sold in response to changes in interest rates, changes in prepayment rates and other factors. The Company does not have the intent to sell any of its AFS securities that are in an unrealized loss position and it is more likely than not that the Company will not be required to sell these securities before recovery of their amortized cost. Management evaluates securities for OTTI on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as an impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components: OTTI related to other factors, which is recognized in OCI, and the remaining OTTI, which is recognized in earnings. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The Company’s securities are exposed to various risks, such as interest rate risk, market risk, and credit risk. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is at least reasonably possible that changes in risks in the near term would materially affect investment assets reported in the consolidated financial statements.
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Loans Held for Sale | Loans Held for Sale – The Company has elected to record the mortgage loans held for sale portfolio at fair market value as opposed to the lower of cost or market. The Company economically hedges its residential loans held for sale portfolio with forward sale agreements, which are reported at fair value. A lower of cost or market accounting treatment would not allow the Company to record the excess of the fair market value over book value, but would require the Company to record the corresponding reduction in value on the hedges. Both the loans and related hedges are carried at fair value, which reduces earnings volatility as the amounts more closely offset, particularly in environments when interest rates are declining. For loans held for sale for which the fair value option has been elected, the aggregate fair value exceeded the aggregate principal balance by $150 thousand. There were no loans held for sale that were nonaccrual or 90 or more days past due as of December 31, 2021. In previous periods, loans originated and intended for sale in the secondary market were carried at the lower of aggregate cost or fair value. Gains and losses on loan sales (sales proceeds minus carrying value) are recorded in noninterest income. Interest income on these loans is recognized in interest and fees on loans in the consolidated statements of income. |
Loans | Loans – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances adjusted for charge-offs, the ALL, and any corresponding deferred fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and amortized as a yield adjustment over the respective term of the loan using the interest method. For SBA PPP loans, the loan origination fees, net of certain direct origination costs, are deferred and accreted into interest income as a yield adjustment under the effective yield method over the estimated life of the PPP loans, with any unamortized net fees being recognized as interest income at the time of forgiveness. For purchased loans that are not deemed impaired at the acquisition date, premiums and discounts are amortized or accreted as adjustments to interest income using the effective yield method. For all classes of loans, the accrual of interest income on loans, including impaired loans, ceases when principal or interest is past due 90 days or more or immediately if, in the opinion of management, full collection is unlikely. Interest will continue to accrue on loans past due 90 days or more if the collateral is adequate to cover principal and interest, and the loan is in the process of collection. Interest accrued, but not collected, at the date of placement on nonaccrual status, is reversed and charged against interest income, unless fully collateralized. Subsequent payments received are either applied to the outstanding principal balance or recorded as interest income, depending upon management’s assessment of the ultimate collectability of principal. Loans are returned to accrual status, for all loan classes, when all the principal and interest amounts contractually due are brought current, the loan has performed in accordance with the contractual terms of the note for a reasonable period of time, generally six months, and the ultimate collectability of the total contractual principal and interest is reasonably assured. Past due status is based on the contractual terms of the loan. Loans, the terms of which are modified, are classified as TDRs if a concession was granted in connection with the modification, for legal or economic reasons, related to the debtor’s financial difficulties. Concessions granted under a TDR typically involve a temporary deferral of scheduled loan payments, an extension of a loans' stated maturity date, a temporary reduction in interest rates, or granting of an interest rate below market rates given the risk of the transaction. If a modification occurs while the loan is on accrual status, it will continue to accrue interest under the modified terms. Nonaccrual TDRs may be restored to accrual status if scheduled principal and interest payments, under the modified terms, are current for six months after modification, and the borrower continues to demonstrate its ability to meet the modified terms. TDRs are evaluated individually for impairment on a quarterly basis including monitoring of performance according to their modified terms. In an effort to assist clients that were negatively impacted by the COVID-19 pandemic, the Bank offered various mitigation options, including a loan payment deferral program. Under this program, most commercial deferrals were for a 90-day period, while most consumer deferrals were for a 180-day period. In accordance with the revised Interagency Statement on Loan Modifications by Financial Institutions Working with Customers Affected by the Coronavirus issued by the federal bank regulatory agencies on April 7, 2020, these deferrals are exempt from TDR status as they meet the specified requirements. Allowance for Loan Losses – The ALL is evaluated on at least a quarterly basis, as losses are estimated to be probable and incurred, and, if deemed necessary, is increased or decreased through the provision for loan losses on the consolidated statements of income. Loan losses are charged against the ALL when management determines that all or a portion of the loan is uncollectible. Recoveries on previously charged-off loans are credited to the ALL when received. The ALL is allocated to loan portfolio classes on a quarterly basis, but the entire balance is available to cover losses from any of the portfolio classes when those losses are confirmed. Management uses internal policies and bank regulatory guidance in periodically evaluating loans for collectability and incorporates historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. See Note 4, Loans and Allowance for Loan Losses, for additional information. Acquired Loans - Loans acquired in connection with business combinations are recorded at fair value with no carryover of any allowance for loan losses. Fair value of the loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. The excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable discount and is recognized into interest income over the remaining life of the loan. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable discount. These loans are accounted for under ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality ("ASC 310-30"). The nonaccretable discount includes estimated future credit losses expected to be incurred over the life of the loan. Subsequent decreases in expected cash flows will require us to evaluate the need for an addition to the allowance for loan losses. Subsequent improvement in expected cash flows will result in the reversal of a corresponding amount of the nonaccretable discount, which we will then reclassify as accretable discount to be recognized into interest income over the remaining life of the loan. Loans acquired through business combinations that do meet the specific criteria of ASC 310-30 are individually evaluated each period to analyze expected cash flows. To the extent that the expected cash flows of a loan have decreased due to credit deterioration, the Company establishes an allowance. Loans acquired through business combinations that do not meet the specific criteria of ASC 310-30 are accounted for under ASC 310-20, Receivables - Nonrefundable Fees and Other Costs. These loans are initially recorded at fair value, and include credit and interest rate marks associated with acquisition accounting adjustments. Purchase premiums or discounts are subsequently amortized as an adjustment to yield over the estimated contractual lives of the loans. There is no allowance for loan losses established at the acquisition date for acquired performing loans. An allowance for loan losses is recorded for any credit deterioration in these loans subsequent to acquisition. Acquired loans that meet the criteria for impairment or nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the client is contractually delinquent if the Company expects to fully collect the new carrying value (i.e., fair value) of the loans. As such, the Company may no longer consider the loan to be nonperforming and may accrue interest on these loans, including the impact of any accretable discount. In addition, charge-offs on such loans would be first applied to the nonaccretable difference portion of the fair value adjustment.
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Loan Commitments and Related Financial Instruments | Loan Commitments and Related Financial Instruments – Financial instruments include off-balance sheet credit commitments issued to meet client financing needs, such as commitments to make loans and commercial letters of credit. These financial instruments are recorded when they are funded. The face amount represents the exposure to loss, before considering client collateral or ability to repay. The Company maintains a reserve for probable losses on off-balance sheet commitments which is included in other liabilities on the consolidated balance sheets. |
Loans Serviced | Loans Serviced – The Bank administers secondary market mortgage programs available through the FHLB and the Federal National Mortgage Association and offers residential mortgage products and services to clients. The Bank originates single-family residential mortgage loans for immediate sale in the secondary market and retains the servicing of those loans. |
Transfers of Financial Assets | Transfers of Financial Assets – Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. |
Cash Surrender Value of Life Insurance | Cash Surrender Value of Life Insurance – The Company has purchased life insurance policies on certain employees. Life insurance is recorded at the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. |
Derivatives | Derivatives - FASB ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company's objectives in using interest rate derivatives are to add stability to interest income and to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of fixed amounts from a counterparty in exchange for the Company making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. Changes to the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged transaction affects earnings. The Company discontinues cash flow hedge accounting if it is probable the forecasted hedged transactions will not occur in the initially identified time period due to circumstances, such as the impact of the COVID-19 pandemic. Upon discontinuance, the associated gains and losses deferred in accumulated other comprehensive income (loss) are reclassified immediately into earnings and subsequent changes in the fair value of the cash flow hedge are recognized in earnings. Such derivatives were used to hedge the variable cash flows associated with overnight borrowings. During 2021, the Company terminated its interest rate derivative, with a notional amount of $50.0 million, which was designated as a cash flow hedge. Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers. The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings. At December 31, 2021 and 2020, the Company had interest rate swaps not designated as hedges with total notional value of $75.8 million and $61.3 million, respectively.
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Premises and Equipment | Premises and Equipment – Buildings, improvements, equipment, and furniture and fixtures are carried at cost less accumulated depreciation and amortization. Land is carried at cost. Depreciation and amortization has been recognized generally on the straight-line method and is computed over the estimated useful lives of the various assets as follows: buildings and improvements, including leasehold improvements – 10 to 40 years; and furniture and equipment – 3 to 15 years. Leasehold improvements are amortized over the shorter of the lease term or the indicated life. Repairs and maintenance are charged to operations as incurred, while additions and improvements are typically capitalized. Gains or losses on the retirement or disposal of individual assets is recorded as income or expense in the period of retirement or disposal. Premises no longer in use and held for sale are included in other assets on the consolidated balance sheets at the lower of carrying value or fair value and no depreciation is charged on them. At December 31, 2021 and 2020, premises held for sale totaled $321 thousand and $1.1 million, respectively. Leases - The Company evaluates its contracts at inception to determine if an arrangement either is a lease or contains one. Operating lease ROU assets are included in other assets and operating lease liabilities in accrued interest payable and other liabilities in the consolidated balance sheets. The Company had no finance leases at December 31, 2021. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent an obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company's leases do not provide an implicit rate, so the Company's incremental borrowing rate is used, which approximates its fully collateralized borrowing rate, based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is reevaluated upon lease modification. The operating lease ROU asset also includes any initial direct costs and prepaid lease payments made less any lease incentives. In calculating the present value of lease payments, the Company may include options to extend the lease when it is reasonably certain that it will exercise that option. In accordance with ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), the Company keeps leases with an initial term of 12 months or less off of the balance sheet. The Company recognizes these lease payments in the consolidated statements of income on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components and has elected the practical expedient to account for them as a single lease component. The Company's operating leases relate primarily to bank branches and office space. The difference between the lease assets and lease liabilities primarily consists of deferred rent liabilities reclassified upon adoption to reduce the measurement of the lease assets. The standard did not materially impact the Company's consolidated net income and had no impact on cash flows upon adoption on January 1, 2019.
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Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets – Goodwill is calculated as the purchase premium, if any, after adjusting for the fair value of net assets acquired in purchase transactions. Goodwill is not amortized but is reviewed for potential impairment on at least an annual basis, with testing between annual tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit. Other intangible assets represent purchased assets that can be distinguished from goodwill because of contractual or other legal rights. The Company’s other intangible assets have finite lives and are amortized on either an accelerated amortization method or straight line basis over their estimated lives, generally 10 years for deposit premiums and 10 to 15 years for other client relationship intangibles. |
Mortgage Servicing Rights | Mortgage Servicing Rights – The estimated fair value of MSRs related to loans sold and serviced by the Company is recorded as an asset upon the sale of such loans. MSRs are amortized as a reduction to servicing income over the estimated lives of the underlying loans. MSRs are evaluated periodically for impairment by comparing the carrying amount to estimated fair value. Fair value is determined periodically through a discounted cash flow valuation performed by a third party. Significant inputs to the valuation include expected servicing income, net of expense, the discount rate and the expected life of the underlying loans. To the extent the amortized cost of the MSRs exceeds their estimated fair values, a valuation allowance is established for such impairment through a charge against servicing income on the consolidated statements of income. If the Company determines, based on subsequent valuations, that the impairment no longer exists or is reduced, the valuation allowance is reduced through a credit to earnings. |
Foreclosed Real Estate | Foreclosed Real Estate – Real estate acquired through foreclosure or other means is initially recorded at the fair value of the related real estate collateral at the transfer date less estimated selling costs, and subsequently at the lower of its carrying value or fair value less estimated costs to sell. Fair value is determined based on an independent third party appraisal of the property or, when appropriate, a recent sales offer. Costs to maintain such real estate are expensed as incurred. Costs that significantly improve the value of the properties are capitalized. |
Investments in Real Estate Partnerships | Investments in Real Estate Partnerships – The Company has a 99% limited partnership interest in several real estate partnerships in central Pennsylvania. These investments are affordable housing projects, which entitle the Company to tax deductions and credits that expire through 2025. The Company accounts for its investments in affordable housing projects under the proportional amortization method when the criteria are met, which is limited to one investment at December 31, 2021. There are five other investments accounted for under the equity method of accounting. |
Advertising | Advertising – The Company expenses advertising as incurred. |
Repurchase Agreements | Repurchase Agreements – The Company enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities which are included in short-term borrowings on the consolidated balance sheets. Under these agreements, the Company may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Company to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing arrangements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability on the Company’s consolidated balance sheets, while the securities underlying the repurchase agreements remaining are reflected in AFS securities. The repurchase obligation and underlying securities are not offset or netted as the Company does not enter into reverse repurchase agreements. The right of setoff for a repurchase agreement resembles a secured borrowing, whereby the collateral would be used to settle the fair value of the repurchase agreement should the Company be in default (e.g., fail to make an interest payment to the counterparty). For the repurchase agreements, the collateral is held by the Company in a segregated custodial account under a third party agreement. Repurchase agreements are secured by U.S. government or government-sponsored debt securities and mature overnight.
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Share Compensation Plans | Stock Compensation Plans – The Company has stock compensation plans that cover employees and non-employee directors. Compensation expense relating to share-based payment transactions is measured based on the grant date fair value of the share award, including a Black-Scholes model for stock options. Compensation expense for all stock awards is calculated and recognized over the employees’ or non-employee directors' service period, generally defined as the vesting period. |
Income Taxes | Income Taxes – Income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of enacted tax law to taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more likely than not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more likely than not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance when, based on the weight of available evidence, it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company recognizes interest and penalties, if any, on income taxes as a component of income tax expense.
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Loss Contingencies | Loss Contingencies – Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. |
Treasury Stock | Treasury Stock – Common stock shares repurchased are recorded as treasury stock, at cost on the consolidated balance sheets, on a settlement date basis. |
Earnings Per Share | Earnings Per Share – Basic earnings per share represents income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Restricted stock awards are included in weighted average common shares outstanding as they are earned. Diluted earnings per share includes additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued by the Company relate solely to outstanding stock options and restricted stock awards and are determined using the treasury stock method. Treasury shares are not deemed outstanding for earnings per share calculations. |
Comprehensive Income | Comprehensive Income – Comprehensive income consists of net income and OCI. Unrealized gains (losses) on securities available for sale and interest rate swaps used in cash flow hedges, net of tax, were the components of AOCI at December 31, 2021 and 2020. |
Fair Value | Fair Value – Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in the Note 20 to the consolidated financial statements. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect the estimates. |
Segment Reporting | Segment Reporting – The Company operates in one segment – Community Banking. The Company’s non-community banking activities are insignificant to the consolidated financial statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements - ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). The amendments in this update require an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Additionally, the amendments in this update amend the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. For certain public companies, this update was effective for interim and annual periods beginning after December 15, 2019. The Company delayed the adoption of ASU 2016-13 as noted below. ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates ("ASU 2019-10"), extended the implementation deadline of ASU 2016-13 for smaller reporting and other companies until the fiscal year and interim periods beginning after December 15, 2022. The Company meets the requirements to be considered a smaller reporting company under SEC Regulation S-K and SEC Rule 405, and will adopt ASU 2016-13 effective January 1, 2023. The Company is evaluating the impact of the delay for adoption of ASU 2016-13, and is working with a third-party vendor solution to assist with the application of ASU 2016-13 and finalizing the loss estimation models to be used. Once management determines which methods will be utilized, a third party will be contracted to perform a model validation prior to adoption. While the Company anticipates the allowance for loan losses will increase under its current assumptions, it expects the impact of adopting ASU 2016-13 will be influenced by the composition, characteristics and quality of its loan and investment securities portfolios, as well as general economic conditions and forecasts at the adoption date. The other provisions of ASU 2019-10 were not applicable to the Company. ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The update simplifies how all entities assess goodwill for impairment by eliminating Step 2 from the goodwill impairment test. As amended, the goodwill impairment test will consist of one step comparing the fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The adoption of this guidance, effective January 1, 2020, did not have a material impact on the Company's consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). ASU 2020-04 contains optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The optional expedients apply consistently to all contracts or transactions within the scope of this topic, while the optional expedients for hedging relationships can be elected on an individual basis. The Company has formed a cross-functional working group to lead the transition from LIBOR to a planned adoption of an alternate index. The Company has elected to replace LIBOR with the 30-Day Average SOFR or Term SOFR in its loan agreements. The Company is in the process of implementing fallback language for loans that will mature after 2021. The Company expects to adopt the LIBOR transition relief allowed under this standard, and is currently evaluating the potential impact of this guidance on its financial statements.
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Revenue | On January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all subsequent amendments (collectively “ASC 606”). The update implements a common revenue standard that clarifies the principles for recognizing revenue. The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to clients in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The majority of the Company's revenue comes from interest income, including loans and securities, that are outside the scope of ASC 606. The Company's services that fall within the scope of ASC 606 are presented within noninterest income on the consolidated statements of income and are recognized as revenue as the Company satisfies its obligation to the client. Services within the scope of ASC 606 include service charges on deposit accounts, income from trust and investment management and brokerage activities and interchange fees from service charges on ATM and debit card transactions. ASC 606 did not result in a change to the accounting for any in-scope revenue streams; as such, no cumulative effect adjustment was recorded. Descriptions of revenue generating activities that are within the scope of ASC 606 are as follows: Service Charges on Deposit Accounts - The Company earns fees from its deposit clients for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the client's request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the client's account balance. Interchange Income - The Company earns interchange fees from debit/credit cardholder transactions conducted through the MasterCard payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. Interchange income is presented net of cardholder rewards. Swap Referral Fee Income - During 2019 and through May 2020, the Company earned fees from a third-party service provider for loan hedging referrals provided to lending clients. The Company acted as an agent in arranging the relationship between our client and the third-party service provider. The Company was paid and recognized income upon completion of the loan hedge between our client and the third-party service provider. Trust and Investment Management Income - The Company earns wealth management and investment brokerage fees from its contracts with trust and wealth management clients to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as the Company provides the contracted services and are generally assessed based on a tiered scale of the market value of assets under management. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e., the trade date. Other related services provided included financial planning services and the associated fees the Company earns, which are based on a fixed fee schedule, are recognized when the services are rendered. Services are generally billed in arrears and a receivable is recorded until fees are paid. Brokerage Income - The Company earns fees from investment management and brokerage services provided to its clients through a third-party service provider. The Company receives commissions from the third-party service provider and recognizes income on a weekly basis based upon client activity. As the Company acts as an agent in arranging the relationship between the client and the third-party service provider and does not control the services rendered to the clients, brokerage income is presented net of related costs.
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Consideration Paid and Assets Acquired and Liabilities Assumed | The following table summarizes the consideration paid for Hamilton and the estimated fair values of the assets acquired and liabilities assumed at the acquisition date.
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Schedule of Loans Acquired in Business Combination | The following table presents performing and PCI loans acquired, by loan class, at May 1, 2019. Upon completion of the Hamilton acquisition, the Company sold the acquired investment portfolio and paid off acquired borrowings at the indicated fair value amounts in conjunction with its asset/liability management strategies.
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Schedule of Fair Value Adjustments Made to Amortized Cost Basis Loans | The following table presents the fair value adjustments made to the amortized cost basis of loans acquired at May 1, 2019.
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Schedule of Information About Purchased Credit Impaired Loans | The following table provides information about acquired PCI loans at May 1, 2019.
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INVESTMENT SECURITIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Amortized Cost and Fair Value and Corresponding Amounts of Gross Unrealized Gains and Losses | The following table summarizes amortized cost and fair value of AFS securities, and the corresponding amounts of gross unrealized gains and losses recognized in AOCI at December 31, 2021 and 2020.
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Summary of Securities Available For Sale With Unrealized Losses | The following table summarizes investment securities with unrealized losses at December 31, 2021 and 2020, aggregated by major security type and length of time in a continuous unrealized loss position.
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Summary of Amortized Cost and Fair Value by Contractual Maturity | The following table summarizes amortized cost and fair value of investment securities by contractual maturity at December 31, 2021. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.
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Summary of Proceeds from Sale of Available for Sale Securities | The following table summarizes proceeds from sales of investment securities and gross gains and gross losses for the years ended December 31, 2021, 2020 and 2019.
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LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Loan Portfolio, Excluding Residential Loans Held for Sale | The following table presents the loan portfolio by segment and class, excluding residential LHFS, at December 31, 2021 and December 31, 2020.
(1) This balance includes $189.9 million and $403.3 million of SBA PPP loans, net of deferred fees and costs, at December 31, 2021 and December 31, 2020, respectively.
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Summary of Ratings Based on Internal Risk Rating System | The following summarizes the Company’s loan portfolio ratings based on its internal risk rating system at December 31, 2021 and 2020:
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Summary of Impaired Loans by Class | The following table, which excludes accruing PCI loans, summarizes impaired loans by segment and class, segregated by those for which a specific allowance was required and those for which a specific allowance was not required at December 31, 2021 and 2020. The recorded investment in loans excludes accrued interest receivable due to insignificance. Related allowances established generally pertain to those loans in which loan forbearance agreements were in the process of being negotiated or updated appraisals were pending and any partial charge-off will be recorded when final information is received.
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Summary of Average Recorded Investment in Impaired Loans and Related Interest Income | The following table, which excludes accruing PCI loans, summarizes the average recorded investment in impaired loans and related recognized interest income for the years ended December 31, 2021, 2020 and 2019.
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Schedule of Impaired Loans that are TDRs | The following table presents impaired loans that are TDRs, with the recorded investment at December 31, 2021 and 2020.
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Schedule of Number of Loans Modified | The following table presents the number of loans modified as TDRs, and their pre-modification and post-modification investment balances for the year ended December 31, 2019. There were no loans modified as TDRs during 2021 and 2020.
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Schedule of Classes of Loan Portfolio Summarized by Aging Categories | The following table presents the classes of the loan portfolio summarized by aging categories of performing loans and nonaccrual loans at December 31, 2021 and 2020.
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Schedule of Activity in Allowance for Loan Losses | The following table presents activity in the ALL for the years ended December 31, 2021, 2020 and 2019.
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Summary of Ending Loan Balance Individually Evaluated for Impairment | The following table summarizes the ending loan balances individually evaluated for impairment based upon loan segment, as well as the related ALL loss allocation for each at December 31, 2021 and 2020. Accruing PCI loans are excluded from loans individually evaluated for impairment.
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Schedule of Activity for the Accretable Yield of Purchased Impaired Loans | The following table provides activity for the accretable yield of purchased impaired loans for the years ended December 31, 2021 and 2020.
(1) The amount for the year ended December 31, 2020 reflects a measurement period adjustment for Hamilton loans that should have been in the PCI pool at the acquisition date. (2) The amount for the year ended December 31, 2020 represents the impact of purchased credit impaired loans sold during that year.
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PREMISES AND EQUIPMENT (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Premises and Equipment | The following table summarizes premises and equipment at December 31, 2021 and 2020.
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LEASES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Right-of-use Assets and Related Lease Liabilities | The following table summarizes the Company's right-of-use assets and related lease liabilities for the year ended December 31, 2021 and 2020.
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Information Related to Operating Leases | The following table presents information related to the Company's operating leases for the years ended December 31, 2021 and 2020:
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Maturities of Lease Liabilities | The following table presents maturities of the Company's lease liabilities by year.
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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Change in Goodwill | The following table presents changes in goodwill for the years ended December 31, 2021 and 2020.
(1) The Company finalized its purchase accounting adjustments associated with Hamilton as of May 1, 2020.
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Schedule of Changes in Components of Other Intangible Assets | The following tables present changes in and components of other intangible assets for the years ended December 31, 2021 and 2020.
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Schedule of Amortized Intangible Assets |
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Schedule of Estimated Amortization Expense | The following table presents future estimated aggregate amortization expense at December 31, 2021.
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INCOME TAXES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Income Tax Expense | The following table summarizes income tax expense for the years ended December 31, 2021, 2020 and 2019.
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Reconciliation of Effective Income Tax Rate to Statutory Federal Rate | The following table reconciles the Company's effective income tax rate to its statutory federal rate for the years ended December 31, 2021, 2020 and 2019.
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Summary of Deferred Tax Assets and Liabilities | The following table summarizes the Company's deferred tax assets and liabilities at December 31, 2021, and 2020.
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SHARE-BASED COMPENSATION PLANS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Nonvested Restricted Shares Activity | The following table presents a summary of nonvested restricted shares activity for 2021.
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Schedule of Restricted Shares Compensation Expense | The following table presents restricted shares compensation expense, with tax benefit information, and fair value of shares vested at December 31, 2021, 2020 and 2019.
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Employee Stock Ownership Plan | The following table presents information for the employee stock purchase plan for years ended December 31, 2021, 2020 and 2019.
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DEPOSITS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Composition of Deposits | The following table summarizes deposits by type at December 31, 2021 and 2020.
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Scheduled Maturities of Time Deposits | The following table summarizes scheduled future maturities of time deposits as of December 31, 2021.
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RELATED PARTY TRANSACTIONS (Tables) |
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Activity in Loans to Related Parties | The following table presents the aggregate activity in loans to related parties during 2021.
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SHORT-TERM BORROWINGS (Tables) |
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Use of Short-Term Borrowings | The following table summarizes these short-term borrowings at and for the years ended December 31, 2021, 2020 and 2019. At December 31, 2021, short-term borrowings were zero due to repayments and maturities of overnight borrowings.
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Summary of the Use of Securities Sold Under Agreements to Repurchase | The following table provides additional details for repurchase agreements at and for the years ended December 31, 2021, 2020 and 2019.
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LONG-TERM DEBT (Tables) |
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | The following table presents components of the Company’s long-term debt at December 31, 2021, and 2020.
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Summary of Future Principal Payments Required | The following table summarizes the future annual principal payments required on these borrowings at December 31, 2021.
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DERIVATIVE FINANCIAL INSTRUMENTS (Tables) |
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Derivative Instruments | The following table summarizes the notional values and fair value of the Company's derivative instruments at December 31, 2021 and December 31, 2020:
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Effect of Derivative Financial Instruments on OCI and Net Income | The following tables summarize the effect of the Company's derivative financial instruments on OCI and net income at December 31, 2021 and 2020:
(1) Includes $514 thousand recorded to other operating expenses due to the loss from the termination of an interest rate swap designated as a cash flow hedge for the year ended December 31, 2021.
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Summary of Interest Rate Swap Components | The following table is a summary of interest rate swap components at December 31, 2021 and 2020. During the year ended December 31, 2021, the Company terminated its remaining interest rate derivative of $50.0 million.
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SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL (Tables) |
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Actual and Required Capital Amounts and Ratios | The following table presents capital amounts and ratios at December 31, 2021 and 2020.
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EARNINGS PER SHARE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share | The following table presents earnings per share for the years ended December 31, 2021, 2020 and 2019.
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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Commitments and Conditional Obligations | The following table presents these contractual, or notional, amounts at December 31, 2021, and 2020.
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FAIR VALUE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Assets Measured at Fair Value on a Recurring Basis | The following table summarizes assets and liabilities measured at fair value on a recurring basis at December 31, 2021 or 2020.
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Level 3 Fair Value, Assets Measurement Activity | The following provides details of the Level 3 fair value measurement activity for the years ended December 31, 2021 or 2020.
The transfers into Level 3 for 2020 noted above relate to two CMO investment securities and one municipal bond for which trading was substantially limited during that year due to the COVID-19 pandemic. As such, older trades or trades of similar securities were utilized to approximate fair value. There were no transfers into or out of Level 3 at December 31, 2021.
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Summary of Assets Measured at Fair Value on Nonrecurring Basis | The following table summarizes assets measured at fair value on a nonrecurring basis at December 31, 2021 and 2020.
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Schedule of Additional Qualitative Information | The following table presents additional qualitative information about assets measured on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value.
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Schedule of Estimated Fair Values of Financial Instruments | The following table presents the carrying amounts and estimated fair values of financial assets and liabilities at December 31, 2021, and 2020.
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REVENUE FROM CONTRACTS WITH CLIENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest Income Disaggregated by Revenue Source | The following table presents the Company's noninterest income disaggregated by revenue source for the years ended December 31, 2021, 2020 and 2019.
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ORRSTOWN FINANCIAL SERVICES, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL INFORMATION (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Balance Sheets | Condensed Balance Sheets
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Condensed Statements of Income | Condensed Statements of Income
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Condensed Statements of Cash Flows | Condensed Statements of Cash Flows
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Loans Held for Sale and Loans (Details) - USD ($) $ in Thousands |
12 Months Ended | |
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Dec. 31, 2021 |
Dec. 31, 2020 |
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Accounting Policies [Abstract] | ||
Fair value option, aggregate fair value exceeded principal amount | $ 150 | $ 436 |
Maturity of interest bearing deposits | 90 days | |
Evaluation period to return non accrual TDRs to accrual status | 6 months |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Loans Serviced (Details) - USD ($) $ in Millions |
Dec. 31, 2021 |
Dec. 31, 2020 |
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Accounting Policies [Abstract] | ||
Balance of loans serviced for others | $ 502.5 | $ 441.1 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -Derivatives (Details) - USD ($) $ in Millions |
12 Months Ended | |
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Dec. 31, 2021 |
Dec. 31, 2020 |
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Interest rate swaps | Designated as Hedging Instrument | Cash Flow Hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Terminated derivative, notional amount | $ 50.0 | |
Interest rate contract | Designated as Hedging Instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, notional amount | $ 50.0 | |
Terminated derivative, notional amount | 50.0 | |
Interest rate contract | Not Designated as Hedging Instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, notional amount | $ 75.8 | $ 61.3 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Premises and Equipment (Details) - USD ($) $ in Thousands |
12 Months Ended | |
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Dec. 31, 2021 |
Dec. 31, 2020 |
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Other Assets | ||
Property, Plant and Equipment [Line Items] | ||
Premises held-for-sale | $ 321 | $ 1,100 |
Minimum | Buildings and improvements, including leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 10 years | |
Minimum | Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 3 years | |
Maximum | Buildings and improvements, including leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 40 years | |
Maximum | Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 15 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill and Other Intangible Assets (Details) |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Deposit premiums | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated life | 10 years |
Minimum | Customer lists | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated life | 10 years |
Maximum | Customer lists | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated life | 15 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Mortgage Servicing Rights (Details) - USD ($) $ in Millions |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Accounting Policies [Abstract] | ||
Balance of mortgage servicing rights | $ 4.0 | $ 2.8 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Foreclosed Real Estate (Details) $ in Thousands |
Dec. 31, 2021
USD ($)
|
---|---|
Accounting Policies [Abstract] | |
Foreclosed real estate | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Investments in Real Estate Partnerships (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021
USD ($)
contract
investment
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
|
Schedule of Equity Method Investments [Line Items] | |||
Limited partner interest (as a percent) | 99.00% | ||
Number of investments accounted for under the proportional amortization method | investment | 1 | ||
Recorded investment in real estate partnerships | $ 2,600 | $ 3,100 | |
Investments accounted for under proportional amortization method | 921 | 1,100 | |
Losses accounted for under the equity method | 272 | 299 | $ 55 |
Losses on investments accounted for under proportional amortization method | 214 | 214 | 214 |
Federal tax credits | $ 315 | $ 460 | $ 460 |
Real Estate Partnerships Interest | |||
Schedule of Equity Method Investments [Line Items] | |||
Number of investments accounted for under the equity method | contract | 5 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Accounting Policies [Abstract] | |||
Advertising expense | $ 677 | $ 392 | $ 577 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Segment Reporting (Details) |
12 Months Ended |
---|---|
Dec. 31, 2021
segment
| |
Accounting Policies [Abstract] | |
Number of significant segments | 1 |
MERGERS AND ACQUISITIONS AND BRANCH CONSOLIDATIONS - Summary of Consideration Paid and Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands |
May 01, 2019 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|---|---|
Estimated fair values of assets acquired and liabilities assumed: | ||||
Goodwill | $ 18,724 | $ 18,724 | $ 19,925 | |
Hamilton Bancorp, Inc. | ||||
Fair value of consideration transferred: | ||||
Cash | $ 14,197 | |||
Common stock issued | 36,622 | |||
Total consideration transferred | 50,819 | |||
Estimated fair values of assets acquired and liabilities assumed: | ||||
Cash and cash equivalents | 43,140 | |||
Securities available for sale | 60,882 | |||
Restricted investments in bank stocks | 2,658 | |||
Loans | 347,143 | |||
Premises and equipment | 3,749 | |||
Core deposit intangible | 4,550 | |||
Goodwill | 6,132 | |||
Cash surrender value of life insurance | 17,948 | |||
Deferred tax asset, net | 7,257 | |||
ROU lease asset | 2,793 | |||
Other assets | 3,925 | |||
Total assets acquired | 500,177 | |||
Deposits | (388,246) | |||
Borrowings | (51,393) | |||
Other liabilities | (9,719) | |||
Total liabilities assumed | $ (449,358) |
MERGERS AND ACQUISITIONS AND BRANCH CONSOLIDATIONS - Schedule of Fair Value Adjustments Made to the Amortized Cost Basis of Loans (Details) - Hamilton Bancorp, Inc. $ in Thousands |
May 01, 2019
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Gross amortized cost basis at acquisition | $ 362,125 |
Market rate adjustment | (5,309) |
Credit fair value adjustment on non-credit impaired loans | (3,947) |
Credit fair value adjustment on impaired loans | (5,726) |
Estimated fair value of acquired loans | $ 347,143 |
MERGERS AND ACQUISITIONS AND BRANCH CONSOLIDATIONS - Information About Acquired PCI Loans (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 01, 2019 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Business Acquisition [Line Items] | |||
Contractual cash flows not expected to be collected (nonaccretable discount) | $ (160) | $ (1,871) | |
Hamilton Bancorp, Inc. | |||
Business Acquisition [Line Items] | |||
Contractually required principal and interest at acquisition | $ 31,599 | ||
Contractual cash flows not expected to be collected (nonaccretable discount) | (8,834) | ||
Expected cash flows at acquisition | 22,765 | ||
Interest component of expected cash flows (accretable discount) | (3,497) | ||
Estimated fair value of acquired PCI loans | $ 19,268 |
INVESTMENT SECURITIES - Summary of Amortized Cost and Fair Value by Contractual Maturity (Detail) $ in Thousands |
Dec. 31, 2021
USD ($)
|
---|---|
Amortized Cost | |
Due in one year or less | $ 0 |
Due after one year through five years | 3,382 |
Due after five years through ten years | 78,759 |
Due after ten years | 123,779 |
CMOs and MBSs | 138,366 |
Asset-backed | 122,520 |
Totals | 466,806 |
Fair Value | |
Due in one year or less | 0 |
Due after one year through five years | 3,718 |
Due after five years through ten years | 79,801 |
Due after ten years | 129,952 |
CMOs and MBSs | 136,346 |
Asset-backed | 122,621 |
Totals | $ 472,438 |
INVESTMENT SECURITIES - Summary of Proceeds from Sale of Available for Sale Securities (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Investments, Debt and Equity Securities [Abstract] | |||
Proceeds from sale of investment securities | $ 149,038 | $ 0 | $ 199,429 |
Gross gains | 1,847 | 0 | 4,974 |
Gross losses | $ 1,209 | $ 16 | $ 225 |
INVESTMENT SECURITIES - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Debt Securities, Available-for-sale [Line Items] | |||
Gain (loss) on investments | $ 638 | $ (16) | $ 4,700 |
Collateral Pledged | |||
Debt Securities, Available-for-sale [Line Items] | |||
Investment securities pledged to secure public funds | $ 295,600 | $ 398,700 |
LOANS AND ALLOWANCE FOR LOAN LOSSES - Schedule of Number of Loans Modified as TDRs (Detail) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
contract
|
|
Financing Receivable, Modifications [Line Items] | |||
Pre- Modification Investment Balance | $ 0 | $ 0 | |
Post- Modification Investment Balance | $ 0 | $ 0 | |
Commercial Real Estate | Owner-occupied | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Contracts | contract | 3 | ||
Pre- Modification Investment Balance | $ 1,866,000 | ||
Post- Modification Investment Balance | $ 1,881,000 |
LOANS AND ALLOWANCE FOR LOAN LOSSES - Schedule of Accretable Yield of Purchased Impaired Loans (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ||
Accretable yield, beginning of period | $ 3,438 | $ 6,950 |
Additions | 0 | 570 |
Accretion of income | (1,093) | (3,457) |
Reclassifications from nonaccretable difference due to improvement in expected cash flows | 160 | 1,871 |
Other changes, net | 156 | (2,496) |
Accretable yield, end of period | $ 2,661 | $ 3,438 |
PREMISES AND EQUIPMENT - Summary of Premises and Equipment (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | $ 65,883 | $ 66,094 | |
Less accumulated depreciation | 31,838 | 30,945 | |
Bank premises and equipment, net | 34,045 | 35,149 | |
Depreciation expense | 2,300 | 3,200 | $ 2,700 |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | 8,586 | 8,586 | |
Buildings and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | 27,852 | 27,569 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | 5,593 | 6,570 | |
Furniture and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | 23,681 | 23,254 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Bank premises and equipment, gross | $ 171 | $ 115 |
LEASES - Narrative (Details) |
Dec. 31, 2021 |
---|---|
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 6 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease term | 31 years |
LEASES - Right-of-use Assets, Lease Liabilities and Other Information related to Operating Leases (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Leases [Abstract] | ||
Operating lease ROU assets | $ 10,515 | $ 8,686 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Other liabilities | Other liabilities |
Operating lease ROU liabilities | $ 11,119 | $ 9,143 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other assets | Other assets |
Weighted-average remaining lease term (in years) | 14 years 7 months 6 days | 16 years 9 months 18 days |
Weighted-average discount rate | 4.10% | 4.30% |
Cash paid for operating lease liabilities | $ 1,266 | $ 1,202 |
Operating lease expense | $ 1,544 | $ 1,620 |
LEASES - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Leases [Abstract] | ||
2022 | $ 1,163 | |
2023 | 1,216 | |
2024 | 1,246 | |
2025 | 1,269 | |
2026 | 1,302 | |
Thereafter | 9,687 | |
Total payments due | 15,883 | |
Less: imputed interest | 4,764 | |
Total lease liabilities | $ 11,119 | $ 9,143 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Change in Goodwill (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Goodwill [Roll Forward] | ||
Balance, beginning of year | $ 18,724 | $ 19,925 |
Adjustments to acquired goodwill | 0 | (1,201) |
Balance, end of year | $ 18,724 | $ 18,724 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Components of Other Intangible Assets (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Finite-lived Intangible Assets [Roll Forward] | |||
Balance, beginning of year | $ 5,458,000 | $ 7,180,000 | |
Amortization expense | (1,275,000) | (1,569,000) | $ (1,570,000) |
Impairment | 0 | (153,000) | 0 |
Ending Balance | $ 4,183,000 | $ 5,458,000 | $ 7,180,000 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Amortized Intangible Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 8,415 | $ 8,415 |
Accumulated Amortization | 4,232 | 2,957 |
Core deposit intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 8,390 | 8,390 |
Accumulated Amortization | 4,208 | 2,935 |
Other client relationship intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 25 | 25 |
Accumulated Amortization | $ 24 | $ 22 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Nov. 30, 2021 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Finite-Lived Intangible Assets [Line Items] | ||||
Goodwill impairment | $ 0 | |||
Impairment of intangibles | $ 0 | $ 153,000 | $ 0 | |
Amortization expense | $ (1,275,000) | (1,569,000) | $ (1,570,000) | |
Other client relationship intangibles | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Other intangible, fully amortized | 149,000 | |||
Other client relationship intangibles | Discontinued Operations | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Impairment of intangibles | 153,000 | |||
Intangible assets, reduction of gross carrying value | $ 350,000 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Estimated amortization Expense (Details) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
2022 | $ 1,105 | ||
2023 | 935 | ||
2024 | 766 | ||
2025 | 596 | ||
2026 | 427 | ||
Thereafter | 354 | ||
Total | $ 4,183 | $ 5,458 | $ 7,180 |
INCOME TAXES - Summary of Income Tax Expense (Benefit) (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Income Tax Disclosure [Abstract] | |||
Current expense | $ 7,072 | $ 6,602 | $ 934 |
Deferred expense (benefit) | 942 | (554) | 1,776 |
Income tax expense | $ 8,014 | $ 6,048 | $ 2,710 |
INCOME TAXES - Reconciliation of Effective Income Tax Rate to Statutory Federal Rate (Detail) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Income Tax Disclosure [Abstract] | |||
Statutory federal tax rate | 21.00% | 21.00% | 21.00% |
Increase (decrease) resulting from: | |||
State taxes, net of federal benefit | 1.10% | 1.00% | (0.10%) |
Tax exempt interest income | (1.70%) | (2.00%) | (4.20%) |
Income from life insurance | (0.90%) | (1.10%) | (1.70%) |
Disallowed interest expense | 0.00% | 0.10% | 0.30% |
Low-income housing credits and related expense | (0.20%) | (0.80%) | (1.30%) |
Merger related | 0.00% | 0.00% | 0.70% |
Other | 0.30% | 0.40% | (0.90%) |
Effective income tax rate | 19.60% | 18.60% | 13.80% |
INCOME TAXES - Narrative (Detail) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Income Tax Disclosure [Abstract] | |||
Income tax expense related to net security (losses) and gains | $ 134,000 | $ (3,000) | $ 997,000 |
Income tax penalties or interest | 0 | 0 | $ 0 |
Accrued penalties | 0 | $ 0 | |
Federal operating loss carryforwards | 10,100,000 | ||
State and Local operating loss carryforwards | $ 10,100,000 |
INCOME TAXES - Summary of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Deferred tax assets: | ||
Allowance for loan losses | $ 4,655 | $ 4,457 |
Deferred compensation | 515 | 578 |
Retirement and salary continuation plans | 2,633 | 2,536 |
Share-based compensation | 681 | 735 |
Off-balance sheet reserves | 353 | 345 |
Nonaccrual loan interest | 220 | 395 |
Deferred loan fees | 1,604 | 1,483 |
Net unrealized losses on interest rate swaps | 0 | 258 |
Purchase accounting adjustments | 1,236 | 1,886 |
Bonus accrual | 930 | 622 |
ROU liability | 2,444 | 2,003 |
Net operating loss carryforward | 2,218 | 2,472 |
Other | 67 | 448 |
Total deferred tax assets | 17,556 | 18,218 |
Deferred tax liabilities: | ||
Depreciation | 368 | 74 |
Net unrealized gains on securities available for sale | 1,183 | 1,148 |
Mortgage servicing rights | 887 | 614 |
Purchase accounting adjustments | 915 | 1,206 |
ROU Asset | 2,311 | 1,903 |
Other | 244 | 340 |
Total deferred tax liabilities | 5,908 | 5,285 |
Net deferred tax asset, included in other assets | $ 11,648 | $ 12,933 |
SHARE-BASED COMPENSATION PLANS - Narrative (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
2011 Incentive Stock Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares reserved to be issued (in shares) | 881,920 | ||
Number of shares available to be issued (in shares) | 248,770 | ||
2011 Incentive Stock Plan | Restricted stock awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation expense | $ 2.3 | $ 2.0 | $ 2.2 |
Unrecognized compensation expense, weighted-average recognition period | 1 year 9 months 18 days | ||
Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares reserved to be issued (in shares) | 350,000 | ||
Number of shares available to be issued (in shares) | 151,480 | ||
Maximum shares purchase, as percentage of salary | 10.00% | ||
Percentage of value of the shares on the semi-annual offering | 95.00% |
SHARE-BASED COMPENSATION PLANS - Summary of Nonvested Restricted Shares Activity (Details) - 2011 Incentive Stock Plan - Restricted stock awards |
12 Months Ended |
---|---|
Dec. 31, 2021
$ / shares
shares
| |
Shares | |
Nonvested shares, beginning of year (in shares) | shares | 245,576 |
Granted (in shares) | shares | 137,347 |
Forfeited (in shares) | shares | (29,638) |
Vested (in shares) | shares | (78,588) |
Nonvested shares, at end of year (in shares) | shares | 274,697 |
Weighted Average Grant Date Fair Value | |
Nonvested shares, beginning of year (in dollars per share) | $ / shares | $ 21.45 |
Granted (in dollars per share) | $ / shares | 19.53 |
Forfeited (in dollars per share) | $ / shares | 19.68 |
Vested (in dollars per share) | $ / shares | 23.52 |
Nonvested shares, at end of year (in dollars per share) | $ / shares | $ 20.05 |
SHARE-BASED COMPENSATION PLANS - Schedule of Restricted Shares Compensation Expense (Details) - 2011 Incentive Stock Plan - Restricted stock awards - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted share award expense | $ 1,901 | $ 1,710 | $ 1,578 |
Restricted share award federal tax benefit | 334 | 359 | 451 |
Fair value of shares vested | $ 1,539 | $ 1,384 | $ 2,744 |
SHARE-BASED COMPENSATION PLANS - Schedule of Employee Stock Purchase Plan Activity (Details) - Employee Stock Purchase Plan - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | |||
Shares purchased (in shares) | 8,755 | 7,831 | 5,399 |
Weighted average price of shares purchased (in dollars per share) | $ 15.58 | $ 14.85 | $ 20.69 |
Compensation expense recognized | $ 48 | $ 6 | $ 8 |
DEPOSITS - Summary of Composition of Deposits (Detail) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Deposits [Abstract] | ||
Noninterest-bearing demand deposits | $ 553,238 | $ 456,778 |
Interest-bearing demand deposits | 903,155 | 883,685 |
Savings | 706,451 | 620,199 |
Time ($250,000 or less) | 258,064 | 334,280 |
Time (over $250,000) | 44,021 | 61,938 |
Total deposits | $ 2,464,929 | $ 2,356,880 |
DEPOSITS - Scheduled Maturities of Time Deposits (Detail) $ in Thousands |
Dec. 31, 2021
USD ($)
|
---|---|
Deposits [Abstract] | |
2022 | $ 237,818 |
2023 | 41,362 |
2024 | 12,032 |
2025 | 4,691 |
2026 | 3,989 |
Thereafter | 2,193 |
Total | $ 302,085 |
DEPOSITS - Narrative (Detail) - USD ($) $ in Millions |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Deposits [Abstract] | ||
Brokered time deposits | $ 0.0 | $ 0.0 |
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Related Party Transaction, Loans To Related Party [Roll Forward] | ||
Balance, beginning of year | $ 5,049 | |
New loans | 1,194 | |
Repayments | (1,654) | |
Director and officer relationship changes | (3,685) | |
Balance, end of year | 904 | |
Deposits from related parties | $ 4,700 | $ 7,700 |
SHORT-TERM BORROWINGS - Summary of the Use of Short-Term Borrowings (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Debt Disclosure [Abstract] | |||
Balance at year-end | $ 0 | $ 55,729 | $ 146,600 |
Weighted average interest rate at year-end | 0.00% | 0.41% | 1.87% |
Average balance during the year | $ 38,546 | $ 138,310 | $ 23,171 |
Average interest rate during the year | 0.33% | 0.67% | 2.20% |
Maximum month-end balance during the year | $ 55,729 | $ 178,729 | $ 146,600 |
SHORT-TERM BORROWINGS - Summary of the Use of Securities Sold Under Agreements to Repurchase (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Debt Disclosure [Abstract] | |||
Balance at year-end | $ 23,301 | $ 19,466 | $ 8,269 |
Weighted average interest rate at year-end | 0.11% | 0.23% | 1.31% |
Average balance during the year | $ 22,888 | $ 18,064 | $ 8,830 |
Average interest rate during the year | 0.14% | 0.47% | 1.28% |
Maximum month-end balance during the year | $ 27,595 | $ 24,403 | $ 12,774 |
Fair value of securities underlying the agreements at year-end | $ 32,662 | $ 29,477 | $ 13,062 |
LONG-TERM DEBT - Schedule of Long-Term Debt (Detail) - FHLB amortizing advance requiring monthly principal and interest payments, maturing - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Amount | ||
2025 | $ 1,896 | $ 2,316 |
Weighted Average rate | ||
2025 | 4.74% | 4.74% |
LONG-TERM DEBT - Narrative (Detail) |
12 Months Ended | |
---|---|---|
Dec. 31, 2021
USD ($)
bank
|
Dec. 31, 2020
USD ($)
|
|
Line of Credit Facility [Line Items] | ||
FHLB borrowings, prepaid | $ 20,000,000 | |
FHLB, borrowings matured | 40,350,000 | |
Collateral for all outstanding loans | 873,100,000 | |
Additional availability at the FHLB based on qualifying collateral | 814,100,000 | |
Letters of credit | 56,000,000 | |
Letters of credit non-deposit | 1,100,000 | |
Available unsecured lines of credit | $ 30,000,000 | |
Number of correspondent banks | bank | 2 | |
Borrowings under lines of credit | $ 0 | $ 0 |
FHLB fixed rate advances maturing | ||
Line of Credit Facility [Line Items] | ||
New long term borrowings | 0 | |
Line of Credit | Federal Home Loan Bank Program | ||
Line of Credit Facility [Line Items] | ||
Available unsecured lines of credit | $ 150,000,000 | $ 94,300,000 |
LONG-TERM DEBT - Summary of Future Principal Payments Required (Detail) $ in Thousands |
Dec. 31, 2021
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2022 | $ 441 |
2023 | 462 |
2024 | 485 |
2025 | 508 |
2026 | 0 |
Thereafter | 0 |
Total | $ 1,896 |
SUBORDINATED NOTES (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Debt Instrument [Line Items] | ||
FHLB advances and other | $ 1,896 | |
Debt issuance costs | $ 537 | $ 597 |
Debt issuance cost amortization period | 10 years | |
Notes Payable | Subordinated Notes matures 2028 | ||
Debt Instrument [Line Items] | ||
FHLB advances and other | $ 32,000 | $ 31,900 |
Fixed interest rate, percentage | 6.00% | |
Notes Payable | Subordinated Notes matures 2028 | LIBOR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 3.16% |
DERIVATIVE FINANCIAL INSTRUMENTS - Summary of Interest Rate Swap Components (Details) - Interest rate swaps |
12 Months Ended |
---|---|
Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Weighted average pay rate | 0.77% |
Weighted average receive rate | 0.09% |
Weighted average maturity in years | 4 years 2 months 12 days |
EARNINGS PER SHARE - Schedule of Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Earnings Per Share [Abstract] | |||
Net income | $ 32,881 | $ 26,463 | $ 16,924 |
Weighted average shares outstanding - basic (in shares) | 10,967 | 10,942 | 10,362 |
Dilutive effect of share-based compensation (in shares) | 139 | 92 | 152 |
Weighted average shares outstanding - diluted (in shares) | 11,106 | 11,034 | 10,514 |
Per share information: | |||
Basic earnings per share (in dollars per share) | $ 3.00 | $ 2.42 | $ 1.63 |
Diluted earnings per share (in dollars per share) | $ 2.96 | $ 2.40 | $ 1.61 |
EARNINGS PER SHARE - Narrative (Detail) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Average outstanding stock options not included in computation of earnings per share (in shares) | 0 | 16,109 | 22,223 |
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK - Schedule of Commitments and Conditional Obligations (Detail) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Home equity - lines of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | $ 261,580 | $ 223,216 |
1-4 family residential construction loans | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | 40,348 | 28,928 |
Commercial real estate, construction and land development loans | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | 124,488 | 60,606 |
Commercial, industrial and other loans | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | 378,996 | 268,931 |
Standby letters of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Commitments to fund | $ 19,724 | $ 14,491 |
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK - Narrative (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Fair Value Disclosures [Abstract] | |||
Reserve in other liabilities | $ 1,600 | $ 1,500 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Reserve in other liabilities | 1,600 | 1,500 | |
Off-balance sheet credit exposures expense | 57 | 511 | $ 39 |
MPF Program | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total outstanding balance of loans sold under the MPF Program | 13,500 | 18,900 | |
Limited recourse back on loans | $ 714 | $ 777 |
CONTINGENCIES (Detail) $ in Thousands |
1 Months Ended | |
---|---|---|
Apr. 30, 2020
USD ($)
|
Dec. 31, 2021
claim
|
|
Commitments and Contingencies Disclosure [Abstract] | ||
Number of legal proceedings that might have a material effect on the results of operations | claim | 0 | |
Litigation settlement, amount awarded to other party | $ | $ 135 |
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