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| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
6480 U.S. Highway 98 West, Suite A, Hattiesburg, Mississippi | 39402 | ||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common Stock, par value $1.00 | FBMS | The Nasdaq Stock Market |
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Large accelerated filer | ☑ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ |
| Smaller Reporting Company | ☐ | ||||||||
Emerging growth company | ☐ |
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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. ☐o
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Auditor Firm PCAOB ID: 686 | Auditor Name: | Auditor Location: Jackson, MS |
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| | March 31, | | December 31, | ||
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| 2022 |
| 2021 | ||
ASSETS | | | | | | |
Cash and due from banks | | $ | 125,709 | | $ | 115,232 |
Interest-bearing deposits with banks | |
| 676,904 | |
| 804,481 |
Total cash and cash equivalents | |
| 802,613 | |
| 919,713 |
Securities available-for-sale, at fair value (amortized cost: $1,683,844 2022; $1,741,153; allowance for credit losses: $0) | |
| 1,591,677 | |
| 1,751,832 |
Securities held to maturity, net of allowance for credit losses of $0 (fair value: $358,395 - 2022; $0 – 2021) | |
| 372,062 | | | 0 |
Other securities | |
| 22,226 | |
| 22,226 |
Total securities | |
| 1,985,965 | |
| 1,774,058 |
Loans held for sale | |
| 8,213 | |
| 7,678 |
Loans held for investment | |
| 2,970,246 | |
| 2,959,553 |
Allowance for credit losses | | | (31,620) | | | (30,742) |
Net loans held for investment | | | 2,938,626 | | | 2,928,811 |
Interest receivable | |
| 23,234 | |
| 23,256 |
Premises and equipment | |
| 125,756 | |
| 125,959 |
Operating lease right-of-use assets | |
| 3,779 | |
| 4,095 |
Finance lease right-of-use assets | |
| 2,278 | |
| 2,394 |
Cash surrender value of bank-owned life insurance | |
| 84,357 | |
| 87,420 |
Goodwill | |
| 156,659 | |
| 156,663 |
Other real estate owned | | | 2,835 | | | 2,565 |
Other assets | | | 61,780 | | | 44,802 |
Total assets | | $ | 6,196,095 | | $ | 6,077,414 |
LIABILITIES AND SHAREHOLDERS' EQUITY | |
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Liabilities: | | | | | | |
Deposits: | |
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Noninterest-bearing |
| $ | 810,723 | | $ | 756,118 |
Interest-bearing | |
| 4,627,015 | |
| 4,470,666 |
Total deposits | |
| 5,437,738 | |
| 5,226,784 |
Interest payable | |
| 1,306 | |
| 1,711 |
Subordinated debentures | |
| 144,801 | |
| 144,726 |
Operating lease liabilities | | | 3,876 | | | 4,192 |
Finance lease liabilities | | | 2,050 | | | 2,094 |
Allowance for credit losses on off-balance sheet credit exposures | | | 1,070 | | | 1,070 |
Other liabilities | |
| 14,814 | |
| 20,665 |
Total liabilities | |
| 5,605,655 | | | 5,401,242 |
Shareholders’ equity: | |
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Common stock, par value $1 per share, 40,000,000 shares authorized; 21,734,437 shares issued at March 31, 2022, and 21,668,644 shares issued at December 31, 2021, respectively | |
| 21,734 | |
| 21,669 |
Additional paid-in capital | |
| 459,075 | |
| 459,228 |
Retained earnings | |
| 219,589 | |
| 206,228 |
Accumulated other comprehensive (loss) income | |
| (68,847) | |
| 7,978 |
Treasury stock, at cost, 1,249,607 shares at March 31, 2022 and 649,607 shares at December 31, 2021 | |
| (41,111) | |
| (18,931) |
Total shareholders’ equity | |
| 590,440 | |
| 676,172 |
Total liabilities and shareholders’ equity | | $ | 6,196,095 | | $ | 6,077,414 |
(Unaudited) | |||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
ASSETS | |||||||||||
Cash and due from banks | $ | 71,555 | $ | 115,232 | |||||||
Interest-bearing deposits with banks | 92,286 | 804,481 | |||||||||
Total cash and cash equivalents | 163,841 | 919,713 | |||||||||
Securities available-for-sale, at fair value (amortized cost: $1,596,290 - 2022; $1,741,153 - 2021; allowance for credit losses: $0) | 1,379,410 | 1,751,832 | |||||||||
Securities held to maturity, net of allowance for credit losses of $0 (fair value: $532,688 - 2022; $0 - 2021) | 593,553 | — | |||||||||
Other securities | 31,060 | 22,226 | |||||||||
Total securities | 2,004,023 | 1,774,058 | |||||||||
Loans held for sale | 2,225 | 7,678 | |||||||||
Loans held for investment | 3,719,388 | 2,959,553 | |||||||||
Allowance for credit losses | (38,356) | (30,742) | |||||||||
Net loans held for investment | 3,681,032 | 2,928,811 | |||||||||
Interest receivable | 24,570 | 23,256 | |||||||||
Premises and equipment | 140,533 | 125,959 | |||||||||
Operating lease right-of-use assets | 7,901 | 4,095 | |||||||||
Finance lease right-of-use assets | 2,046 | 2,394 | |||||||||
Cash surrender value of bank-owned life insurance | 95,351 | 87,420 | |||||||||
Goodwill | 178,764 | 156,663 | |||||||||
Other real estate owned | 10,328 | 2,565 | |||||||||
Other assets | 144,234 | 44,802 | |||||||||
Total assets | $ | 6,454,848 | $ | 6,077,414 | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
Liabilities: | |||||||||||
Deposits: | |||||||||||
Noninterest-bearing | $ | 1,770,848 | $ | 1,550,381 | |||||||
Interest-bearing | 3,780,450 | 3,676,403 | |||||||||
Total deposits | 5,551,298 | 5,226,784 | |||||||||
Interest payable | 1,365 | 1,711 | |||||||||
Borrowed funds | 90,000 | — | |||||||||
Subordinated debentures | 144,952 | 144,726 | |||||||||
Operating lease liabilities | 8,092 | 4,192 | |||||||||
Finance lease liabilities | 1,962 | 2,094 | |||||||||
Allowance for credit losses on off-balance sheet credit exposures | 1,220 | 1,070 | |||||||||
Other liabilities | 34,488 | 20,665 | |||||||||
Total liabilities | 5,833,377 | 5,401,242 | |||||||||
Shareholders’ equity: | |||||||||||
Common stock, par value $1 per share, 40,000,000 shares authorized; 25,277,727 shares issued at September 30, 2022, and 21,668,644 shares issued at December 31, 2021, respectively | 25,278 | 21,669 | |||||||||
Additional paid-in capital | 558,181 | 459,228 | |||||||||
Retained earnings | 241,132 | 206,228 | |||||||||
Accumulated other comprehensive (loss) income | (162,009) | 7,978 | |||||||||
Treasury stock, at cost, 1,249,607 shares at September 30, 2022 and 649,607 shares at December 31, 2021 | (41,111) | (18,931) | |||||||||
Total shareholders’ equity | 621,471 | 676,172 | |||||||||
Total liabilities and shareholders’ equity | $ | 6,454,848 | $ | 6,077,414 |
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| | (Unaudited) | ||||
| | Three Months Ended | ||||
| | March 31, | ||||
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| 2022 |
| 2021 | ||
Interest and dividend income: | | | | | | |
Interest and fees on loans | | $ | 34,154 | | $ | 39,613 |
Interest and dividends on securities: | |
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Taxable interest and dividends | |
| 6,152 | |
| 3,591 |
Tax exempt interest | |
| 2,422 | |
| 1,935 |
Interest on federal funds sold and interest-bearing deposits in other banks | | | 13 | | | 48 |
Total interest income | |
| 42,741 | |
| 45,187 |
Interest expense: | |
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Interest on deposits | |
| 2,283 | |
| 3,849 |
Interest on borrowed funds | |
| 1,819 | |
| 2,109 |
Total interest expense | |
| 4,102 | |
| 5,958 |
Net interest income | |
| 38,639 | |
| 39,229 |
Provision for credit losses, LHFI | | | 0 | | | 0 |
Provision for credit losses, OBSC exposures | | | 0 | | | 0 |
Net interest income after provision for credit losses | |
| 38,639 | |
| 39,229 |
Non-interest income: | |
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Service charges on deposit accounts | |
| 2,040 | |
| 1,761 |
(Loss) gain on securities | | | (3) | | | 20 |
Government awards/grants | | | 702 | | | 0 |
BOLI death proceeds | | | 1,630 | | | 0 |
Gain (loss) on sale of premises and equipment | | | 2 | | | (4) |
Other | |
| 6,786 | |
| 7,695 |
Total non-interest income | |
| 11,157 | |
| 9,472 |
Non-interest expense: | |
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Salaries and employee benefits | | | 16,799 | | | 16,054 |
Occupancy and equipment | | | 3,876 | | | 3,879 |
Acquisition expense/charter conversion | | | 408 | | | 0 |
Other | |
| 7,507 | |
| 7,331 |
Total non-interest expense | | | 28,590 | | | 27,264 |
Income before income taxes | | | 21,206 | | | 21,437 |
Income tax expense | | | 4,377 | | | 4,793 |
Net income | | $ | 16,829 | | $ | 16,644 |
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Basic earnings per share | | $ | 0.81 | | $ | 0.79 |
Diluted earnings per share | | | 0.81 | | | 0.79 |
(Unaudited) | (Unaudited) | ||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Interest and dividend income: | |||||||||||||||||||||||
Interest and fees on loans | $ | 42,274 | $ | 37,480 | $ | 111,091 | $ | 114,368 | |||||||||||||||
Interest and dividends on securities: | |||||||||||||||||||||||
Taxable interest and dividends | 8,723 | 5,033 | 23,247 | 12,641 | |||||||||||||||||||
Tax exempt interest | 2,875 | 1,905 | 8,077 | 5,748 | |||||||||||||||||||
Interest on federal funds sold and interest-bearing deposits in other banks | 2 | 17 | 47 | 103 | |||||||||||||||||||
Total interest income | 53,874 | 44,435 | 142,462 | 132,860 | |||||||||||||||||||
Interest expense: | |||||||||||||||||||||||
Interest on deposits | 2,748 | 2,588 | 6,937 | 9,752 | |||||||||||||||||||
Interest on borrowed funds | 1,978 | 1,819 | 5,638 | 5,801 | |||||||||||||||||||
Total interest expense | 4,726 | 4,407 | 12,575 | 15,553 | |||||||||||||||||||
Net interest income | 49,148 | 40,028 | 129,887 | 117,307 | |||||||||||||||||||
Provision for credit losses, LHFI | 4,300 | — | 4,750 | — | |||||||||||||||||||
Provision for credit losses, OBSC exposures | — | — | 150 | — | |||||||||||||||||||
Net interest income after provision for credit losses | 44,848 | 40,028 | 124,987 | 117,307 | |||||||||||||||||||
Non-interest income: | |||||||||||||||||||||||
Service charges on deposit accounts | 2,219 | 1,846 | 6,297 | 5,363 | |||||||||||||||||||
(Loss) gain on securities | 1 | 11 | (82) | 107 | |||||||||||||||||||
Gain on acquisition | — | — | 281 | — | |||||||||||||||||||
Government awards/grants | — | 1,826 | 873 | 1,826 | |||||||||||||||||||
BOLI death proceeds | — | — | 1,630 | — | |||||||||||||||||||
(Loss) gain on sale of premises and equipment | — | (397) | (114) | (383) | |||||||||||||||||||
Other | 6,802 | 6,300 | 19,958 | 20,968 | |||||||||||||||||||
Total non-interest income | 9,022 | 9,586 | 28,843 | 27,881 | |||||||||||||||||||
Non-interest expense: | |||||||||||||||||||||||
Salaries and employee benefits | 19,099 | 16,246 | 53,135 | 48,337 | |||||||||||||||||||
Occupancy and equipment | 3,826 | 3,922 | 11,530 | 11,614 | |||||||||||||||||||
Acquisition expense/charter conversion | 3,640 | 5 | 5,220 | 5 | |||||||||||||||||||
Other | 9,338 | 8,880 | 25,563 | 23,814 | |||||||||||||||||||
Total non-interest expense | 35,903 | 29,053 | 95,448 | 83,770 | |||||||||||||||||||
Income before income taxes | 17,967 | 20,561 | 58,382 | 61,418 | |||||||||||||||||||
Income tax expense | 3,924 | 4,429 | 11,758 | 13,042 | |||||||||||||||||||
Net income | $ | 14,043 | $ | 16,132 | $ | 46,624 | $ | 48,376 | |||||||||||||||
Basic earnings per share | $ | 0.61 | $ | 0.77 | $ | 2.18 | $ | 2.30 | |||||||||||||||
Diluted earnings per share | 0.61 | 0.76 | 2.17 | 2.28 |
(LOSS)
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| | (Unaudited) | ||||
| | Three Months Ended | ||||
| | March 31, | ||||
| | 2022 | | 2021 | ||
Net income | | $ | 16,829 | | $ | 16,644 |
Other comprehensive income: | |
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Unrealized holding losses arising during the period on available-for-sale securities | |
| (102,849) | |
| (12,852) |
Reclassification adjustment for losses (gains) included in net income | |
| 3 | |
| (20) |
Unrealized holding losses arising during the period on available-for-sale securities | |
| (102,846) | |
| (12,872) |
Income tax benefit | |
| 26,021 | |
| 3,257 |
Other comprehensive loss | |
| (76,825) | |
| (9,615) |
Comprehensive (loss) income | | $ | (59,996) | | $ | 7,029 |
(Unaudited) | (Unaudited) | ||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net income | $ | 14,043 | $ | 16,132 | $ | 46,624 | $ | 48,376 | |||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||
Unrealized holding (losses) gains arising during the period on available-for-sale securities | (67,785) | (7,306) | (227,641) | (16,204) | |||||||||||||||||||
Reclassification adjustment for losses (gains) included in net income | (1) | (11) | 82 | (107) | |||||||||||||||||||
Unrealized holding (losses) gains arising during the period on available-for-sale securities | (67,786) | (7,317) | (227,559) | (16,311) | |||||||||||||||||||
Income tax (expense) benefit | 17,150 | 1,852 | 57,572 | 4,127 | |||||||||||||||||||
Other comprehensive income (loss) | (50,636) | (5,465) | (169,987) | (12,184) | |||||||||||||||||||
Comprehensive income (loss) | $ | (36,593) | $ | 10,667 | $ | (123,363) | $ | 36,192 |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2021 | 21,598,993 | $ | 21,599 | $ | 456,919 | $ | 154,241 | $ | 25,816 | (483,984) | $ | (13,760) | $ | 644,815 | |||||||||||||||||||||||||||||||||
Net income | — | — | — | 16,644 | — | — | — | 16,644 | |||||||||||||||||||||||||||||||||||||||
Common stock repurchased | — | — | — | — | — | (165,623) | (5,171) | (5,171) | |||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | (9,615) | — | — | (9,615) | |||||||||||||||||||||||||||||||||||||||
Dividends on common stock, $0.13 per share | — | — | — | (2,723) | — | — | — | (2,723) | |||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock grants | 84,578 | 85 | (85) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Restricted stock grants forfeited | (500) | (1) | 1 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Repurchase of restricted stock for payment of taxes | (14,720) | (15) | (426) | — | — | — | — | (441) | |||||||||||||||||||||||||||||||||||||||
Compensation expense | — | — | 440 | — | — | — | — | 440 | |||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2021 | 21,668,351 | 21,668 | 456,849 | 168,162 | 16,201 | (649,607) | (18,931) | 643,949 | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | 15,600 | — | — | — | 15,600 | |||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | 2,896 | — | — | 2,896 | |||||||||||||||||||||||||||||||||||||||
Dividends on common stock, $0.14 per share | — | — | — | (2,942) | — | — | — | (2,942) | |||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock grants | 3,000 | 3 | (3) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Restricted stock grants forfeited | (1,021) | (1) | 1 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Compensation expense | — | — | 549 | — | — | — | — | 549 | |||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2021 | 21,670,330 | 21,670 | 457,396 | 180,820 | 19,097 | (649,607) | (18,931) | 660,052 | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | 16,132 | — | — | — | 16,132 | |||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | (5,465) | — | — | (5,465) | |||||||||||||||||||||||||||||||||||||||
Dividends on common stock, $0.15 per share | — | — | — | (3,152) | — | — | — | (3,152) | |||||||||||||||||||||||||||||||||||||||
Restricted stock grants forfeited | (500) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Repurchase of restricted stock for payment of taxes | (326) | — | (12) | — | — | — | — | (12) | |||||||||||||||||||||||||||||||||||||||
Compensation expense | — | — | 1,128 | — | — | — | — | 1,128 | |||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2021 | 21,669,504 | $ | 21,670 | $ | 458,512 | $ | 193,800 | $ | 13,632 | (649,607) | $ | (18,931) | $ | 668,683 | |||||||||||||||||||||||||||||||||
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| | | | | | | | | | | | | Accumulated | | | | | | | | | |
| | | | Additional | | | | | Other | | | | | | | | | |||||
| | Common Stock | | Paid-in | | Retained | | Comprehensive | | Treasury Stock | | | | |||||||||
|
| Shares | | Amount |
| Capital |
| Earnings |
| Income (Loss) |
| Shares |
| Amount |
| Total | ||||||
Balance, January 1, 2021 | | 21,598,993 | | $ | 21,599 | | $ | 456,919 | | $ | 154,241 | | $ | 25,816 | | (483,984) | | $ | (13,760) | | $ | 644,815 |
Net income | | — | | | — | | | — | | | 16,644 | | | — | | — | | | — | | | 16,644 |
Common Stock repurchased | | — | | | — | | | — | | | — | | | — | | (165,623) | | | (5,171) | | | (5,171) |
Other comprehensive loss | | — | | | — | | | — | | | — | | | (9,615) | | — | | | — | | | (9,615) |
Dividends on common stock, $0.13 per share | | — | | | — | | | — | | | (2,723) | | | — | | — | | | — | | | (2,723) |
Issuance of restricted stock grants | | 84,578 | | | 85 | | | (85) | | | — | | | — | | — | | | — | | | — |
Restricted stock grants forfeited | | (500) | | | (1) | | | 1 | | | — | | | — | | — | | | — | | | — |
Repurchase of restricted stock for payment of taxes | | (14,720) | | | (15) | | | (426) | | | — | | | — | | — | | | — | | | (441) |
Compensation expense | | — | | | — | | | 440 | | | — | | | — | | — | | | — | | | 440 |
Balance, March 31, 2021 | | 21,668,351 | | $ | 21,668 | | $ | 456,849 | | $ | 168,162 | | $ | 16,201 | | (649,607) | | $ | (18,931) | | $ | 643,949 |
| | | | | | | | | | | | | | | | | | | | | | |
Balance, January 1, 2022 | | 21,668,644 | | $ | 21,669 | | $ | 459,228 | | $ | 206,228 | | $ | 7,978 | | (649,607) | | $ | (18,931) | | $ | 676,172 |
Net income | | — | | | — | | | — | | | 16,829 | | | — | | — | | | — | | | 16,829 |
Common stock repurchased | | — | | | — | | | — | | | — | | | — | | (600,000) | | | (22,180) | | | (22,180) |
Other comprehensive loss | | — | | | — | | | — | | | — | | | (76,825) | | — | | | — | | | (76,825) |
Dividends on common stock, $0.17 per share | | — | | | — | | | — | | | (3,468) | | | — | | — | | | — | | | (3,468) |
Issuance of restricted stock grants | | 82,123 | | | 82 | | | (82) | | | — | | | — | | — | | | — | | | — |
Restricted stock grants forfeited | | (1,000) | | | (1) | | | 1 | | | — | | | — | | — | | | — | | | — |
Repurchase of restricted stock for payment of taxes | | (15,330) | | | (16) | | | (538) | | | — | | | — | | — | | | — | | | (554) |
Compensation expense | | — | | | — | | | 466 | | | — | | | — | | — | | | — | | | 466 |
Balance, March 31, 2022 | | 21,734,437 | | $ | 21,734 | | $ | 459,075 | | $ | 219,589 | | $ | (68,847) | | (1,249,607) | | $ | (41,111) | | $ | 590,440 |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2022 | 21,668,644 | $ | 21,669 | $ | 459,228 | $ | 206,228 | $ | 7,978 | (649,607) | $ | (18,931) | $ | 676,172 | |||||||||||||||||||||||||||||||||
Net income | — | — | — | 16,829 | — | — | — | 16,829 | |||||||||||||||||||||||||||||||||||||||
Common stock repurchased | — | — | — | — | — | (600,000) | (22,180) | (22,180) | |||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | (76,825) | — | — | (76,825) | |||||||||||||||||||||||||||||||||||||||
Dividends on common stock, $0.17 per share | — | — | — | (3,468) | — | — | — | (3,468) | |||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock grants | 82,123 | 82 | (82) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Restricted stock grants forfeited | (1,000) | (1) | 1 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Repurchase of restricted stock for payment of taxes | (15,330) | (16) | (538) | — | — | — | — | (554) | |||||||||||||||||||||||||||||||||||||||
Compensation expense | — | — | 466 | — | — | — | — | 466 | |||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2022 | 21,734,437 | 21,734 | 459,075 | 219,589 | (68,847) | (1,249,607) | (41,111) | 590,440 | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | 15,753 | — | — | — | 15,753 | |||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | (42,526) | — | — | (42,526) | |||||||||||||||||||||||||||||||||||||||
Dividends on common stock, $0.18 per share | — | — | — | (3,688) | — | — | — | (3,688) | |||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock grants | 47,827 | 48 | (48) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Restricted stock grants forfeited | (1,000) | (1) | 1 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Repurchase of restricted stock for payment of taxes | (2,533) | (2) | (71) | — | — | — | — | (73) | |||||||||||||||||||||||||||||||||||||||
Compensation expense | — | — | 546 | — | — | — | — | 546 | |||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2022 | 21,778,731 | 21,779 | 459,503 | 231,654 | (111,373) | (1,249,607) | (41,111) | 560,452 | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | 14,043 | — | — | — | 14,043 | |||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | (50,636) | — | — | (50,636) | |||||||||||||||||||||||||||||||||||||||
Dividends on common stock, $0.19 per share | — | — | — | (4,565) | — | — | — | (4,565) | |||||||||||||||||||||||||||||||||||||||
Issuance of common shares for BBI acquisition | 3,498,936 | 3,499 | 97,970 | — | — | — | — | 101,469 | |||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock grants | 60 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Compensation expense | — | — | 708 | — | — | — | — | 708 | |||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2022 | 25,277,727 | $ | 25,278 | $ | 558,181 | $ | 241,132 | $ | (162,009) | (1,249,607) | $ | (41,111) | $ | 621,471 |
6
(Unaudited) | |||||||||||
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 46,624 | $ | 48,376 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation, amortization and accretion | 5,549 | 10,453 | |||||||||
Provision for credit loss | 4,900 | — | |||||||||
Loss on sale or writedown of ORE | 252 | 778 | |||||||||
Securities loss (gain) | 82 | (107) | |||||||||
Acquisition gain | (281) | — | |||||||||
Loss (gain) on disposal of premises and equipment | 114 | 383 | |||||||||
Restricted stock expense | 1,720 | 2,117 | |||||||||
Increase in cash value of life insurance | (1,576) | (1,407) | |||||||||
Federal Home Loan Bank stock dividends | (8) | (26) | |||||||||
Residential loans originated and held for sale | (113,058) | (182,371) | |||||||||
Proceeds from sale of residential loans held for sale | 118,511 | 195,263 | |||||||||
Changes in: | |||||||||||
Interest receivable | 166 | 3,200 | |||||||||
Interest payable | (346) | (758) | |||||||||
Operating lease liability | 3,900 | (1,696) | |||||||||
Other, net | 1,844 | 2,667 | |||||||||
Net cash provided by operating activities | 68,393 | 76,872 | |||||||||
Cash flows from investing activities: | |||||||||||
Maturities, calls and paydowns of available-for-sale and held-to-maturity securities | 157,181 | 174,987 | |||||||||
Proceeds from sales of securities available-for-sale | 21,069 | — | |||||||||
Purchases of available-for-sale and held-to-maturity securities | (609,218) | (636,825) | |||||||||
Purchases of other securities | (8,580) | 5,276 | |||||||||
Proceeds from other securities | 1,237 | — | |||||||||
Net (increase) decrease in loans | (273,335) | 160,700 | |||||||||
Net changes in premises and equipment | (5,756) | (6,448) | |||||||||
Proceeds from sale of other real estate owned | 2,260 | 4,221 | |||||||||
Proceeds from the sale of land | 712 | — | |||||||||
Bank-owned life insurance – death proceeds | 1,630 | — | |||||||||
Purchase of bank-owned life insurance | — | (12,330) | |||||||||
Cash received in excess of cash paid for acquisitions | 23,939 | — | |||||||||
Net cash used in investing activities | (688,861) | (310,419) | |||||||||
Cash flows from financing activities: | |||||||||||
(Decrease) increase in deposits | (165,921) | 457,443 | |||||||||
Proceeds from borrowed funds | 270,001 | 24,025 | |||||||||
Repayments of borrowed funds | (205,001) | (138,672) | |||||||||
Principal payments on finance lease liabilities | (132) | (141) | |||||||||
Dividends paid on common stock | (11,544) | (8,682) | |||||||||
Cash paid to repurchase common stock | (22,180) | (5,171) | |||||||||
Payment of subordinated debt issuance costs | — | (60) | |||||||||
Repurchase of restricted stock for payment of taxes | (627) | (453) | |||||||||
Net cash provided by (used in) financing activities | (135,404) | 328,289 | |||||||||
Net change in cash and cash equivalents | (755,872) | 94,742 | |||||||||
Beginning cash and cash equivalents | 919,713 | 562,554 | |||||||||
Ending cash and cash equivalents | $ | 163,841 | $ | 657,296 | |||||||
| | | | | | |
| | (Unaudited) | ||||
| | Three Months Ended | ||||
| | March 31, | ||||
| | 2022 |
| 2021 | ||
| | | | | | |
Cash flows from operating activities: | | | | | | |
Net income | | $ | 16,829 | | $ | 16,644 |
Adjustments to reconcile net income to net cash provided by operating activities: | |
| | |
| |
Depreciation, amortization and accretion | |
| 3,569 | |
| 3,318 |
Gain on sale or writedown of ORE | | | (46) | | | (75) |
Securities loss (gain) | | | 3 | | | (20) |
(Gain) loss on disposal of premises and equipment | | | (2) | | | 4 |
Restricted stock expense | |
| 466 | |
| 440 |
Increase in cash value of life insurance | |
| (574) | |
| (482) |
Federal Home Loan Bank stock dividends | | | 0 | | | (14) |
Residential loans originated and held for sale | | | (38,783) | | | (79,365) |
Proceeds from sale of residential loans held for sale | | | 38,248 | | | 85,678 |
Changes in: | |
| | |
|
|
Interest receivable | |
| 22 | |
| 1,658 |
Interest payable | |
| (405) | |
| (532) |
Operating lease liability | | | (316) | | | (398) |
Other, net | |
| 4,093 | |
| 5,351 |
Net cash provided by operating activities | |
| 23,104 | |
| 32,207 |
Cash flows from investing activities: | |
|
| |
| |
Maturities, calls and paydowns of available-for-sale and held-to-maturity securities | | | 56,465 | | | 53,570 |
Purchases of available-for-sale and held-to-maturity securities | |
| (372,629) | |
| (180,948) |
Redemptions of other securities, net | |
| 0 | |
| 5,352 |
Net (increase) decrease in loans | |
| (9,510) | |
| 65,731 |
Net changes in premises and equipment | |
| (1,183) | |
| (283) |
Proceeds from sale of other real estate owned | |
| 271 | |
| 831 |
Bank-owned life insurance – death proceeds | | | 1,630 | | | 0 |
Purchase of bank-owned life insurance | | | 0 | | | (12,248) |
Net cash used in investing activities | |
| (324,956) | |
| (67,995) |
Cash flows from financing activities: | |
|
| |
|
|
Increase in deposits | |
| 210,953 | |
| 405,078 |
Net decrease in borrowed funds | |
| 0 | |
| (110,181) |
Principal payments on finance lease liabilities | | | (44) | | | (47) |
Dividends paid on common stock | |
| (3,423) | |
| (2,688) |
Cash paid to repurchase common stock | | | (22,180) | | | (5,171) |
Payment of subordinated debt issuance costs | |
| 0 | |
| (59) |
Repurchase of restricted stock for payment of taxes | |
| (554) | |
| (441) |
Net cash provided by financing activities | |
| 184,752 | |
| 286,491 |
Net change in cash and cash equivalents | |
| (117,100) | |
| 250,703 |
Beginning cash and cash equivalents | |
| 919,713 | |
| 562,554 |
Ending cash and cash equivalents | | $ | 802,613 | | $ | 813,257 |
| |
|
| |
|
|
Supplemental disclosures: | |
|
| |
|
|
Loans transferred to other real estate | |
| 493 | |
| 723 |
Issuance of restricted stock grants | |
| 82 | |
| 85 |
Dividends on restricted stock grants | | | 45 | | | 35 |
(Unaudited) | |||||||||||
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Supplemental disclosures: | |||||||||||
Loans transferred to other real estate | 1,490 | 1,780 | |||||||||
Issuance of restricted stock grants | 130 | 86 | |||||||||
Dividends on restricted stock grants | 176 | 135 | |||||||||
Stock issued in connection with BBI acquisition | 101,469 | — | |||||||||
Lease liabilities arising from obtaining right-of-use assets | 600 | 14 | |||||||||
Lease liabilities arising from BBI acquisition | 5,437 | — |
7
March 31,
On May 25, 2022, the Company paid a cash dividend in the amount of $0.18 per share to shareholders of record as of the close of business on May 10, 2022. On July 27, 2022, the Company announced that its Board of Directors declared a cash dividend of $0.19 per share to be paid on its common stock on August 25, 2022 to shareholders of record as of the close of business on August 8, 2022. On August 25, 2022, the Company announced that its Board of Directors declared a cash dividend of $0.20 per share to be paid on its common stock on November 25, 2022 to shareholders of record as of the close of business on November 8, 2022.
8
In October 2021, FASB issued ASU No. 2021-08, Business Combination (Topic 805): “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendment improves comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. This ASU is effective for the Company after December 15, 2022. The Company is assessing ASU 2021-08 and its impact on the Company’s consolidated financial statements.
Purchase price: | |||||
Cash and stock | $ | 101,470 | |||
Total purchase price | 101,470 | ||||
Identifiable assets: | |||||
Cash | $ | 23,939 | |||
Investments | 22,907 | ||||
Loans | 482,903 | ||||
Other real estate | 8,797 | ||||
Bank owned life insurance | 10,092 | ||||
Core deposit intangible | 9,791 | ||||
Personal and real property | 13,825 | ||||
Deferred tax asset | 28,105 | ||||
Other assets | 9,649 | ||||
Total assets | 610,008 | ||||
Liabilities and equity: | |||||
Deposits | 490,588 | ||||
Borrowings | 25,000 | ||||
Other liabilities | 14,772 | ||||
Total liabilities | 530,360 | ||||
Net assets acquired | 79,648 | ||||
Goodwill | $ | 21,822 |
9
The following table summarizes the provisional fair values of the assets acquired and liabilities assumed and the goodwill (bargain purchase gain) generated from the transaction ($ in thousands):
| | | |
Purchase price: |
| |
|
Cash | | $ | 1,000 |
Total purchase price | |
| 1,000 |
Identifiable assets: | |
|
|
Cash | | $ | 359,916 |
Loans | |
| 40,262 |
Core deposit intangible | |
| 2,890 |
Personal and real property | |
| 9,675 |
Other assets | |
| 135 |
Total assets | |
| 412,878 |
Liabilities and equity: | |
|
|
Deposits | |
| 410,171 |
Other liabilities | |
| 407 |
Total liabilities | |
| 410,578 |
Net assets acquired | |
| 2,300 |
Bargain purchase gain | | $ | (1,300) |
Southwest Georgia Financial Corporation
On April 3, 2020, the Company completed its acquisition of Southwest Georgia Financial Corporation (“SWG”), and immediately thereafter merged its wholly-owned subsidiary, Southwest Georgia Bank with and into The First. The Company paid a total consideration of $47.9 million to the SWG shareholders as consideration in the merger, which included 2,546,967 shares of Company common stock and approximately $2 thousand in cash. As a result of the acquisition, the Company was able to increase its loan and deposit base and reduce costs through economies of scale. The merger strengthened the Company’s market share and brought forth additional opportunities by adding a new market area in the Company’s footprint.
In connection with the acquisition, the Company recorded a $7.8 million bargain purchase gain and $4.6 million core deposit intangible. The bargain purchase gain was generated as a result of the estimated fair value of net assets acquired exceeding the merger consideration, based on fair values, which is reflected as an adjustment to retained earnings. The bargain purchase gain is considered non-taxable for income taxes purposes. The core deposit intangible will be amortized to expense over 10 years.
The Company acquired the $394.6 million loan portfolio at an estimated fair value discount of $2.3 million. The discount represents expected credit losses, adjusted for market interest rates and liquidity adjustments.
Expenses associated with the SWG acquisition were $0 for the three months ended March 31, 2022. These costs included system conversion and integrating operations charges and legal and consulting expenses, which have been expensed as incurred.
The outstanding principal balance and the carrying amount of these loans included in the consolidated balance sheet at December 31, 2020, are as follows ($ in thousands):
| | | |
|
| December 31, 2020 | |
Outstanding principal balance | | $ | 297,528 |
Carrying amount | |
| 295,772 |
10
Purchase price: | |||||
Cash | $ | 1,000 | |||
Total purchase price | 1,000 | ||||
Identifiable assets: | |||||
Cash | $ | 359,916 | |||
Loans | 40,262 | ||||
Core deposit intangible | 2,890 | ||||
Personal and real property | 9,675 | ||||
Other assets | 135 | ||||
Total assets | 412,878 | ||||
Liabilities and equity: | |||||
Deposits | 410,171 | ||||
Other liabilities | 126 | ||||
Total liabilities | 410,297 | ||||
Net assets acquired | 2,581 | ||||
Bargain purchase gain | $ | (1,581) |
| | | | | | |
($in thousands) |
| Pro-Forma |
| Pro-Forma | ||
| | Three months ended | | Three months ended | ||
| | March 31, 2022 | | March 31, 2021 | ||
| | (unaudited) | | (unaudited) | ||
Net interest income | | $ | 38,639 | | $ | 39,229 |
Non-interest income | |
| 11,157 | |
| 9,472 |
Total revenue | |
| 49,796 | |
| 48,701 |
Income before income taxes | |
| 21,461 | |
| 21,437 |
($ in thousands) | (unaudited) | (unaudited) | |||||||||
Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | ||||||||||
Net interest income | $ | 140,551 | $ | 129,439 | |||||||
Non-interest income | 33,710 | 45,114 | |||||||||
Total revenue | 174,261 | 174,553 | |||||||||
Income before income taxes | 69,123 | 63,787 |
Contents
| | | | | | | | | | | | | | | | |
| | For the Three Months Ended |
| For the Three Months Ended | ||||||||||||
| | March 31, 2022 |
| March 31, 2021 | ||||||||||||
| | Net Income | | Shares | | Per |
| Net Income | | Shares | | Per | ||||
|
| (Numerator) |
| (Denominator) |
| Share Data |
| (Numerator) |
| (Denominator) |
| Share Data | ||||
Basic earnings per share | | $ | 16,829 |
| 20,697,946 | | $ | 0.81 | | $ | 16,644 | | 21,009,088 | | $ | 0.79 |
Effect of dilutive shares: | |
| |
| | |
| | | | | | | | | |
Restricted stock grants | |
| |
| 149,051 | |
| | | | | | 191,470 | | | |
Diluted earnings per share | | $ | 16,829 |
| 20,846,997 | | $ | 0.81 | | $ | 16,644 | | 21,200,558 | | $ | 0.79 |
Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | ||||||||||||||||||||||||||||||||||
Net Income (Numerator) | Shares (Denominator) | Per Share Data | Net Income (Numerator) | Shares (Denominator) | Per Share Data | ||||||||||||||||||||||||||||||
Basic earnings per share | $ | 14,043 | 22,861,795 | $ | 0.61 | $ | 16,132 | 21,020,128 | $ | 0.77 | |||||||||||||||||||||||||
Effect of dilutive shares: | |||||||||||||||||||||||||||||||||||
Restricted stock grants | 117,734 | 190,763 | |||||||||||||||||||||||||||||||||
Diluted earnings per share | $ | 14,043 | 22,979,529 | $ | 0.61 | $ | 16,132 | 21,210,891 | $ | 0.76 | |||||||||||||||||||||||||
For the Nine Months Ended September 30, 2022 | For the Nine Months Ended September 30, 2021 | ||||||||||||||||||||||||||||||||||
Net Income (Numerator) | Shares (Denominator) | Per Share Data | Net Income (Numerator) | Shares (Denominator) | Per Share Data | ||||||||||||||||||||||||||||||
Basic earnings per share | $ | 46,624 | 21,355,731 | $ | 2.18 | $ | 48,376 | 21,015,996 | $ | 2.30 | |||||||||||||||||||||||||
Effect of dilutive shares: | |||||||||||||||||||||||||||||||||||
Restricted stock grants | 111,397 | 186,661 | |||||||||||||||||||||||||||||||||
Diluted earnings per share | $ | 46,624 | 21,467,128 | $ | 2.17 | $ | 48,376 | 21,202,657 | $ | 2.28 |
The Company granted 47,827 shares and 3,000 shares of restricted stock in the second quarter of 2022 and 2021, respectively. The Company granted 60 shares and 0 shares of restricted stock in the third quarter of 2022 and 2021, respectively.
11
| | | | | | | | | | | | |
($ in thousands) | | March 31, 2022 | | December 31, 2021 | ||||||||
|
| Fixed Rate |
| Variable Rate |
| Fixed Rate |
| Variable Rate | ||||
Commitments to make loans | | $ | 123,092 | | $ | 15,086 | | $ | 80,760 | | $ | 23,946 |
Unused lines of credit | | | 221,457 | | | 314,120 | | | 213,332 | | | 309,791 |
Standby letters of credit | |
| 2,692 | | | 9,164 | | | 2,586 | |
| 9,737 |
($ in thousands) | September 30, 2022 | December 31, 2021 | |||||||||||||||||||||
Fixed Rate | Variable Rate | Fixed Rate | Variable Rate | ||||||||||||||||||||
Commitments to make loans | $ | 85,066 | $ | 11,113 | $ | 80,760 | $ | 23,946 | |||||||||||||||
Unused lines of credit | 219,118 | 314,864 | 213,332 | 309,791 | |||||||||||||||||||
Standby letters of credit | 4,470 | 10,079 | 2,586 | 9,737 |
| | | | | | |
|
| Three Months Ended |
| Three Months Ended | ||
| | March 31, 2022 | | March 31, 2021 | ||
Balance at beginning of period | | $ | 1,070 | | $ | — |
Adoption of ASU 326 | |
| — | |
| 718 |
Credit loss expense related to OBSC exposures | |
| — | |
| — |
Balance at end of period | | $ | 1,070 | | $ | 718 |
periods:
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Balance at beginning of period | $ | 1,220 | $ | 718 | $ | 1,070 | $ | — | |||||||||||||||
Adoption of ASU 326 | — | — | — | 718 | |||||||||||||||||||
Credit loss expense related to OBSC exposures | — | — | 150 | — | |||||||||||||||||||
Balance at end of period | $ | 1,220 | $ | 718 | $ | 1,220 | $ | 718 |
The Company recorded no provision and $150 thousand for the three months and nine months period ended September 30, 2022. The increase in the ACL on OBSC exposures for the nine months ended September 30, 2022 was primarily due to an increase in unfunded commitments.
12
The following methods and assumptions were used by the Company to estimate its financial instrument fair values disclosed at March 31,September 30, 2022 and December 31, 2021:
13
•
offsetting swap with a correspondent bank. These back-to-back agreements are intended to offset each other and allow the Company to originate a variable rate loan, while providing the contract or fixed interest payments for the customer. Due to the observable nature of the inputs used in deriving the fair value of these derivative contracts, the valuation of interest rates swaps is classified within Level 2 of the fair value hierarchy.
| | | | | | | | | | | | | | | |
March 31, 2022 | | | | | | | | Fair Value Measurements | |||||||
($ in thousands) | | | | | | | | | | | | | | | |
|
| | |
| | |
| | |
| Significant |
| | | |
| | | | | | | | | | | Other | | Significant | ||
| | | | | | | | | | | Observable | | Unobservable | ||
| | Carrying | | Estimated | | Quoted Prices | | Inputs | | Inputs | |||||
|
| Amount |
| Fair Value |
| (Level 1) |
| (Level 2) |
| (Level 3) | |||||
| | | | | | | | | | | | | | | |
Financial Instruments: | | | | | | | | | | | | | | | |
Assets: |
| |
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents | | $ | 802,613 | | $ | 802,613 | | $ | 802,613 | | $ | 0 | | $ | 0 |
Securities available-for-sale: | |
| | | | | | | | | | | | | |
U.S. Treasury | | | 128,993 | | | 128,993 | | | 128,993 | | | 0 | | | 0 |
Obligations of U.S. government agencies and sponsored entities | |
| 164,582 | |
| 164,582 | |
| 0 | |
| 164,582 | |
| 0 |
Municipal securities | |
| 639,253 | |
| 639,253 | |
| 0 | |
| 619,625 | |
| 19,628 |
Mortgage-backed securities | |
| 623,117 | |
| 623,117 | |
| 0 | |
| 623,117 | |
| 0 |
Corporate obligations | |
| 35,732 | |
| 35,732 | |
| 0 | |
| 35,689 | |
| 43 |
Securities held- to-maturity | |
| 372,062 | |
| 358,395 | |
| 0 | |
| 358,395 | |
| 0 |
Loans, net | |
| 2,938,626 | |
| 2,967,573 | |
| 0 | |
| 0 | |
| 2,967,573 |
Accrued interest receivable | |
| 23,234 | |
| 23,234 | |
| 0 | |
| 7,542 | |
| 15,692 |
Liabilities: | |
| | |
| | |
| | |
| | |
| |
Noninterest-bearing deposits | | $ | 810,723 | | $ | 810,723 | | $ | 0 | | $ | 810,723 | | $ | 0 |
Interest-bearing deposits | |
| 4,627,015 | | | 4,572,416 | | | 0 | | | 4,572,416 | | | 0 |
Subordinated debentures | |
| 144,801 | |
| 156,128 | |
| 0 | |
| 0 | |
| 156,128 |
Accrued interest payable | |
| 1,306 | |
| 1,306 | |
| 0 | |
| 1,306 | |
| 0 |
| | | | | | | | | | | | | | | |
December 31, 2021 | | | | | | | | Fair Value Measurements | |||||||
($ in thousands) | | | | | | | | | | | | | | | |
|
| | |
| | |
| | |
| Significant |
| | | |
| | | | | | | | | | | Other | | Significant | ||
| | | | | | | | Quoted | | Observable | | Unobservable | |||
| | Carrying | | Estimated | | Prices | | Inputs | | Inputs | |||||
|
| Amount |
| Fair Value |
| (Level 1) |
| (Level 2) |
| (Level 3) | |||||
| | | | | | | | | | | | | | | |
Financial Instruments: |
| |
|
| |
|
| |
|
| |
|
| |
|
Assets: |
| |
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents | | $ | 919,713 | | $ | 919,713 | | $ | 919,713 | | $ | 0 | | $ | 0 |
Securities available-for-sale: | |
| | |
| | |
| | |
| | |
| |
U.S. Treasury | | | 135,158 | | | 135,158 | | | 135,158 | | | 0 | | | 0 |
Obligations of U.S. government agencies and sponsored entities | | | 183,021 | | | 183,021 | | | 0 | | | 183,021 | | | 0 |
Municipal securities | | | 708,502 | | | 708,502 | | | 0 | | | 688,379 | | | 20,123 |
Mortgage-backed securities | | | 688,298 | | | 688,298 | | | 0 | | | 688,298 | | | 0 |
Corporate obligations | | | 36,853 | | | 36,853 | | | 0 | | | 36,810 | | | 43 |
Loans, net | |
| 2,928,811 | |
| 2,956,297 | |
| 0 | |
| 0 | |
| 2,956,297 |
Accrued interest receivable | |
| 23,256 | |
| 23,256 | |
| 0 | |
| 6,838 | |
| 16,418 |
Liabilities: | |
|
| |
|
| |
|
| |
|
| |
|
|
Non-interest-bearing deposits | | $ | 756,118 | | $ | 756,118 | | $ | 0 | | $ | 756,118 | | $ | 0 |
Interest-bearing deposits | |
| 4,470,666 | |
| 4,431,771 | |
| 0 | |
| 4,431,771 | |
| 0 |
Subordinated debentures | |
| 144,726 | |
| 156,952 | |
| 0 | |
| 0 | |
| 156,952 |
Accrued interest payable | |
| 1,711 | |
| 1,711 | |
| 0 | |
| 1,711 | |
| 0 |
14
September 30, 2022 | Carrying Amount | Estimated Fair Value | Fair Value Measurements | |||||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||
Quoted Prices (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||||||||
Financial Instruments: | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 163,841 | $ | 163,841 | $ | 163,841 | $ | — | $ | — | ||||||||||||||||||||||
Securities available-for-sale: | ||||||||||||||||||||||||||||||||
U.S. Treasury | 122,918 | 122,918 | 122,918 | — | — | |||||||||||||||||||||||||||
Obligations of U.S. government agencies and sponsored entities | 144,926 | 144,926 | — | 144,926 | — | |||||||||||||||||||||||||||
Municipal securities | 550,891 | 550,891 | — | 533,933 | 16,958 | |||||||||||||||||||||||||||
Mortgage-backed securities | 517,432 | 517,432 | — | 517,432 | — | |||||||||||||||||||||||||||
Corporate obligations | 43,243 | 43,243 | — | 43,211 | 32 | |||||||||||||||||||||||||||
Securities held-to-maturity | 593,553 | 593,553 | — | 593,553 | — | |||||||||||||||||||||||||||
Loans, net | 3,681,032 | 3,684,489 | — | — | 3,684,489 | |||||||||||||||||||||||||||
Accrued interest receivable | 24,570 | 23,317 | — | 8,495 | 14,822 | |||||||||||||||||||||||||||
Interest rate swaps | 13,258 | 13,258 | — | 13,258 | — | |||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Noninterest-bearing deposits | $ | 1,770,848 | $ | 1,770,848 | $ | — | $ | 1,770,848 | $ | — | ||||||||||||||||||||||
Interest-bearing deposits | 3,780,450 | 3,614,886 | — | 3,614,886 | — | |||||||||||||||||||||||||||
Subordinated debentures | 144,952 | 137,418 | — | — | 137,418 | |||||||||||||||||||||||||||
FHLB advances and other borrowings | 90,000 | 90,000 | — | 90,000 | — | |||||||||||||||||||||||||||
Accrued interest payable | 1,365 | 1,365 | — | 1,365 | — | |||||||||||||||||||||||||||
Interest rate swaps | 13,258 | 13,258 | — | 13,258 | — |
December 31, 2021 Carrying
AmountEstimated
Fair ValueFair Value Measurements ($ in thousands) Quoted
Prices
(Level 1)Significant
Other
Observable
Inputs
(Level 2)Significant
Unobservable
Inputs
(Level 3)Financial Instruments: Assets: Cash and cash equivalents $ 919,713 $ 919,713 $ 919,713 $ — $ — Securities available-for-sale: U.S. Treasury 135,158 135,158 135,158 — — Obligations of U.S. government agencies and sponsored entities 183,021 183,021 — 183,021 — Municipal securities 708,502 708,502 — 688,379 20,123 Mortgage-backed securities 688,298 688,298 — 688,298 — Corporate obligations 36,853 36,853 — 36,810 43 Loans, net 2,928,811 2,956,297 — — 2,956,297 Accrued interest receivable 23,256 23,256 — 6,838 16,418 Liabilities: Non-interest-bearing deposits $ 1,550,381 $ 1,550,381 $ — $ 1,550,381 $ — Interest-bearing deposits 3,676,403 3,644,418 — 3,644,418 — Subordinated debentures 144,726 156,952 — — 156,952 Accrued interest payable 1,711 1,711 — 1,711 —
September 30, 2022 | ||||||||||||||||||||||||||
($ in thousands) | Fair Value | Fair Value Measurements Using | ||||||||||||||||||||||||
Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Available-for-sale | ||||||||||||||||||||||||||
U.S. Treasury | $ | 122,918 | $ | 122,918 | $ | — | $ | — | ||||||||||||||||||
Obligations of U.S. Government agencies and sponsored entities | 144,926 | — | 144,926 | — | ||||||||||||||||||||||
Municipal securities | 550,891 | — | 533,933 | 16,958 | ||||||||||||||||||||||
Mortgage-backed securities | 517,432 | — | 517,432 | — | ||||||||||||||||||||||
Corporate obligations | 43,243 | — | 43,211 | 32 | ||||||||||||||||||||||
Total available-for-sale | $ | 1,379,410 | $ | 122,918 | $ | 1,239,502 | $ | 16,990 | ||||||||||||||||||
Interest rate swaps | $ | 13,258 | $ | — | $ | 13,258 | $ | — | ||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||
Interest rate swaps | $ | 13,258 | $ | — | $ | 13,258 | $ | — |
| | | | | | | | | | | | |
($ in thousands) | | | | | Fair Value Measurements Using | |||||||
| | | | | Quoted Prices in | | | | | | ||
| | | | | Active Markets | | Significant Other | | Significant | |||
| | | | | For | | Observable | | Unobservable | |||
| | | | | Identical Assets | | Inputs | | Inputs | |||
|
| Fair Value |
| (Level 1) |
| (Level 2) |
| (Level 3) | ||||
Available-for-sale | | | | | | | | | | | | |
U.S. Treasury | | $ | 128,993 | | $ | 128,993 | | $ | 0 | | $ | 0 |
Obligations of U.S. Government agencies and sponsored entities | | | 164,582 | | | 0 | | | 164,582 | | | 0 |
Municipal securities | |
| 639,253 | |
| 0 | |
| 619,625 | |
| 19,628 |
Mortgage-backed securities | |
| 623,117 | |
| 0 | |
| 623,117 | |
| 0 |
Corporate obligations | |
| 35,732 | |
| 0 | |
| 35,689 | |
| 43 |
Total available-for-sale | | $ | 1,591,677 | | $ | 128,993 | | $ | 1,443,013 | | $ | 19,671 |
December 31, 2021
| | | | | | | | | | | | |
($ in thousands) | | | | | Fair Value Measurements Using | |||||||
| | | | | Quoted Prices in | | | | | | ||
| | | | | Active Markets | | Significant Other | | Significant | |||
| | | | | For | | Observable | | Unobservable | |||
| | | | | Identical Assets | | Inputs | | Inputs | |||
|
| Fair Value |
| (Level 1) |
| (Level 2) |
| (Level 3) | ||||
Available-for-sale | | | | | | | | | | | | |
U.S. Treasury | | $ | 135,158 | | $ | 135,158 | | $ | 0 | | $ | 0 |
Obligations of U.S. Government agencies and sponsored entities | | | 183,021 | | | 0 | | | 183,021 | | | 0 |
Municipal securities | |
| 708,502 | |
| 0 | |
| 688,379 | |
| 20,123 |
Mortgage-backed securities | |
| 688,298 | |
| 0 | |
| 688,298 | |
| 0 |
Corporate obligations | |
| 36,853 | |
| 0 | |
| 36,810 | |
| 43 |
Total available-for-sale | | $ | 1,751,832 | | $ | 135,158 | | $ | 1,596,508 | | $ | 20,166 |
December 31, 2021 | ||||||||||||||||||||||||||
($ in thousands) | Fair Value | Fair Value Measurements Using | ||||||||||||||||||||||||
Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||
Available-for-sale | ||||||||||||||||||||||||||
U.S. Treasury | $ | 135,158 | $ | 135,158 | $ | — | $ | — | ||||||||||||||||||
Obligations of U.S. Government agencies and sponsored entities | 183,021 | — | 183,021 | — | ||||||||||||||||||||||
Municipal securities | 708,502 | — | 688,379 | 20,123 | ||||||||||||||||||||||
Mortgage-backed securities | 688,298 | — | 688,298 | — | ||||||||||||||||||||||
Corporate obligations | 36,853 | — | 36,810 | 43 | ||||||||||||||||||||||
Total available-for-sale | $ | 1,751,832 | $ | 135,158 | $ | 1,596,508 | $ | 20,166 |
| | | | | | |
| | Bank-Issued Trust | ||||
| | Preferred Securities | ||||
($ in thousands) |
| 2022 |
| 2021 | ||
Balance, January 1 | | $ | 43 | | $ | 235 |
Unrealized gain included in comprehensive income | |
| — | |
| 40 |
Balance at March 31 | | $ | 43 | | $ | 275 |
| | | | | | |
| | Municipal Securities | ||||
($ in thousands) |
| 2022 |
| 2021 | ||
Balance, January 1 | | $ | 20,123 | | $ | 20,126 |
Maturities, calls and paydowns | | | (216) | | | — |
Unrealized (loss) gain included in comprehensive income | |
| (279) | |
| 22 |
Balance at March 31 | | $ | 19,628 | | $ | 20,148 |
15
Bank-Issued Trust Preferred Securities | |||||||||||
($ in thousands) | 2022 | 2021 | |||||||||
Balance, January 1 | $ | 43 | $ | 235 | |||||||
Paydowns | (11) | (64) | |||||||||
Unrealized gain included in comprehensive income | — | 55 | |||||||||
Balance at September 30 | $ | 32 | $ | 226 |
Municipal Securities | |||||||||||
($ in thousands) | 2022 | 2021 | |||||||||
Balance, January 1 | $ | 20,123 | $ | 20,126 | |||||||
Purchases | — | 4,209 | |||||||||
Maturities, calls and paydowns | (524) | (4,474) | |||||||||
Unrealized loss included in comprehensive income | (2,641) | (496) | |||||||||
Balance at September 30 | $ | 16,958 | $ | 19,365 |
The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a recurring basis at March 31,September 30, 2022 and December 31, 2021. The following tables present quantitative information about recurring Level 3 fair value measurements ($ in thousands):
Trust Preferred Securities | Fair Value | Valuation Technique | Significant Unobservable Inputs | Range of Inputs | ||||||||||||||||||||||
September 30, 2022 | $ | 32 | Discounted cash flow | Probability of default | 5.78% - 6.11% | |||||||||||||||||||||
December 31, 2021 | $ | 43 | Discounted cash flow | Probability of default | 2.35% - 2.47% |
Municipal Securities | Fair Value | Valuation Technique | Significant Unobservable Inputs | Range of Inputs | ||||||||||||||||||||||
September 30, 2022 | $ | 16,958 | Discounted cash flow | Discount Rate | 1.10% - 4.62% | |||||||||||||||||||||
December 31, 2021 | $ | 20,123 | Discounted cash flow | Discount Rate | 0.50% - 1.90% |
| | | | | | | | | |
| | | | | | Significant Unobservable | | | |
Trust Preferred Securities |
| Fair Value |
| Valuation Technique |
| Inputs |
| Range of Inputs | |
March 31, 2022 | | $ | 43 |
| Discounted cash flow |
| Probability of default |
| 2.86% - 2.99% |
December 31, 2021 | | $ | 43 |
| Discounted cash flow |
| Probability of default |
| 2.35% - 2.47% |
| | | | | | | | | |
| | | | | | Significant | | | |
Municipal Securities |
| Fair Value |
| Valuation Technique |
| Unobservable Inputs |
| Range of Inputs | |
March 31, 2022 | | $ | 19,628 |
| Discounted cash flow |
| Discount Rate |
| 0.70% - 2.78% |
December 31, 2021 | | $ | 20,123 |
| Discounted cash flow |
| Discount Rate |
| 0.50% - 1.90% |
March 31, 2022
| | | | | | | | | | | | |
($ in thousands) | | | | | Fair Value Measurements Using | |||||||
| | | | | Quoted Prices in | | Significant | | | |||
| | | | | Active Markets | | Other | | Significant | |||
| | | | | For | | Observable | | Unobservable | |||
| | | | | Identical Assests | | Inputs | | Inputs | |||
|
| Fair Value |
| (Level 1) |
| (Level 2) |
| (Level 3) | ||||
Collateral dependent loans | | $ | 2,095 | | $ | 0 | | $ | 0 | | $ | 2,095 |
Other real estate owned | |
| 2,835 | |
| 0 | |
| 0 | |
| 2,835 |
December 31, 2021
| | | | | | | | | | | | |
($ in thousands) | | | | | Fair Value Measurements Using | |||||||
| | | | | Quoted Prices in | | Significant | | | |||
| | | | | Active Markets | | Other | | Significant | |||
| | | | | For | | Observable | | Unobservable | |||
| | | | | Identical Assests | | Inputs | | Inputs | |||
| | Fair Value |
| (Level 1) | | (Level 2) | | (Level 3) | ||||
Collateral dependent loans | | $ | 3,564 | | $ | 0 | | $ | 0 | | $ | 3,564 |
Other real estate owned | |
| 2,565 | |
| 0 | |
| 0 | |
| 2,565 |
16
September 30, 2022 | |||||||||||||||||||||||
($ in thousands) | Fair Value Measurements Using | ||||||||||||||||||||||
Fair Value | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
Collateral dependent loans | $ | 6,633 | $ | — | $ | — | $ | 6,633 | |||||||||||||||
Other real estate owned | 10,328 | — | — | 10,328 |
December 31, 2021 | |||||||||||||||||||||||
($ in thousands) | Fair Value Measurements Using | ||||||||||||||||||||||
Fair Value | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
Collateral dependent loans | $ | 3,564 | $ | — | $ | — | $ | 3,564 | |||||||||||||||
Other real estate owned | 2,565 | — | — | 2,565 |
2021.
($ in thousands) | September 30, 2022 | ||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||||||
U.S. Treasury | $ | 135,786 | $ | — | $ | 12,868 | $ | 122,918 | |||||||||||||||
Obligations of U.S. government agencies and sponsored entities | 164,486 | 4 | 19,564 | 144,926 | |||||||||||||||||||
Tax-exempt and taxable obligations of states and municipal subdivisions | 661,260 | 546 | 110,915 | 550,891 | |||||||||||||||||||
Mortgage-backed securities - residential | 353,965 | 15 | 46,071 | 307,909 | |||||||||||||||||||
Mortgage-backed securities - commercial | 234,860 | 71 | 25,408 | 209,523 | |||||||||||||||||||
Corporate obligations | 45,933 | — | 2,690 | 43,243 | |||||||||||||||||||
Total available-for-sale | $ | 1,596,290 | $ | 636 | $ | 217,516 | $ | 1,379,410 | |||||||||||||||
Held-to-maturity: | |||||||||||||||||||||||
U.S. Treasury | $ | 109,578 | $ | — | $ | 5,670 | $ | 103,908 | |||||||||||||||
Obligations of U.S. government agencies and sponsored entities | 33,074 | — | 2,164 | 30,910 | |||||||||||||||||||
Tax-exempt and taxable obligations of states and municipal subdivisions | 146,789 | — | 18,975 | 127,814 | |||||||||||||||||||
Mortgage-backed securities - residential | 159,844 | — | 19,253 | 140,591 | |||||||||||||||||||
Mortgage-backed securities - commercial | 134,268 | — | 13,350 | 120,918 | |||||||||||||||||||
Corporate obligations | 10,000 | — | 1,453 | 8,547 | |||||||||||||||||||
Total held-to-maturity | $ | 593,553 | $ | — | $ | 60,865 | $ | 532,688 |
| | | | | | | | | | | | |
($ in thousands) | | March 31, 2022 | ||||||||||
| | | | | Gross | | Gross | | Estimated | |||
| | Amortized | | Unrealized | | Unrealized | | Fair | ||||
|
| Cost |
| Gains |
| Losses |
| Value | ||||
Available-for-sale securities: |
| |
|
| |
|
| |
|
| |
|
U.S. Treasury | | $ | 135,854 | | $ | — | | $ | 6,861 | | $ | 128,993 |
Obligations of U.S. government agencies and sponsored entities | | | 173,403 |
| | 57 | | | 8,878 | | | 164,582 |
Tax-exempt and taxable obligations of states and municipal subdivisions | |
| 684,533 |
| | 2,844 | |
| 48,124 | |
| 639,253 |
Mortgage-backed securities - residential | |
| 387,989 |
| | 533 | |
| 19,491 | |
| 369,031 |
Mortgage-backed securities - commercial | | | 266,197 | | | 508 | | | 12,619 | | | 254,086 |
Corporate obligations | |
| 35,868 |
| | 367 | |
| 503 | |
| 35,732 |
Total available-for-sale | | $ | 1,683,844 | | $ | 4,309 | | $ | 96,476 | | $ | 1,591,677 |
Held-to-maturity: | | | | | | | | | | | | |
U.S. Treasury | | $ | 109,476 | | $ | — | | $ | 2,127 | | $ | 107,349 |
Obligations of U.S. government agencies and sponsored entities | | | 18,134 | | | — | | | — | | | 18,134 |
Tax-exempt and taxable obligations of states and municipal subdivisions | | | 61,398 | | | — | | | 5,092 | | | 56,306 |
Mortgage-backed securities - residential | | | 110,817 | | | — | | | 4,048 | | | 106,769 |
Mortgage-backed securities - commercial | | | 62,237 | | | — | | | 1,944 | | | 60,293 |
Corporate obligations | | | 10,000 | | | — | | | 456 | | | 9,544 |
Total held-to-maturity | | $ | 372,062 | | $ | — | | $ | 13,667 | | $ | 358,395 |
| | | | | | | | | | | | |
($ in thousands) | | December 31, 2021 | ||||||||||
|
| | |
| Gross |
| Gross |
| Estimated | |||
|
| Amortized |
| Unrealized |
| Unrealized |
| Fair | ||||
| | Cost |
| Gains |
| Losses |
| Value | ||||
Available-for-sale securities: |
| |
|
| |
|
| |
|
| |
|
U.S. Treasury | | $ | 135,889 | | $ | 83 | | $ | 814 | | $ | 135,158 |
Obligations of U.S. government agencies sponsored entities | | | 182,877 | | | 1,238 | | | 1,094 | | | 183,021 |
Tax-exempt and taxable obligations of states and municipal subdivisions | |
| 698,861 | |
| 12,452 | |
| 2,811 | |
| 708,502 |
Mortgage-backed securities - residential | |
| 410,269 | |
| 4,123 | |
| 3,425 | |
| 410,967 |
Mortgage-backed securities - commercial | |
| 277,353 | |
| 2,917 | |
| 2,939 | |
| 277,331 |
Corporate obligations | |
| 35,904 | |
| 962 | |
| 13 | |
| 36,853 |
Total available-for-sale | | $ | 1,741,153 | | $ | 21,775 | | $ | 11,096 | | $ | 1,751,832 |
($ in thousands) | December 31, 2021 | ||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||||||
U.S. Treasury | $ | 135,889 | $ | 83 | $ | 814 | $ | 135,158 | |||||||||||||||
Obligations of U.S. government agencies sponsored entities | 182,877 | 1,238 | 1,094 | 183,021 | |||||||||||||||||||
Tax-exempt and taxable obligations of states and municipal subdivisions | 698,861 | 12,452 | 2,811 | 708,502 | |||||||||||||||||||
Mortgage-backed securities - residential | 410,269 | 4,123 | 3,425 | 410,967 | |||||||||||||||||||
Mortgage-backed securities - commercial | 277,353 | 2,917 | 2,939 | 277,331 | |||||||||||||||||||
Corporate obligations | 35,904 | 962 | 13 | 36,853 | |||||||||||||||||||
Total available-for-sale | $ | 1,741,153 | $ | 21,775 | $ | 11,096 | $ | 1,751,832 |
17
•
At both March 31,September 30, 2022 and December 31, 2021, the results of the analysis did not identify any securities where the decline was indicative of credit loss factors; therefore, no DCF analysis was performed and 0 credit loss was recognized on any of the securities AFS.
| | | |
|
| March 31, 2022 | |
A2 | | $ | 1,422 |
Aa1/Aa2 | |
| 12,062 |
Aaa | |
| 303,194 |
Not rated | |
| 55,384 |
Total | | $ | 372,062 |
18
($ in thousands) | September 30, 2022 | ||||
Aaa | $ | 452,516 | |||
Aa1/Aa2/Aa3 | 66,260 | ||||
A1/A2 | 21,092 | ||||
BBB | 10,000 | ||||
Not rated | 43,685 | ||||
Total | $ | 593,553 |
The amortized cost and fair value of debt securities are shown by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.
| | | | | | |
($ in thousands) | | March 31, 2022 | ||||
| | Amortized | | Fair | ||
Available-for-Sale |
| Cost |
| Value | ||
Due less than one year | | $ | 36,378 | | $ | 36,420 |
Due after one year through five years | |
| 248,150 | |
| 241,935 |
Due after five years through ten years | |
| 395,784 | |
| 372,741 |
Due greater than ten years | |
| 349,346 | |
| 317,464 |
Mortgage-backed securities - residential | |
| 387,989 | |
| 369,031 |
Mortgage-backed securities - commercial | | | 266,197 | | | 254,086 |
Total | | $ | 1,683,844 | | $ | 1,591,677 |
| | | | | | |
Held-to-maturity | | | | | | |
Due less than one year | | $ | 10,280 | | $ | 10,230 |
Due after one year through five years | | | 103,433 | | | 101,152 |
Due after five years through ten years | | | 33,969 | | | 32,933 |
Due greater than ten years | | | 51,326 | | | 47,018 |
Mortgage-backed securities - residential | | | 110,817 | | | 106,769 |
Mortgage-backed securities - commercial | | | 62,237 | | | 60,293 |
Total | | $ | 372,062 | | $ | 358,395 |
($ in thousands) | September 30, 2022 | ||||||||||
Amortized Cost | Fair Value | ||||||||||
Available-for-sale: | |||||||||||
Due less than one year | $ | 26,758 | $ | 26,432 | |||||||
Due after one year through five years | 276,821 | 256,948 | |||||||||
Due after five years through ten years | 376,584 | 324,364 | |||||||||
Due greater than ten years | 327,302 | 254,234 | |||||||||
Mortgage-backed securities - residential | 353,965 | 307,909 | |||||||||
Mortgage-backed securities - commercial | 234,860 | 209,523 | |||||||||
Total | $ | 1,596,290 | $ | 1,379,410 | |||||||
Held-to-maturity: | |||||||||||
Due less than one year | $ | 20,850 | $ | 20,558 | |||||||
Due after one year through five years | 109,905 | 103,568 | |||||||||
Due after five years through ten years | 41,211 | 36,786 | |||||||||
Due greater than ten years | 127,475 | 110,267 | |||||||||
Mortgage-backed securities - residential | 159,844 | 140,591 | |||||||||
Mortgage-backed securities - commercial | 134,268 | 120,918 | |||||||||
Total | $ | 593,553 | $ | 532,688 |
| | | | | | | | | | | | | | | | | | |
($ in thousands) | | March 31, 2022 | ||||||||||||||||
| | Losses < 12 Months | | Losses 12 Months or > | | Total | ||||||||||||
| | | | | Gross | | | | | Gross | | | | | Gross | |||
| | Fair | | Unrealized | | Fair | | Unrealized | | Fair | | Unrealized | ||||||
|
| Value |
| Losses |
| Value |
| Losses |
| Value |
| Losses | ||||||
U.S. Treasury | | $ | 128,014 | | $ | 6,773 | | $ | 979 | | $ | 88 | | $ | 128,993 | | $ | 6,861 |
Obligations of U.S. government agencies and sponsored entities | | | 149,445 | | | 8,449 | | | 4,876 | | | 429 | | | 154,321 | | | 8,878 |
Tax-exempt and taxable obligations of state and municipal subdivisions | |
| 457,582 | |
| 41,484 | |
| 62,050 | |
| 6,640 | |
| 519,632 | |
| 48,124 |
Mortgage-backed securities - residential | |
| 287,353 | |
| 16,315 | |
| 34,234 | |
| 3,176 | |
| 321,587 | |
| 19,491 |
Mortgage-backed securities - commercial | | | 165,280 | | | 10,689 | | | 21,506 | | | 1,930 | | | 186,786 | | | 12,619 |
Corporate obligations | |
| 17,386 | |
| 499 | |
| 38 | |
| 4 | |
| 17,424 | |
| 503 |
Total | | $ | 1,205,060 | | $ | 84,209 | | $ | 123,683 | | $ | 12,266 | | $ | 1,328,743 | | $ | 96,476 |
| | | | | | | | | | | | | | | | | | |
Held-to-maturity | | | | | | | | | | | | | | | | | | |
U.S. Treasury | | $ | 107,349 | | $ | 2,127 | | $ | 0 | | $ | 0 | | $ | 107,349 | | $ | 2,127 |
Tax-exempt and taxable obligations of | | | | | | | | | | | | | | | | | | |
state and municipal subdivisions | |
| 56,306 | |
| 5,092 | |
| 0 | |
| 0 | |
| 56,306 | |
| 5,092 |
Mortgage-backed securities - residential | |
| 106,769 | |
| 4,048 | |
| 0 | |
| 0 | |
| 106,769 | |
| 4,048 |
Mortgage-backed securities - commercial | | | 60,293 | | | 1,944 | | | 0 | | | 0 | | | 60,293 | | | 1,944 |
Corporate obligations | |
| 9,544 | |
| 456 | |
| 0 | |
| 0 | |
| 9,544 | |
| 456 |
Total | | $ | 340,261 | | $ | 13,667 | | $ | 0 | | $ | 0 | | $ | 340,261 | | $ | 13,667 |
19
($ in thousands) | September 30, 2022 | ||||||||||||||||||||||||||||||||||
Losses < 12 Months | Losses 12 Months or > | Total | |||||||||||||||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||
Available-for-sale: | |||||||||||||||||||||||||||||||||||
U.S. Treasury | $ | 104,630 | $ | 10,570 | $ | 18,288 | $ | 2,298 | $ | 122,918 | $ | 12,868 | |||||||||||||||||||||||
Obligations of U.S. government agencies and sponsored entities | 78,456 | 9,317 | 65,383 | 10,247 | 143,839 | 19,564 | |||||||||||||||||||||||||||||
Tax-exempt and taxable obligations of state and municipal subdivisions | 411,023 | 80,247 | 125,582 | 30,668 | 536,605 | 110,915 | |||||||||||||||||||||||||||||
Mortgage-backed securities - residential | 129,058 | 14,720 | 177,053 | 31,351 | 306,111 | 46,071 | |||||||||||||||||||||||||||||
Mortgage-backed securities - commercial | 113,360 | 10,431 | 91,036 | 14,977 | 204,396 | 25,408 | |||||||||||||||||||||||||||||
Corporate obligations | 43,215 | 2,686 | 28 | 4 | 43,243 | 2,690 | |||||||||||||||||||||||||||||
Total | $ | 879,742 | $ | 127,971 | $ | 477,370 | $ | 89,545 | $ | 1,357,112 | $ | 217,516 | |||||||||||||||||||||||
Held-to-maturity: | |||||||||||||||||||||||||||||||||||
U.S. Treasury | $ | 103,908 | $ | 5,670 | $ | — | $ | — | $ | 103,908 | $ | 5,670 | |||||||||||||||||||||||
Obligations of U.S. government agencies and sponsored entities | 30,910 | 2,164 | — | — | 30,910 | 2,164 | |||||||||||||||||||||||||||||
Tax-exempt and taxable obligations of state and municipal subdivisions | 120,472 | 18,975 | — | — | 120,472 | 18,975 | |||||||||||||||||||||||||||||
Mortgage-backed securities - residential | 140,591 | 19,253 | — | — | 140,591 | 19,253 | |||||||||||||||||||||||||||||
Mortgage-backed securities - commercial | 120,918 | 13,350 | — | — | 120,918 | 13,350 | |||||||||||||||||||||||||||||
Corporate obligations | 8,547 | 1,453 | — | — | 8,547 | 1,453 | |||||||||||||||||||||||||||||
Total | $ | 525,346 | $ | 60,865 | $ | — | $ | — | $ | 525,346 | $ | 60,865 |
| | | | | | | | | | | | | | | | | | |
($ in thousands) | | December 31, 2021 | ||||||||||||||||
| | Losses < 12 Months | | Losses 12 Months or > | | Total | ||||||||||||
| | | | | Gross | | | | | Gross | | | | | Gross | |||
| | Fair | | Unrealized | | Fair | | Unrealized | | Fair | | Unrealized | ||||||
|
| Value |
| Losses |
| Value |
| Losses |
| Value |
| Losses | ||||||
U.S. Treasury | | $ | 130,098 | | $ | 814 | | $ | 0 | | $ | 0 | | $ | 130,098 | | $ | 814 |
Obligations of U.S. government agencies and sponsored entities | | | 121,402 | | | 933 | | | 5,254 | | | 161 | | | 126,656 | | | 1,094 |
Tax-exempt and taxable obligations of state and municipal subdivisions | |
| 249,430 | |
| 2,692 | |
| 3,692 | |
| 119 | |
| 253,122 | |
| 2,811 |
Mortgage-backed securities - residential | |
| 284,183 | |
| 3,228 | |
| 8,912 | |
| 197 | |
| 293,095 | |
| 3,425 |
Mortgage-backed securities - commercial | | | 174,697 | | | 2,836 | | | 3,038 | | | 103 | | | 177,735 | | | 2,939 |
Corporate obligations | |
| 6,692 | |
| 8 | |
| 42 | |
| 5 | |
| 6,734 | |
| 13 |
Total | | $ | 966,502 | | $ | 10,511 | | $ | 20,938 | | $ | 585 | | $ | 987,440 | | $ | 11,096 |
($ in thousands) December 31, 2021 Losses < 12 Months Losses 12 Months or > Total Fair
ValueGross
Unrealized
LossesFair
ValueGross
Unrealized
LossesFair
ValueGross
Unrealized
LossesU.S. Treasury $ 130,098 $ 814 $ — $ — $ 130,098 $ 814 Obligations of U.S. government agencies and sponsored entities 121,402 933 5,254 161 126,656 1,094 Tax-exempt and taxable obligations of state and municipal subdivisions 249,430 2,692 3,692 119 253,122 2,811 Mortgage-backed securities - residential 284,183 3,228 8,912 197 293,095 3,425 Mortgage-backed securities - commercial 174,697 2,836 3,038 103 177,735 2,939 Corporate obligations 6,692 8 42 5 6,734 13 Total $ 966,502 $ 10,511 $ 20,938 $ 585 $ 987,440 $ 11,096
20
($ in thousands) | September 30, 2022 | December 31, 2021 | |||||||||
Loans held for sale | |||||||||||
Mortgage loans held for sale | $ | 2,225 | $ | 7,678 | |||||||
Total LHFS | $ | 2,225 | $ | 7,678 | |||||||
Loans held for investment | |||||||||||
Commercial, financial and agriculture (1) | $ | 517,197 | $ | 397,516 | |||||||
Commercial real estate | 2,125,471 | 1,683,698 | |||||||||
Consumer real estate | 1,032,343 | 838,654 | |||||||||
Consumer installment | 44,377 | 39,685 | |||||||||
Total loans | 3,719,388 | 2,959,553 | |||||||||
Less allowance for credit losses | (38,356) | (30,742) | |||||||||
Net LHFI | $ | 3,681,032 | $ | 2,928,811 |
| | | | | | |
($ in thousands) |
| March 31, 2022 |
| December 31, 2021 | ||
Loans held for sale |
| |
|
| |
|
Mortgage loans held for sale |
| $ | 8,213 |
| $ | 7,678 |
Total LHFS | | $ | 8,213 | | $ | 7,678 |
| | | | | | |
Loans held for investment | |
| | |
| |
Commercial, financial and agriculture (1) | | $ | 385,036 | | $ | 397,516 |
Commercial real estate | |
| 1,697,839 | |
| 1,683,698 |
Consumer real estate | |
| 848,021 | |
| 838,654 |
Consumer installment | |
| 39,350 | |
| 39,685 |
Total loans | |
| 2,970,246 | |
| 2,959,553 |
Less allowance for credit losses | |
| (31,620) | |
| (30,742) |
Net LHFI | | $ | 2,938,626 | | $ | 2,928,811 |
(1) | Loan balance includes |
Accrued interest receivable is not included in the amortized cost basis of the Company’s LHFI. At March 31,September 30, 2022 and December 31, 2021, accrued interest receivable for LHFI totaled $15.7$16.1 million and $16.4 million, respectively, with no related ACL and was reported in interest receivable on the accompanying consolidated balance sheet.
($ in thousands) September 30, 2022 Past Due
30 to 89
DaysPast Due
90 Days
or More and
Still AccruingNonaccrual PCD Total
Past Due,
Nonaccrual
and PCDTotal
LHFINonaccrual
and PCD
with No ACLCommercial, financial and agriculture (1) $ 293 $ — $ 29 $ — $ 322 $ 517,197 $ — Commercial real estate 121 — 10,253 1,198 11,572 2,125,471 5,265 Consumer real estate 1,452 571 3,282 1,079 6,384 1,032,343 1,339 Consumer installment 144 — 3 — 147 44,377 — Total $ 2,010 $ 571 $ 13,567 $ 2,277 $ 18,425 $ 3,719,388 $ 6,604
| | | | | | | | | | | | | | | | | | | | | |
| | March 31, 2022 | |||||||||||||||||||
| | | | | Past Due | | | | | | | | Total | | | | | | | ||
| | Past Due |
| 90 Days |
| | |
| | |
| Past Due, |
| |
| Nonaccrual | |||||
| | 30 to 89 | | or More and | | | | | | | | Nonaccrual | | Total | | and PCD | |||||
($ in thousands) |
| Days |
| Still Accruing |
| Nonaccrual |
| PCD |
| and PCD |
| LHFI |
| with No ACL | |||||||
Commercial, financial and agriculture (1) | | $ | 986 | | $ | — | | $ | 153 | | $ | — | | $ | 1,139 | | $ | 385,036 | | $ | — |
Commercial real estate | |
| 4,300 | |
| — | |
| 18,580 | |
| 1,467 | |
| 24,347 | |
| 1,697,839 | |
| 1,438 |
Consumer real estate | |
| 2,965 | |
| — | |
| 3,168 | |
| 1,358 | |
| 7,491 | |
| 848,021 | |
| 557 |
Consumer installment | |
| 94 | |
| — | |
| 9 | |
| 1 | |
| 104 | |
| 39,350 | |
| 5 |
Total | | $ | 8,345 | | $ | — | | $ | 21,910 | | $ | 2,826 | | $ | 33,081 | | $ | 2,970,246 | | $ | 2,000 |
(1) | Total loan balance includes |
| | | | | | | | | | | | | | | | | | | | | |
December 31, 2021 | | | |||||||||||||||||||
|
| | |
| Past Due 90 |
| | | | | |
| Total |
| | |
| Nonaccrual | |||
|
| Past Due |
| Days or | | | | | | | Past Due, |
| |
| and PCD | ||||||
|
| 30 to 89 |
| More and | | | | | | | Nonaccrual |
| Total | | with No | ||||||
($ in thousands) | | Days | | Still Accruing |
| Nonaccrual |
| PCD | | and PCD |
| LHFI | | ACL | |||||||
Commercial, financial and agriculture (1) | | $ | 246 | | $ | — | | $ | 190 | | $ | — | | $ | 436 | | $ | 397,516 | | $ | — |
Commercial real estate | | | 453 | | | — | | | 19,445 | | | 2,082 | | | 21,980 | | | 1,683,698 | | | 1,661 |
Consumer real estate | | | 2,140 | | | 45 | | | 3,776 | | | 2,512 | | | 8,473 | | | 838,654 | | | 1,488 |
Consumer installment | | | 121 | | | — | | | 7 | | | 1 | | | 129 | | | 39,685 | | | — |
Total | | $ | 2,960 | | $ | 45 | | $ | 23,418 | | $ | 4,595 | | $ | 31,018 | | $ | 2,959,553 | | $ | 3,149 |
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
($ in thousands) | Past Due 30 to 89 Days | Past Due 90 Days or More and Still Accruing | Nonaccrual | PCD | Total Past Due, Nonaccrual and PCD | Total LHFI | Nonaccrual and PCD with No ACL | ||||||||||||||||||||||||||||||||||
Commercial, financial and agriculture (1) | $ | 246 | $ | — | $ | 190 | $ | — | $ | 436 | $ | 397,516 | $ | — | |||||||||||||||||||||||||||
Commercial real estate | 453 | — | 19,445 | 2,082 | 21,980 | 1,683,698 | 1,661 | ||||||||||||||||||||||||||||||||||
Consumer real estate | 2,140 | 45 | 3,776 | 2,512 | 8,473 | 838,654 | 1,488 | ||||||||||||||||||||||||||||||||||
Consumer installment | 121 | — | 7 | 1 | 129 | 39,685 | — | ||||||||||||||||||||||||||||||||||
Total | $ | 2,960 | $ | 45 | $ | 23,418 | $ | 4,595 | $ | 31,018 | $ | 2,959,553 | $ | 3,149 |
(1) | Total loan balance includes $41.1 million in PPP loans as of December 31, 2021. |
($ in thousands) | Carrying Amount | ||||
Purchase price of loans at acquisition | $ | 27,669 | |||
Allowance for credit losses at acquisition | 1,303 | ||||
Non-credit discount (premium) at acquisition | 530 | ||||
Par value of acquired loans at acquisition | $ | 29,502 |
21
Acquired Loans
As of March 31,September 30, 2022, and December 31, 2021 the amortized cost of the Company’s PCD loans totaled $6.7$27.1 million and $8.6 million, respectively, which had an estimated ACL of $619 thousand$1.7 million and $855 thousand, respectively.
("TDRs")
In response to the Coronavirus Disease 2019 (“COVID-19”) pandemic and its economic impact to its customers, the Company implemented a short-term modification program in accordance with interagency regulatory guidance to provide temporary payment relief to those borrowers directly impacted by COVID-19 who were not more than 30 days past due at the time
| | | | | | | | |
| | Three Months Ended March 31, | ||||||
| | | | Outstanding | | Outstanding | ||
| | | | Recorded | | Recorded | ||
| | Number of | | Investment | | Investment | ||
2022 |
| Loans |
| Pre-Modification |
| Post-Modification | ||
Commercial real estate | | 1 | | $ | 230 | | $ | 230 |
Total | | 1 | | $ | 230 | | $ | 230 |
September 30, 2022.
($ in thousands) | Three Months Ended September 30, | |||||||||||||||||||
2021 | Number of Loans | Outstanding Recorded Investment Pre-Modification | Outstanding Recorded Investment Post-Modification | |||||||||||||||||
Commercial, financial and agriculture | 3 | $ | 4,914 | $ | 4,914 | |||||||||||||||
Commercial real estate | 1 | $ | 38 | $ | 38 | |||||||||||||||
Consumer installment | 2 | $ | 113 | $ | 151 | |||||||||||||||
Total | 6 | $ | 5,065 | $ | 5,103 |
($ in thousands) | Nine Months Ended September 30, | |||||||||||||||||||
2021 | Number of Loans | Outstanding Recorded Investment Pre-Modification | Outstanding Recorded Investment Post-Modification | |||||||||||||||||
Commercial, financial and agriculture | 5 | $ | 5,151 | $ | 5,151 | |||||||||||||||
Commercial real estate | 1 | 38 | 38 | |||||||||||||||||
Consumer real estate | 1 | 13 | 2 | |||||||||||||||||
Consumer installment | 3 | 168 | 194 | |||||||||||||||||
Total | 10 | $ | 5,370 | $ | 5,385 |
| | | | | | | | | | |
| | Three Months Ended March 31, | ||||||||
| | 2022 | | 2021 | ||||||
Troubled Debt Restructurings | | Number of | | Recorded | | Number of | | Recorded | ||
That Subsequently Defaulted: |
| Loans |
| Investment |
| Loans |
| Investment | ||
Commercial real estate |
| 3 | | $ | 4,606 |
| 3 | | $ | 1,065 |
Consumer real estate | | 3 | | | 141 | | — | | | — |
Total |
| 6 | | $ | 4,747 |
| 3 | | $ | 1,065 |
Troubled Debt Restructurings That Subsequently Defaulted: | Nine Months Ended September 30, | |||||||||||||
2021 | ||||||||||||||
Number of Loans | Recorded Investment | |||||||||||||
Commercial real estate | 1 | $ | 165 | |||||||||||
Consumer real estate | 2 | 355 | ||||||||||||
Total | 3 | $ | 520 |
22
The following tables represents the Company’s TDRs at March 31,September 30, 2022 and December 31, 2021:
| | | | | | | | | | | | | | | |
March 31, 2022 | | | | | | | Past Due 90 | | | | | | |||
|
| Current |
| Past Due |
| days and still | | | | | |||||
($ in thousands) |
| Loans |
| 30-89 |
| accruing |
| Nonaccrual |
| Total | |||||
Commercial, financial and agriculture | | $ | 18 | | $ | — | | $ | — | | $ | 85 | | $ | 103 |
Commercial real estate | |
| 3,210 | |
| — | |
| — | |
| 16,051 | |
| 19,261 |
Consumer real estate | |
| 1,665 | |
| — | |
| — | |
| 943 | |
| 2,608 |
Consumer installment | |
| 16 | |
| — | |
| — | |
| — | |
| 16 |
Total | | $ | 4,909 | | $ | — | | $ | — | | $ | 17,079 | | $ | 21,988 |
Allowance for credit losses | | $ | 81 | | $ | — | | $ | — | | $ | 3,974 | | $ | 4,055 |
| | | | | | | | | | | | | | | |
December 31, 2021 |
| | | | | | Past Due 90 | | |
| | | |||
|
| Current |
| Past Due |
| days and still | | | | | |||||
($ in thousands) | | Loans | | 30-89 |
| accruing | | Nonaccrual | | Total | |||||
Commercial, financial and agriculture | | $ | 63 | | $ | — | | $ | — | | $ | 107 | | $ | 170 |
Commercial real estate | | | 3,367 | |
| — | |
| — | |
| 16,858 | |
| 20,225 |
Consumer real estate | | | 1,772 | |
| — | |
| — | |
| 1,973 | |
| 3,745 |
Consumer installment | | | 18 | |
| — | |
| — | |
| — | |
| 18 |
Total | | $ | 5,220 | | $ | — | | $ | — | | $ | 18,938 | | $ | 24,158 |
Allowance for credit losses | | $ | 90 | | $ | — | | $ | — | | $ | 4,217 | | $ | 4,307 |
September 30, 2022 | Current Loans | Past Due 30-89 | Past Due 90 days and still accruing | Nonaccrual | Total | |||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||
Commercial, financial and agriculture | $ | 681 | $ | — | $ | — | $ | — | $ | 681 | ||||||||||||||||||||||
Commercial real estate | 13,661 | — | — | 6,847 | 20,508 | |||||||||||||||||||||||||||
Consumer real estate | 1,411 | 51 | — | 778 | 2,240 | |||||||||||||||||||||||||||
Consumer installment | 15 | — | — | — | 15 | |||||||||||||||||||||||||||
Total | $ | 15,768 | $ | 51 | $ | — | $ | 7,625 | $ | 23,444 | ||||||||||||||||||||||
Allowance for credit losses | $ | 223 | $ | — | $ | — | $ | 481 | $ | 704 |
December 31, 2021 | Current Loans | Past Due 30-89 | Past Due 90 days and still accruing | Nonaccrual | Total | |||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||
Commercial, financial and agriculture | $ | 63 | $ | — | $ | — | $ | 107 | $ | 170 | ||||||||||||||||||||||
Commercial real estate | 3,367 | — | — | 16,858 | 20,225 | |||||||||||||||||||||||||||
Consumer real estate | 1,772 | — | — | 1,973 | 3,745 | |||||||||||||||||||||||||||
Consumer installment | 18 | — | — | — | 18 | |||||||||||||||||||||||||||
Total | $ | 5,220 | $ | — | $ | — | $ | 18,938 | $ | 24,158 | ||||||||||||||||||||||
Allowance for credit losses | $ | 90 | $ | — | $ | — | $ | 4,217 | $ | 4,307 |
| | | | | | | | | |
March 31, 2022 | | | | | | | | | |
|
| Real Property |
| Miscellaneous |
| Total | |||
Commercial real estate | | $ | 1,438 | | $ | — | | $ | 1,438 |
Consumer real estate | |
| 682 | |
| — | |
| 682 |
Consumer installment | |
| — | |
| 5 | |
| 5 |
Total | | $ | 2,120 | | $ | 5 | | $ | 2,125 |
| | | | | | |
December 31, 2021 | | Real Property | | Total | ||
Commercial real estate |
| $ | 1,712 | | $ | 1,712 |
Consumer real estate |
| | 1,858 | |
| 1,858 |
Total |
| $ | 3,570 | | $ | 3,570 |
2021:
September 30, 2022 | |||||||||||
($ in thousands) | Real Property | Total | |||||||||
Commercial real estate | $ | 5,265 | $ | 5,265 | |||||||
Consumer real estate | 1,374 | 1,374 | |||||||||
Total | $ | 6,639 | $ | 6,639 |
December 31, 2021 | |||||||||||
($ in thousands) | Real Property | Total | |||||||||
Commercial real estate | $ | 1,712 | $ | 1,712 | |||||||
Consumer real estate | 1,858 | 1,858 | |||||||||
Total | $ | 3,570 | $ | 3,570 |
23
Loan Participations
24
The tables below present the amortized cost basis of loans by credit quality indicator and class of loans based on the most recent analysis performed at March 31,September 30, 2022 and December 31, 2021. Revolving loans converted to term as of the threenine months ended March 31,September 30, 2022 and December 31, 2021 were not material to the total loan portfolio.
| | | | | | | | | | | | | | | | | | | | | | | | |
($ in thousands) | | Term Loans Amortized Cost Basis by Origination Year | | | | | | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | Revolving | | | | |
As of March 31, 2022 |
| 2022 |
| 2021 |
| 2020 |
| 2019 |
| 2018 |
| Prior |
| Loans |
| Total | ||||||||
Commercial, financial and: |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
agriculture |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Risk Rating |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Pass | | $ | 35,149 | | $ | 129,950 | | $ | 55,278 | | $ | 48,382 | | $ | 44,072 | | $ | 54,853 | | $ | 87 | | $ | 367,771 |
Special mention | |
| — | |
| — | |
| 230 | |
| 681 | |
| 1,235 | |
| 7,505 | |
| — | |
| 9,651 |
Substandard | |
| 38 | |
| 40 | |
| — | |
| 1,151 | |
| 4,921 | |
| 1,464 | |
| — | |
| 7,614 |
Doubtful | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — |
Total commercial, financial | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
and agriculture | | $ | 35,187 | | $ | 129,990 | | $ | 55,508 | | $ | 50,214 | | $ | 50,228 | | $ | 63,822 | | $ | 87 | | $ | 385,036 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Risk Rating | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Pass | | $ | 122,802 | | $ | 406,171 | | $ | 293,259 | | $ | 195,948 | | $ | 162,109 | | $ | 414,336 | | $ | — | | $ | 1,594,625 |
Special mention | |
| — | |
| 1,326 | |
| 2,245 | |
| 1,744 | |
| 7,764 | |
| 16,116 | |
| — | |
| 29,195 |
Substandard | |
| — | |
| 5,041 | |
| 2,613 | |
| 2,438 | |
| 16,941 | |
| 46,986 | |
| — | |
| 74,019 |
Doubtful | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — |
Total commercial real estate | | $ | 122,802 | | $ | 412,538 | | $ | 298,117 | | $ | 200,130 | | $ | 186,814 | | $ | 477,438 | | $ | — | | $ | 1,697,839 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Consumer real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Risk Rating | | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | 50,294 | | $ | 246,677 | | $ | 148,600 | | $ | 65,615 | | $ | 61,059 | | $ | 159,050 | | $ | 98,248 | | $ | 829,543 |
Special mention | | | — | | | — | | | — | | | 326 | | | 26 | | | 3,486 | | | — | | | 3,838 |
Substandard | | | 785 | | | 436 | | | 424 | | | 898 | | | 2,973 | | | 7,686 | | | 1,438 | | | 14,640 |
Doubtful | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — |
Total consumer real estate | | $ | 51,079 | | $ | 247,113 | | $ | 149,024 | | $ | 66,839 | | $ | 64,058 | | $ | 170,222 | | $ | 99,686 | | $ | 848,021 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Consumer installment: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Risk Rating | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Pass | | $ | 5,005 | | $ | 16,200 | | $ | 7,862 | | $ | 3,477 | | $ | 1,294 | | $ | 2,365 | | $ | 3,098 | | $ | 39,301 |
Special mention | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — |
Substandard | |
| — | |
| — | |
| 26 | |
| 2 | |
| 5 | |
| 16 | |
| — | |
| 49 |
Doubtful | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — |
Total consumer installment | | $ | 5,005 | | $ | 16,200 | | $ | 7,888 | | $ | 3,479 | | $ | 1,299 | | $ | 2,381 | | $ | 3,098 | | $ | 39,350 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Pass | | $ | 213,250 | | $ | 798,998 | | $ | 504,999 | | $ | 313,422 | | $ | 268,534 | | $ | 630,604 | | $ | 101,433 | | $ | 2,831,240 |
Special mention | |
| — | |
| 1,326 | |
| 2,475 | |
| 2,751 | |
| 9,025 | |
| 27,107 | |
| — | |
| 42,684 |
Substandard | |
| 823 | |
| 5,517 | |
| 3,063 | |
| 4,489 | |
| 24,840 | |
| 56,152 | |
| 1,438 | |
| 96,322 |
Doubtful | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — |
Total | | $ | 214,073 | | $ | 805,841 | | $ | 510,537 | | $ | 320,662 | | $ | 302,399 | | $ | 713,863 | | $ | 102,871 | | $ | 2,970,246 |
25
As of September 30, 2022 | Term Loans Amortized Cost Basis by Origination Year | Revolving Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
($ in thousands) | 2022 | 2021 | 2020 | 2019 | 2018 | Prior | ||||||||||||||||||||||||||||||||||||||||||||
Commercial, financial and | ||||||||||||||||||||||||||||||||||||||||||||||||||
agriculture: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Rating | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 139,969 | $ | 151,211 | $ | 58,425 | $ | 58,055 | $ | 46,316 | $ | 53,783 | $ | 115 | $ | 507,874 | ||||||||||||||||||||||||||||||||||
Special mention | 389 | 5,655 | 1,690 | 204 | — | 1,032 | — | 8,970 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | — | 17 | — | 54 | 35 | 247 | — | 353 | ||||||||||||||||||||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Total commercial, financial and agriculture | $ | 140,358 | $ | 156,883 | $ | 60,115 | $ | 58,313 | $ | 46,351 | $ | 55,062 | $ | 115 | $ | 517,197 | ||||||||||||||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Rating | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 458,767 | $ | 458,929 | $ | 320,224 | $ | 228,481 | $ | 147,199 | $ | 411,604 | $ | — | $ | 2,025,204 | ||||||||||||||||||||||||||||||||||
Special mention | 676 | 1,389 | 2,315 | 11,763 | 7,184 | 20,665 | — | 43,992 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 51 | 5,159 | 2,705 | 3,514 | 15,394 | 28,777 | — | 55,600 | ||||||||||||||||||||||||||||||||||||||||||
Doubtful | — | — | — | — | — | 675 | — | 675 | ||||||||||||||||||||||||||||||||||||||||||
Total commercial real estate | $ | 459,494 | $ | 465,477 | $ | 325,244 | $ | 243,758 | $ | 169,777 | $ | 461,721 | $ | — | $ | 2,125,471 | ||||||||||||||||||||||||||||||||||
Consumer real estate: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Rating | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 264,641 | $ | 240,464 | $ | 144,526 | $ | 62,785 | $ | 58,092 | $ | 141,643 | $ | 103,853 | $ | 1,016,004 | ||||||||||||||||||||||||||||||||||
Special mention | — | — | — | — | 837 | 4,256 | — | 5,093 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 116 | 1,003 | 220 | 640 | 1,726 | 6,515 | 1,026 | 11,246 | ||||||||||||||||||||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Total consumer real estate | $ | 264,757 | $ | 241,467 | $ | 144,746 | $ | 63,425 | $ | 60,655 | $ | 152,414 | $ | 104,879 | $ | 1,032,343 | ||||||||||||||||||||||||||||||||||
Consumer installment: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Rating | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 15,513 | $ | 13,840 | $ | 5,858 | $ | 2,597 | $ | 986 | $ | 1,669 | $ | 3,867 | $ | 44,330 | ||||||||||||||||||||||||||||||||||
Special mention | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Substandard | — | 4 | 25 | 9 | 1 | 8 | — | 47 | ||||||||||||||||||||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Total consumer installment | $ | 15,513 | $ | 13,844 | $ | 5,883 | $ | 2,606 | $ | 987 | $ | 1,677 | $ | 3,867 | $ | 44,377 | ||||||||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 878,890 | $ | 864,444 | $ | 529,033 | $ | 351,918 | $ | 252,593 | $ | 608,699 | $ | 107,835 | $ | 3,593,412 | ||||||||||||||||||||||||||||||||||
Special mention | 1,065 | 7,044 | 4,005 | 11,967 | 8,021 | 25,953 | — | 58,055 | ||||||||||||||||||||||||||||||||||||||||||
Substandard | 167 | 6,183 | 2,950 | 4,217 | 17,156 | 35,547 | 1,026 | 67,246 | ||||||||||||||||||||||||||||||||||||||||||
Doubtful | — | — | — | — | — | 675 | — | 675 | ||||||||||||||||||||||||||||||||||||||||||
Total | $ | 880,122 | $ | 877,671 | $ | 535,988 | $ | 368,102 | $ | 277,770 | $ | 670,874 | $ | 108,861 | $ | 3,719,388 |
| | | | | | | | | | | | | | | | | | | | | | | | |
($ in thousands) | | Term Loans Amortized Cost Basis by Origination Year | | | | | | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | Revolving | | | | ||
As of December 31, 2021 |
| 2021 |
| 2020 |
| 2019 |
| 2018 |
| 2017 |
| Prior |
| Loans |
| Total | ||||||||
Commercial, financial and: | | | | | | | | | | | | | | | | | | | | | | | | |
agriculture | | | | | | | | | | | | | | | | | | | | | | | | |
Risk Rating | | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | 152,798 | | $ | 60,106 | | $ | 52,802 | | $ | 47,988 | | $ | 22,083 | | $ | 43,773 | | $ | 178 | | $ | 379,728 |
Special mention | |
| — | |
| 255 | |
| 749 | |
| 90 | |
| 481 | |
| 29 | |
| — | |
| 1,604 |
Substandard | |
| — | |
| — | |
| 1,398 | |
| 6,184 | |
| 360 | |
| 8,242 | |
| — | |
| 16,184 |
Doubtful | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — |
Total commercial, financial and agriculture | | $ | 152,798 | | $ | 60,361 | | $ | 54,949 | | $ | 54,262 | | $ | 22,924 | | $ | 52,044 | | $ | 178 | | $ | 397,516 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Risk Rating | | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | 402,284 | | $ | 313,288 | | $ | 207,879 | | $ | 177,943 | | $ | 134,234 | | $ | 332,588 | | $ | — | | $ | 1,568,216 |
Special mention | |
| 1,326 | |
| 2,259 | |
| 1,782 | |
| 15,076 | |
| 2,779 | |
| 15,519 | |
| — | |
| 38,741 |
Substandard | |
| 3,904 | |
| 3,189 | |
| 1,931 | |
| 17,147 | |
| 18,814 | |
| 31,756 | |
| — | |
| 76,741 |
Doubtful | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — |
Total commercial real estate | | $ | 407,514 | | $ | 318,736 | | $ | 211,592 | | $ | 210,166 | | $ | 155,827 | | $ | 379,863 | | $ | — | | $ | 1,683,698 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Consumer real estate: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Risk Rating | | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | 243,340 | | $ | 164,359 | | $ | 70,465 | | $ | 66,940 | | $ | 51,988 | | $ | 121,238 | | $ | 98,444 | | $ | 816,774 |
Special mention | |
| — | |
| — | |
| 331 | |
| 26 | |
| 1,746 | |
| 1,949 | |
| — | |
| 4,052 |
Substandard | |
| 444 | |
| 532 | |
| 1,280 | |
| 3,410 | |
| 1,288 | |
| 9,241 | |
| 1,633 | |
| 17,828 |
Doubtful | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — |
Total consumer real estate | | $ | 243,784 | | $ | 164,891 | | $ | 72,076 | | $ | 70,376 | | $ | 55,022 | | $ | 132,428 | | $ | 100,077 | | $ | 838,654 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Consumer installment: | | | | | | | | | | | | | | | | | | | | | | | | |
Risk Rating | | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | 17,980 | | $ | 9,245 | | $ | 4,222 | | $ | 1,645 | | $ | 1,088 | | $ | 1,758 | | $ | 3,697 | | $ | 39,635 |
Special mention | |
| — | |
| — | |
| — | |
| — | |
| 1 | |
| — | |
| — | |
| 1 |
Substandard | |
| — | |
| 26 | |
| 3 | |
| 5 | |
| 8 | |
| 7 | |
| — | |
| 49 |
Doubtful | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — |
Total consumer installment | | $ | 17,980 | | $ | 9,271 | | $ | 4,225 | | $ | 1,650 | | $ | 1,097 | | $ | 1,765 | | $ | 3,697 | | $ | 39,685 |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | 816,402 | | $ | 546,998 | | $ | 335,368 | | $ | 294,516 | | $ | 209,393 | | $ | 499,357 | | $ | 102,319 | | $ | 2,804,353 |
Special mention | |
| 1,326 | |
| 2,514 | |
| 2,862 | |
| 15,192 | |
| 5,007 | |
| 17,497 | |
| — | |
| 44,398 |
Substandard | |
| 4,348 | |
| 3,747 | |
| 4,612 | |
| 26,746 | |
| 20,470 | |
| 49,246 | |
| 1,633 | |
| 110,802 |
Doubtful | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — |
Total | | $ | 822,076 | | $ | 553,259 | | $ | 342,842 | | $ | 336,454 | | $ | 234,870 | | $ | 566,100 | | $ | 103,952 | | $ | 2,959,553 |
As of December 31, 2021 Term Loans Amortized Cost Basis by Origination Year Revolving
LoansTotal ($ in thousands) 2021 2020 2019 2018 2017 Prior Commercial, financial and: agriculture Risk Rating Pass $ 152,798 $ 60,106 $ 52,802 $ 47,988 $ 22,083 $ 43,773 $ 178 $ 379,728 Special mention — 255 749 90 481 29 — 1,604 Substandard — — 1,398 6,184 360 8,242 — 16,184 Doubtful — — — — — — — — Total commercial, financial and agriculture $ 152,798 $ 60,361 $ 54,949 $ 54,262 $ 22,924 $ 52,044 $ 178 $ 397,516 Commercial real estate: Risk Rating Pass $ 402,284 $ 313,288 $ 207,879 $ 177,943 $ 134,234 $ 332,588 $ — $ 1,568,216 Special mention 1,326 2,259 1,782 15,076 2,779 15,519 — 38,741 Substandard 3,904 3,189 1,931 17,147 18,814 31,756 — 76,741 Doubtful — — — — — — — — Total commercial real estate $ 407,514 $ 318,736 $ 211,592 $ 210,166 $ 155,827 $ 379,863 $ — $ 1,683,698 Consumer real estate: Risk Rating Pass $ 243,340 $ 164,359 $ 70,465 $ 66,940 $ 51,988 $ 121,238 $ 98,444 $ 816,774 Special mention — — 331 26 1,746 1,949 — 4,052 Substandard 444 532 1,280 3,410 1,288 9,241 1,633 17,828 Doubtful — — — — — — — — Total consumer real estate $ 243,784 $ 164,891 $ 72,076 $ 70,376 $ 55,022 $ 132,428 $ 100,077 $ 838,654 Consumer installment: Risk Rating Pass $ 17,980 $ 9,245 $ 4,222 $ 1,645 $ 1,088 $ 1,758 $ 3,697 $ 39,635 Special mention — — — — 1 — — 1 Substandard — 26 3 5 8 7 — 49 Doubtful — — — — — — — — Total consumer installment $ 17,980 $ 9,271 $ 4,225 $ 1,650 $ 1,097 $ 1,765 $ 3,697 $ 39,685 Total Pass $ 816,402 $ 546,998 $ 335,368 $ 294,516 $ 209,393 $ 499,357 $ 102,319 $ 2,804,353 Special mention 1,326 2,514 2,862 15,192 5,007 17,497 — 44,398 Substandard 4,348 3,747 4,612 26,746 20,470 49,246 1,633 110,802 Doubtful — — — — — — — — Total $ 822,076 $ 553,259 $ 342,842 $ 336,454 $ 234,870 $ 566,100 $ 103,952 $ 2,959,553
26
factors. Management may selectively apply external market data to subjectively adjust the Company’s own loss history including index or peer data. Expected losses are estimated over the contractual term of the loans, adjusted for expected prepayments. The contractual term excludes expected extensions, renewals, and modifications. Loans are charged-off against the allowance when management believes the uncollectibility of a loan balance is confirmed and recoveries are credited to the allowance when received. Expected recovery amounts may not exceed the aggregate of amounts previously charged-off.
27
information not used in the quantitative calculation to determine if any subjective qualitative adjustments are required so that all significant risks are incorporated to form a sufficient basis to estimate credit losses.
($ in thousands) | Three Months Ended September 30, 2022 | ||||||||||||||||||||||||||||
Commercial, Financial and Agriculture | Commercial Real Estate | Consumer Real Estate | Consumer Installment | Total | |||||||||||||||||||||||||
Allowance for credit losses: | |||||||||||||||||||||||||||||
Beginning balance | $ | 4,511 | $ | 18,668 | $ | 8,752 | $ | 469 | $ | 32,400 | |||||||||||||||||||
Initial allowance on PCD loans | 614 | 576 | 113 | — | 1,303 | ||||||||||||||||||||||||
Provision for credit losses | 483 | 1,663 | 2,135 | 19 | 4,300 | ||||||||||||||||||||||||
Loans charged-off | — | — | (55) | (186) | (241) | ||||||||||||||||||||||||
Recoveries | 292 | 18 | 39 | 245 | 594 | ||||||||||||||||||||||||
Total ending allowance balance | $ | 5,900 | $ | 20,925 | $ | 10,984 | $ | 547 | $ | 38,356 |
($ in thousands) | Nine Months Ended September 30, 2022 | ||||||||||||||||||||||||||||
Commercial, Financial and Agriculture | Commercial Real Estate | Consumer Real Estate | Consumer Installment | Total | |||||||||||||||||||||||||
Allowance for credit losses: | |||||||||||||||||||||||||||||
Beginning balance | $ | 4,873 | $ | 17,552 | $ | 7,889 | $ | 428 | $ | 30,742 | |||||||||||||||||||
Initial allowance on PCD loans | 614 | 576 | 113 | — | 1,303 | ||||||||||||||||||||||||
Provision for credit losses | 171 | 2,292 | 2,197 | 90 | 4,750 | ||||||||||||||||||||||||
Loans charged-off | (146) | (27) | (202) | (523) | (898) | ||||||||||||||||||||||||
Recoveries | 388 | 532 | 987 | 552 | 2,459 | ||||||||||||||||||||||||
Total ending allowance balance | $ | 5,900 | $ | 20,925 | $ | 10,984 | $ | 547 | $ | 38,356 |
($ in thousands) | Three Months Ended September 30, 2021 | ||||||||||||||||||||||||||||
Commercial, Financial and Agriculture | Commercial Real Estate | Consumer Real Estate | Consumer Installment | Total | |||||||||||||||||||||||||
Allowance for credit losses: | |||||||||||||||||||||||||||||
Beginning balance | $ | 3,910 | $ | 17,573 | $ | 10,339 | $ | 635 | $ | 32,457 | |||||||||||||||||||
Provision for credit losses | — | — | — | — | — | ||||||||||||||||||||||||
Loans charged-off | (142) | (59) | (19) | (166) | (386) | ||||||||||||||||||||||||
Recoveries | 57 | 180 | 39 | 71 | 347 | ||||||||||||||||||||||||
Total ending allowance balance | $ | 3,825 | $ | 17,694 | $ | 10,359 | $ | 540 | $ | 32,418 |
| | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2022 | |||||||||||||
($ in thousands) | | Commercial, | | | | | | | | | |||||
| | Financial and | | Commercial | | Consumer | | Consumer | | | |||||
|
| Agriculture |
| Real Estate |
| Real Estate |
| Installment |
| Total | |||||
Allowance for credit losses: | | | | | | | | | | | | | | | |
Beginning balance | | $ | 4,873 | | $ | 17,552 | | $ | 7,889 | | $ | 428 | | $ | 30,742 |
Provision for credit losses |
| | — |
| | — |
| | — |
| | — |
| | — |
Loans charged-off |
| | (52) |
| | (3) |
| | (7) |
| | (169) |
| | (231) |
Recoveries |
| | 53 |
| | 224 |
| | 610 |
| | 222 |
| | 1,109 |
Total ending allowance balance | | $ | 4,874 | | $ | 17,773 | | $ | 8,492 | | $ | 481 | | $ | 31,620 |
| | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2021 | |||||||||||||
($ in thousands) | | Commercial, | | | | | | | | | |||||
| | Financial and | | Commercial | | Consumer | | Consumer | | | |||||
|
| Agriculture |
| Real Estate |
| Real Estate |
| Installment |
| Total | |||||
Allowance for credit losses: | | | | | | | | | | | | | | | |
Beginning balance | | $ | 6,214 | | $ | 24,319 | | $ | 4,736 | | $ | 551 | | $ | 35,820 |
Impact of ASC 326 adoption on non-PCD loans | | | (1,319) | | | (4,607) | | | 5,257 | | | (49) | | | (718) |
Impact of ASC 326 adoption on PCD loans | | | 166 | | | 575 | | | 372 | | | 2 | | | 1,115 |
Provision for credit losses |
| | — |
| | — |
| | — |
| | — |
| | — |
Loans charged-off |
| | (986) |
| | (2,841) |
| | (139) |
| | (157) |
| | (4,123) |
Recoveries |
| | 83 |
| | 132 |
| | 54 |
| | 300 |
| | 569 |
Total ending allowance balance | | $ | 4,158 | | $ | 17,578 | | $ | 10,280 | | $ | 647 | | $ | 32,663 |
($ in thousands) | Nine Months Ended September 30, 2021 | ||||||||||||||||||||||||||||
Commercial, Financial and Agriculture | Commercial Real Estate | Consumer Real Estate | Consumer Installment | Total | |||||||||||||||||||||||||
Allowance for credit losses: | |||||||||||||||||||||||||||||
Beginning balance | $ | 6,214 | $ | 24,319 | $ | 4,736 | $ | 551 | $ | 35,820 | |||||||||||||||||||
Impact of ASC 326 adoption on non-PCD loans | (1,319) | (4,607) | 5,257 | (49) | (718) | ||||||||||||||||||||||||
Impact of ASC 326 adoption on PCD loans | 166 | 575 | 372 | 2 | 1,115 | ||||||||||||||||||||||||
Provision for credit losses | — | — | — | — | — | ||||||||||||||||||||||||
Loans charged-off | (1,618) | (3,066) | (282) | (431) | (5,397) | ||||||||||||||||||||||||
Recoveries | 382 | 473 | 276 | 467 | 1,598 | ||||||||||||||||||||||||
Total ending allowance balance | $ | 3,825 | $ | 17,694 | $ | 10,359 | $ | 540 | $ | 32,418 |
nine months ended September 30, 2022, compared with no provision for credit losses for the same period in 2021.
| | | | | | | | | | | | | | | |
March 31,2022 | | Commercial, | | | | | | | | | | | |||
| | Financial and | | Commercial | | Consumer | | Consumer | | | | ||||
|
| Agriculture |
| Real Estate |
| Real Estate |
| Installment |
| Total | |||||
LHFI | | | | | | | | | | | | | | | |
Individually evaluated | | $ | — | | $ | 1,438 | | $ | 682 | | $ | 5 | | $ | 2,125 |
Collectively evaluated | | | 385,036 | | | 1,696,401 | | | 847,339 | | | 39,345 | | | 2,968,121 |
Total | | $ | 385,036 | | $ | 1,697,839 | | $ | 848,021 | | $ | 39,350 | | $ | 2,970,246 |
| | | | | | | | | | | | | | | |
Allowance for Credit Losses | |
| | |
| | |
| | |
| | |
| |
Individually evaluated | | $ | — | | $ | 30 | | $ | — | | $ | — | | $ | 30 |
Collectively evaluated | |
| 4,874 | |
| 17,743 | |
| 8,492 | |
| 481 | |
| 31,590 |
Total | | $ | 4,874 | | $ | 17,773 | | $ | 8,492 | | $ | 481 | | $ | 31,620 |
28
September 30, 2022 | Commercial, Financial and Agriculture | Commercial Real Estate | Consumer Real Estate | Consumer Installment | Total | ||||||||||||||||||||||||
LHFI | |||||||||||||||||||||||||||||
Individually evaluated | $ | — | $ | 5,265 | $ | 1,374 | $ | — | $ | 6,639 | |||||||||||||||||||
Collectively evaluated | 517,197 | 2,120,206 | 1,030,969 | 44,377 | 3,712,749 | ||||||||||||||||||||||||
Total | $ | 517,197 | $ | 2,125,471 | $ | 1,032,343 | $ | 44,377 | $ | 3,719,388 | |||||||||||||||||||
Allowance for Credit Losses | |||||||||||||||||||||||||||||
Individually evaluated | $ | — | $ | — | $ | 5 | $ | — | $ | 5 | |||||||||||||||||||
Collectively evaluated | 5,900 | 20,925 | 10,979 | 547 | 38,351 | ||||||||||||||||||||||||
Total | $ | 5,900 | $ | 20,925 | $ | 10,984 | $ | 547 | $ | 38,356 |
December 31, 2021 | Commercial, Financial and Agriculture | Commercial Real Estate | Consumer Real Estate | Consumer Installment | Total | ||||||||||||||||||||||||
LHFI | |||||||||||||||||||||||||||||
Individually evaluated | $ | — | $ | 1,712 | $ | 1,858 | $ | — | $ | 3,570 | |||||||||||||||||||
Collectively evaluated | 397,516 | 1,681,986 | 836,796 | 39,685 | 2,955,983 | ||||||||||||||||||||||||
Total | $ | 397,516 | $ | 1,683,698 | $ | 838,654 | $ | 39,685 | $ | 2,959,553 | |||||||||||||||||||
Allowance for Credit Losses | |||||||||||||||||||||||||||||
Individually evaluated | $ | — | $ | 4 | $ | 2 | $ | — | $ | 6 | |||||||||||||||||||
Collectively evaluated | 4,873 | 17,548 | 7,887 | 428 | 30,736 | ||||||||||||||||||||||||
Total | $ | 4,873 | $ | 17,552 | $ | 7,889 | $ | 428 | $ | 30,742 |
| | | | | | | | | | | | | | | |
December 31, 2021 | | Commercial, | | | |
| |
| | | | | |||
| | Financial and | | Commercial | | Consumer | | Consumer | | | | ||||
|
| Agriculture |
| Real Estate |
| Real Estate |
| Installment |
| Total | |||||
LHFI | | | | | | | | | | | | | | | |
Individually evaluated | | $ | — | | $ | 1,712 | | $ | 1,858 | | $ | — | | $ | 3,570 |
Collectively evaluated | |
| 397,516 | |
| 1,681,986 | |
| 836,796 | |
| 39,685 | |
| 2,955,983 |
Total | | $ | 397,516 | | $ | 1,683,698 | | $ | 838,654 | | $ | 39,685 | | $ | 2,959,553 |
| | | | | | | | | | | | | | | |
Allowance for Credit Losses | |
| | |
| | |
| | |
| | |
| |
Individually evaluated | | $ | — | | $ | 4 | | $ | 2 | | $ | — | | $ | 6 |
Collectively evaluated | |
| 4,873 | |
| 17,548 | |
| 7,887 | |
| 428 | |
| 30,736 |
Total | | $ | 4,873 | | $ | 17,552 | | $ | 7,889 | | $ | 428 | | $ | 30,742 |
NOTE 11 – COVID-19 UPDATE
- DERIVATIVE FINANCIAL INSTRUMENTS
($ in thousands) | |||||
September 30, 2022 | |||||
Notional amount | $ | 326,156 | |||
Weighted average pay rate | 4.3 | % | |||
Weighted average receive rate | 4.3 | % | |||
Weighted average maturity in years | 6.34 |
($ in thousands) | |||||||||||
September 30, 2022 | |||||||||||
Derivative Assets | Derivative Liabilities | ||||||||||
Interest rate swap contracts | $ | 13,258 | 13,258 |
The pandemic is having an adverse impact on certain industriesexpress the Company serves, including hotels, restaurants, retail, and direct energy. As of March 31, 2022, the Company’s aggregate outstanding exposure in these segments was $458.7 million. While it is still not yet possible to know the full effect that the pandemic will have on the economy, or to what extent this crisis will continue to impact the Company, all available current industry statistics and internal monitoring of loan repayment ability and payment forgiveness across the portfolio has been analyzed in an attempt to understand the correlation with asset quality and degree of possible deterioration.
It is unknown how long the adverse conditions associated with the COVID-19 pandemic will last and what the complete financial effect will be to the Company. It is reasonably possible that estimates made in the financial statements could be materially and adversely impacted in the near term as a resultvolume of these conditions, includingtransactions, but the determinationamounts potentially subject to credit risk are much smaller. The Company assesses the credit risk of the allowance forits dealer counterparties by regularly monitoring publicly available credit losses,rating information, evaluating other market indicators, and periodically reviewing detailed financials.
counterparty fair value amounts in the consolidated statement of financial condition.
On May 2, 2022,the approval of the shareholders of each of the Company announced that it would not be participating in the U.S. Department of Treasury's Emergency Capital Investment Program ("ECIP"). Because the Company is not participating in ECIP, it will not receive any portion of the previously disclosed proposed investment in the Company from the U.S. Department of Treasury.
29
•the ongoing impact of COVID-19 pandemic on the economy and our operations; •negative impacts on our business, profitability and our stock price that could result from prolonged periods of inflation; •risks and uncertainties relating to recent, pending or potential future mergers or acquisitions, including risks related to the completion of such acquisitions within expected timeframes and the successful integration of the business that we acquire into our operations; •the risk that a future economic downturn and contraction, including a recession, could have a material adverse effect on our capital, financial condition, credit quality, results of operations and future growth, including the risk that the strength of the current economic environment could be weakened by the continued impact of rising interest rates, supply chain challenges and inflation; •disruptions to the financial markets as a result of the current or anticipated impact of military conflict, including Russia’s military action in Ukraine, terrorism or other geopolitical events; •governmental monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve, as well as legislative, tax and regulatory changes, including those that impact the money supply and inflation; •the costs and effects of litigation, investigations, inquiries or similar matters, or adverse facts and developments related thereto, including the costs and effects of litigation related to our participation in government stimulus programs associated with the COVID-19 pandemic; • |
reduced earnings due to higher credit losses generally and specifically because losses in the sectors of our loan portfolio secured by real estate are greater than expected due to economic factors, including declining real estate values, increasing interest rates, increasing unemployment, or changes in payment behavior or other factors; |
30
31
As a result of the Company’s immediate response to COVID-19, including loan modifications/payment deferral programs and the PPP, the Company has elected to temporarily suspend the application of one provision of U.S. Generally Accepted Accounting Principles (“GAAP”), as allowed by the CARES Act, which was signed into law by the President on March 27, 2020. Sections 4013 and 4014 of the CARES Act provides the Company with temporary relief from TDRs, which the Company believes prudent to elect in these challenging times to allow us time to provide consistent, high-quality financial information to our investors and other stakeholders. Sections 4013 and 4014 of the CARES Act expired on December 31, 2021.
32
OVERVIEW OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION
First
income.
33
The FTE average yield on all earning assets, a non-GAAP measure, decreased 77increased 23 basis points in prior year quarterly comparison, from 3.84%3.60% for the firstthird quarter of 2021 to 3.07%3.83% for the firstthird quarter of 2022. Interest expense on average interest-bearing liabilities decreased 224 basis points from 0.54%0.52% for the firstthird quarter of 2021 to 0.32%0.48% for the firstthird quarter of 2022. Cost of all deposits averaged 1719 basis points for the firstthird quarter of 2022 compared to 3622 basis points for the firstthird quarter of 2021. See reconciliation of non-GAAP financial measures provided below.
34
The following tables depict, for the periods indicated, certain information related to the average balance sheet and average yields on assets and average costs of liabilities. Such yields are derived by dividing income or expense by the average balance of the corresponding assets or liabilities. Average balances have been derived from daily averages.
| | | | | | | | | | | | | | | | | |
($ in thousands) | | Three Months Ended |
| ||||||||||||||
| | March 31, 2022 | | March 31, 2021 |
| ||||||||||||
| | | | | Tax | | | | | | | Tax | | |
| ||
| | Avg. | | Equivalent | | Yield/ | | Avg. | | Equivalent | | Yield/ | | ||||
|
| Balance |
| interest |
| Rate |
| Balance |
| interest |
| Rate |
| ||||
Earning Assets: |
| |
|
| |
|
|
|
| |
|
| |
|
|
| |
Taxable securities | | $ | 1,413,523 | | $ | 6,152 |
| 1.74 | % | $ | 699,585 | | $ | 3,591 |
| 2.05 | % |
Tax exempt securities | |
| 483,780 | |
| 3,242 |
| 2.68 | % |
| 367,322 | |
| 2,590 |
| 2.82 | % |
Total investment securities | |
| 1,897,303 | |
| 9,394 |
| 1.98 | % |
| 1,066,907 | |
| 6,181 |
| 2.32 | % |
Interest bearing deposits in other banks | |
| 825,877 | |
| 13 |
| 0.01 | % |
| 614,283 | |
| 48 |
| 0.03 | % |
Loans | |
| 2,945,877 | |
| 34,154 |
| 4.64 | % |
| 3,097,145 | |
| 39,613 |
| 5.12 | % |
Total earning assets | |
| 5,669,057 | |
| 43,561 |
| 3.07 | % |
| 4,778,335 | |
| 45,842 |
| 3.84 | % |
Other assets | |
| 533,612 | |
| |
| | |
| 558,929 | |
|
|
|
| |
Total assets | | $ | 6,202,669 | | | |
|
| | $ | 5,337,264 | |
|
|
|
| |
| | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | |
|
| |
|
|
|
| |
|
| |
|
|
|
| |
Deposits | | $ | 5,021,657 | | $ | 2,283 |
| 0.18 | % | $ | 4,172,326 | | $ | 3,849 |
| 0.37 | % |
Borrowed funds | |
| — | |
| — |
| 0.00 | % |
| 100,143 | | | 288 |
| 1.15 | % |
Subordinated debentures | |
| 144,759 | |
| 1,819 |
| 5.03 | % |
| 144,590 | | | 1,821 |
| 5.04 | % |
Total interest-bearing liabilities | |
| 5,166,416 | |
| 4,102 |
| 0.32 | % |
| 4,417,059 | | | 5,958 |
| 0.54 | % |
Other liabilities | |
| 369,692 | |
| |
|
| |
| 275,282 | | | |
|
| |
Shareholders’ equity | |
| 666,561 | |
| |
|
| |
| 644,923 | | | |
|
| |
Total liabilities and shareholders’ equity | | $ | 6,202,669 | | | |
|
| | $ | 5,337,264 | | | |
|
| |
| | | | | | | | | | | | | | | | | |
Net interest income | | | | | $ | 38,639 |
|
| |
|
| | $ | 39,229 |
|
| |
Net interest margin | |
| | |
| | | 2.73 | % |
|
| |
| |
| 3.28 | % |
Net interest income (FTE)* | | | | | $ | 39,459 | | 2.75 | % |
| | | $ | 39,884 |
| 3.30 | % |
Net interest margin (FTE)* | |
| | |
| | | 2.78 | % |
|
| |
| |
| 3.34 | % |
($ in thousands) | Three Months Ended | ||||||||||||||||||||||||||||||||||
September 30, 2022 | September 30, 2021 | ||||||||||||||||||||||||||||||||||
Avg. Balance | Tax Equivalent Interest | Yield/ Rate | Avg. Balance | Tax Equivalent Interest | Yield/ Rate | ||||||||||||||||||||||||||||||
Earning Assets: | |||||||||||||||||||||||||||||||||||
Taxable securities | $ | 1,612,066 | $ | 8,723 | 2.16 | % | $ | 986,821 | $ | 5,033 | 2.04 | % | |||||||||||||||||||||||
Tax exempt securities | 479,168 | 3,849 | 3.21 | % | 377,610 | 2,550 | 2.70 | % | |||||||||||||||||||||||||||
Total investment securities | 2,091,234 | 12,572 | 2.40 | % | 1,364,431 | 7,583 | 2.22 | % | |||||||||||||||||||||||||||
Interest bearing deposits in other banks | 143,867 | 2 | 0.01 | % | 656,891 | 17 | 0.01 | % | |||||||||||||||||||||||||||
Loans | 3,492,110 | 42,274 | 4.84 | % | 2,983,771 | 37,480 | 5.02 | % | |||||||||||||||||||||||||||
Total earning assets | 5,727,211 | 54,848 | 3.83 | % | 5,005,093 | 45,080 | 3.60 | % | |||||||||||||||||||||||||||
Other assets | 645,661 | 506,134 | |||||||||||||||||||||||||||||||||
Total assets | $ | 6,372,872 | $ | 5,511,227 | |||||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
Deposits | $ | 3,777,059 | $ | 2,748 | 0.29 | % | $ | 3,274,257 | $ | 2,588 | 0.32 | % | |||||||||||||||||||||||
Borrowed funds | 13,261 | 92 | 2.78 | % | 206 | — | — | % | |||||||||||||||||||||||||||
Subordinated debentures | 144,910 | 1,886 | 5.21 | % | 144,630 | 1,819 | 5.03 | % | |||||||||||||||||||||||||||
Total interest-bearing liabilities | 3,935,230 | 4,726 | 0.48 | % | 3,419,093 | 4,407 | 0.52 | % | |||||||||||||||||||||||||||
Other liabilities | 1,806,898 | 1,427,540 | |||||||||||||||||||||||||||||||||
Shareholders’ equity | 630,744 | 664,594 | |||||||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 6,372,872 | $ | 5,511,227 | |||||||||||||||||||||||||||||||
Net interest income | $ | 49,148 | $ | 40,028 | |||||||||||||||||||||||||||||||
Net interest margin | 3.43 | % | 3.20 | % | |||||||||||||||||||||||||||||||
Net interest income (FTE)* | $ | 50,122 | 3.35 | % | $ | 40,673 | 3.22 | % | |||||||||||||||||||||||||||
Net interest margin (FTE)* | 3.50 | % | 3.25 | % |
($ in thousands) | Nine Months Ended | ||||||||||||||||||||||||||||||||||
September 30, 2022 | September 30, 2021 | ||||||||||||||||||||||||||||||||||
Avg. Balance | Tax Equivalent Interest | Yield/ Rate | Avg. Balance | Tax Equivalent Interest | Yield/ Rate | ||||||||||||||||||||||||||||||
Earning Assets: | |||||||||||||||||||||||||||||||||||
Taxable securities | $ | 1,553,820 | $ | 23,247 | 1.99 | % | $ | 847,745 | $ | 12,641 | 1.99 | % | |||||||||||||||||||||||
Tax exempt securities | 485,101 | 10,812 | 2.97 | % | 370,706 | 7,693 | 2.77 | % | |||||||||||||||||||||||||||
Total investment securities | 2,038,921 | 34,059 | 2.23 | % | 1,218,451 | 20,334 | 2.23 | % | |||||||||||||||||||||||||||
Interest bearing deposits in other banks | 465,312 | 47 | 0.01 | % | 644,074 | 103 | 0.02 | % | |||||||||||||||||||||||||||
Loans | 3,151,197 | 111,091 | 4.70 | % | 3,040,818 | 114,368 | 5.01 | % | |||||||||||||||||||||||||||
Total earning assets | 5,655,430 | 145,197 | 3.42 | % | 4,903,343 | 134,805 | 3.67 | % | |||||||||||||||||||||||||||
Other assets | 572,623 | 532,968 | |||||||||||||||||||||||||||||||||
Total assets | $ | 6,228,053 | $ | 5,436,311 | |||||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
Deposits | $ | 3,756,077 | $ | 6,936 | 0.25 | % | $ | 4,324,047 | $ | 9,752 | 0.30 | % | |||||||||||||||||||||||
Borrowed funds | 4,469 | 92 | 2.74 | % | 34,202 | 339 | 1.32 | % | |||||||||||||||||||||||||||
Subordinated debentures | 144,835 | 5,546 | 5.11 | % | 144,604 | 5,462 | 5.04 | % | |||||||||||||||||||||||||||
Total interest-bearing liabilities | 3,905,381 | 12,574 | 0.43 | % | 4,502,853 | 15,553 | 0.46 | % | |||||||||||||||||||||||||||
Other liabilities | 1,692,565 | 280,930 | |||||||||||||||||||||||||||||||||
Shareholders’ equity | 630,107 | 652,528 | |||||||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 6,228,053 | $ | 5,436,311 | |||||||||||||||||||||||||||||||
Net interest income | $ | 129,887 | $ | 117,307 | |||||||||||||||||||||||||||||||
Net interest margin | 3.06 | % | 3.19 | % | |||||||||||||||||||||||||||||||
Net interest income (FTE)* | $ | 132,623 | 2.99 | % | $ | 119,253 | 3.21 | % | |||||||||||||||||||||||||||
Net interest margin (FTE)* | 3.13 | % | 3.24 | % |
35
NON-INTEREST INCOME AND NON-INTEREST EXPENSE
($ in thousands) | Three Months Ended | ||||||||||||||||||||||
EARNINGS STATEMENT | September 30, 2022 | % of Total | September 30, 2021 | % of Total | |||||||||||||||||||
Non-interest income: | |||||||||||||||||||||||
Service charges on deposit accounts | $ | 2,219 | 24.6 | % | $ | 1,846 | 19.3 | % | |||||||||||||||
Mortgage fee income | 1,221 | 13.5 | % | 1,732 | 18.1 | % | |||||||||||||||||
Interchange fee income | 3,310 | 36.7 | % | 2,744 | 28.6 | % | |||||||||||||||||
(Loss) gain on securities, net | 1 | — | % | 11 | 0.1 | % | |||||||||||||||||
Gain (loss) on sale of premises and equipment | — | 0.0 | % | (397) | (4.1) | % | |||||||||||||||||
Government awards/grants | — | 0.0 | % | 1,826 | 19.0 | % | |||||||||||||||||
Other | 2,271 | 25.2 | % | 1,824 | 19.0 | % | |||||||||||||||||
Total non-interest income | $ | 9,022 | 100 | % | $ | 9,586 | 100 | % | |||||||||||||||
Non-interest expense: | |||||||||||||||||||||||
Salaries and employee benefits | $ | 19,099 | 53.2 | % | $ | 16,246 | 56.0 | % | |||||||||||||||
Occupancy expense | 3,826 | 10.7 | % | 3,922 | 13.5 | % | |||||||||||||||||
FDIC/OCC premiums | 496 | 1.4 | % | 532 | 1.8 | % | |||||||||||||||||
Marketing | 50 | 0.1 | % | 78 | 0.3 | % | |||||||||||||||||
Amortization of core deposit intangibles | 1,227 | 3.4 | % | 1,052 | 3.6 | % | |||||||||||||||||
Other professional services | 1,256 | 3.5 | % | 934 | 3.2 | % | |||||||||||||||||
Other non-interest expense | 6,309 | 17.6 | % | 6,284 | 21.6 | % | |||||||||||||||||
Acquisition and charter conversion charges | 3,640 | 10.1 | % | 5 | 0.0 | % | |||||||||||||||||
Total non-interest expense | $ | 35,903 | 100 | % | $ | 29,053 | 100 | % |
| | | | | | | | | | | |
($ in thousands) | | Three Months Ended | |||||||||
| | March 31, | | % of | | March 31, | | % of | | ||
EARNINGS STATEMENT |
| 2022 |
| Total |
| 2021 |
| Total |
| ||
Non-interest income: | |
| |
| | |
| |
| | |
Service charges on deposit accounts | | $ | 2,040 |
| 18.3 | % | $ | 1,761 |
| 18.6 | % |
Mortgage fee income | |
| 1,230 |
| 11.0 | % |
| 3,162 |
| 33.4 | % |
Interchange fee income | |
| 3,197 |
| 28.7 | % |
| 2,644 |
| 27.9 | % |
(Loss) gain on securities, net | | | (3) | | 0.0 | % | | 20 | | 0.2 | % |
Gain (loss) on sale of premises and equipment | | | 2 | | 0.0 | % | | (4) | | 0.0 | % |
Government awards/grants | | | 702 | | 6.3 | % | | — | | 0.00 | % |
BOLI income from death proceeds | | | 1,630 | | 14.6 | % | | — | | 0.00 | % |
Other | |
| 2,359 |
| 21.1 | % |
| 1,889 |
| 19.9 | % |
Total non-interest income | | $ | 11,157 |
| 100 | % | $ | 9,472 |
| 100 | % |
| | | | | | | | | | | |
Non-interest expense: | |
| |
| | |
| |
| | |
Salaries and employee benefits | | $ | 16,799 |
| 58.8 | % | $ | 16,054 |
| 58.9 | % |
Occupancy expense | |
| 3,876 |
| 13.5 | % |
| 3,879 |
| 14.2 | % |
FDIC/OCC premiums | |
| 566 |
| 2.0 | % |
| 494 |
| 1.8 | % |
Marketing | |
| 86 |
| 0.3 | % |
| 160 |
| 0.6 | % |
Amortization of core deposit intangibles | |
| 1,064 |
| 3.7 | % |
| 1,052 |
| 3.9 | % |
Other professional services | |
| 563 |
| 2.0 | % |
| 934 |
| 3.4 | % |
Other non-interest expense | |
| 5,228 |
| 18.3 | % |
| 4,691 |
| 17.2 | % |
Acquisition and charter conversion charges | |
| 408 |
| 1.4 | % |
| — |
| 0.0 | % |
Total non-interest expense | | $ | 28,590 |
| 100 | % | $ | 27,264 |
| 100 | % |
($ in thousands) | Nine Months Ended | ||||||||||||||||||||||
EARNINGS STATEMENT | September 30, 2022 | % of Total | September 30, 2021 | % of Total | |||||||||||||||||||
Non-interest income: | |||||||||||||||||||||||
Service charges on deposit accounts | $ | 6,297 | 21.8 | % | $ | 3,516 | 19.2 | % | |||||||||||||||
Mortgage fee income | 3,678 | 12.8 | % | 5,534 | 30.2 | % | |||||||||||||||||
Interchange fee income | 9,609 | 33.3 | % | 5,789 | 31.7 | % | |||||||||||||||||
(Loss) gain on securities, net | (82) | (0.3) | % | 97 | 0.5 | % | |||||||||||||||||
Gain (loss) on sale of premises and equipment | (114) | (0.4) | % | — | 0.0 | % | |||||||||||||||||
Gain on acquisition | 281 | 1.0 | % | — | 0.0 | % | |||||||||||||||||
Government awards/grants | 873 | 3.0 | % | — | 0.0 | % | |||||||||||||||||
BOLI income from death proceeds | 1,630 | 5.7 | % | — | 0.0 | % | |||||||||||||||||
Other | 6,671 | 23.1 | % | 3,359 | 18.4 | % | |||||||||||||||||
Total non-interest income | $ | 28,843 | 100 | % | $ | 18,295 | 100 | % | |||||||||||||||
Non-interest expense: | |||||||||||||||||||||||
Salaries and employee benefits | $ | 53,135 | 55.6 | % | $ | 32,091 | 58.7 | % | |||||||||||||||
Occupancy expense | 11,530 | 12.1 | % | 7,692 | 14.1 | % | |||||||||||||||||
FDIC/OCC premiums | 1,608 | 1.7 | % | 993 | 1.8 | % | |||||||||||||||||
Marketing | 258 | 0.3 | % | 199 | 0.4 | % | |||||||||||||||||
Amortization of core deposit intangibles | 3,355 | 3.5 | % | 2,104 | 3.8 | % | |||||||||||||||||
Other professional services | 2,587 | 2.7 | % | 1,983 | 3.6 | % | |||||||||||||||||
Other non-interest expense | 17,755 | 18.6 | % | 9,655 | 17.6 | % | |||||||||||||||||
Acquisition and charter conversion charges | 5,220 | 5.5 | % | — | 0.0 | % | |||||||||||||||||
Total non-interest expense | $ | 95,448 | 100 | % | $ | 54,717 | 100 | % |
The provision for the nine months ended September 30, 2022 was $11.8 million or 20.1% of earnings before income taxes compared to $13.0 million or 21.2% for the same period in 2021.
36
cash flows from the loan and deposit activities of customers; 2) they provide a source of pledged assets for securing public deposits, bankruptcy deposits and certain borrowed funds which require collateral; 3) they constitute a large base of assets with maturity and interest rate characteristics that can be changed more readily than the loan portfolio to better match changes in the deposit base and other funding sources of the Company; 4) they are another interest-earning option for surplus funds when loan demand is light; and 5) they can provide partially tax exempt income. Total securities, excluding other securities, totaled $1.964$1.973 billion, or 31.7%30.6% of total assets at March 31,September 30, 2022 compared to $1.752 billion, or 28.8% of total assets at December 31, 2021.
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
Amount | Percent of Total | Amount | Percent of Total | ||||||||||||||||||||
Commercial, financial and agriculture (1) | $ | 517,197 | 13.9 | % | $ | 397,516 | 13.4 | % | |||||||||||||||
Commercial real estate | 2,125,471 | 57.1 | % | 1,683,698 | 57.0 | % | |||||||||||||||||
Consumer real estate | 1,032,343 | 27.8 | % | 838,654 | 28.3 | % | |||||||||||||||||
Consumer installment | 44,377 | 1.2 | % | 39,685 | 1.3 | % | |||||||||||||||||
Total loans | 3,719,388 | 100 | % | 2,959,553 | 100 | % | |||||||||||||||||
Allowance for credit losses | (38,356) | (30,742) | |||||||||||||||||||||
Net loans | $ | 3,681,032 | $ | 2,928,811 |
| | | | | | | | | | | | |
| | March 31, 2022 | | December 31, 2021 |
| |||||||
|
| | | | Percent | | | | | Percent | | |
| | Amount |
| of Total |
| Amount |
| of Total |
| |||
Commercial, financial and agriculture (1) | | $ | 385,036 |
| | 12.9 | % | $ | 397,516 |
| 13.4 | % |
Commercial real estate | |
| 1,697,839 |
| | 57.2 | % |
| 1,683,698 |
| 56.9 | % |
Consumer real estate | |
| 848,021 |
| | 28.6 | % |
| 838,654 |
| 28.4 | % |
Consumer installment | |
| 39,350 |
| | 1.3 | % |
| 39,685 |
| 1.3 | % |
Total loans | |
| 2,970,246 |
| | 100 | % |
| 2,959,553 |
| 100 | % |
Allowance for credit losses | | | (31,620) | | | | | | (30,742) |
|
| |
Net loans | | $ | 2,938,626 | | | | | $ | 2,928,811 | | | |
37
Generally, the Company limits its loan-to-value ratio to 80%. Management attempts to maintain a conservative philosophy regarding its underwriting guidelines and believes that the risk elements of its loan portfolio have been reduced through strategies that diversify the lending mix.
The acquisition of BBI accounted for approximately $8.1 million of the increase.
| | | | | | | |
|
| March 31, 2022 |
| December 31, 2021 |
| ||
Nonaccrual Loans | | | | | | | |
Commercial, financial and agriculture | | $ | 153 | | $ | 190 | |
Commercial real estate | |
| 20,047 | |
| 21,526 | |
Consumer real estate | |
| 4,526 | |
| 6,289 | |
Consumer installment | |
| 10 | |
| 8 | |
Total Nonaccrual Loans | |
| 24,736 | |
| 28,013 | |
| |
| | |
| | |
Other real-estate owned | | | 2,835 | | | 2,565 | |
| |
| | |
| | |
Total NPAs | | $ | 27,571 | | $ | 30,578 | |
Performing TDRs | | $ | 4,908 | | $ | 5,220 | |
Past due 90 days or more and still accruing | | $ | — | | $ | 45 | |
Total NPAs as a % of total loans & leases net of unearned income | |
| 0.9 | % |
| 1.0 | % |
Total nonaccrual loans as a % of total loans & leases net of unearned income | |
| 0.8 | % |
| 0.9 | % |
noted.
($ in thousands) | September 30, 2022 | December 31, 2021 | |||||||||
Nonaccrual Loans | |||||||||||
Commercial, financial and agriculture | $ | 29 | $ | 190 | |||||||
Commercial real estate | 11,452 | 21,527 | |||||||||
Consumer real estate | 4,361 | 6,288 | |||||||||
Consumer installment | 2 | 8 | |||||||||
Total Nonaccrual Loans | 15,844 | 28,013 | |||||||||
Other real-estate owned | 10,328 | 2,565 | |||||||||
Total NPAs | $ | 26,172 | $ | 30,578 | |||||||
Performing TDRs | $ | 15,767 | $ | 5,220 | |||||||
Past due 90 days or more and still accruing | $ | 571 | $ | 45 | |||||||
Total NPAs as a % of total loans & leases net of unearned income | 0.7 | % | 1.0 | % | |||||||
Total nonaccrual loans as a % of total loans & leases net of unearned income | 0.4 | % | 0.9 | % |
38
ALLOWANCE FOR CREDIT LOSSES
39
The table that follows summarizes the activity in the allowance for credit losses for the three and nine months ended March 31,September 30, 2022 and 2021 ($ in thousands):
| | | | | | | |
Allowance for Credit Losses |
| |
| |
| ||
| | Three Months Ended | | Three Months Ended | | ||
Balances: | | March 31, 2022 | | March 31, 2021 |
| ||
Average LHFI outstanding during period: |
| $ | 2,945,877 |
| $ | 3,097,145 | |
LHFI outstanding at end of period: | | | 2,970,246 | | | 3,055,093 | |
Allowance for Credit Losses: | |
| | | | | |
Balance at beginning of period | | $ | 30,742 | | $ | 35,820 | |
ASC 326 adoption adjustment | |
| — | |
| 397 | |
Provision charged to expense | | | — | | | — | |
Charge-offs: | |
| | |
| | |
Commercial, financial and agriculture | |
| 52 | |
| 986 | |
Commercial real estate | |
| 3 | |
| 2,841 | |
Consumer real estate | |
| 7 | |
| 139 | |
Consumer installment | |
| 169 | |
| 157 | |
Total Charge-offs | |
| 231 | |
| 4,123 | |
Recoveries: | |
| | |
| | |
Commercial, financial and agriculture | |
| 53 | |
| 83 | |
Commercial real estate | |
| 224 | |
| 132 | |
Consumer real estate | |
| 610 | |
| 54 | |
Consumer installment | |
| 222 | |
| 300 | |
Total Recoveries | |
| 1,109 | |
| 569 | |
Net loan charge offs (recoveries) | |
| (878) | |
| 3,554 | |
Balance at end of period | | $ | 31,620 | | $ | 32,663 | |
RATIOS | |
| | |
|
| |
Net Charge-offs (recoveries) to average LHFI (annualized) | |
| (0.1) | % |
| 0.5 | % |
ACL to LHFI at end of period | |
| 1.1 | % |
| 1.1 | % |
Net Loan Charge-offs (recoveries) to PCL | |
| 0.0 | % |
| 0.0 | % |
Allowance for Credit Losses | |||||||||||||||||||||||
Balances: | Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | |||||||||||||||||||
Average LHFI outstanding during period: | $ | 3,162,310 | $ | 2,983,771 | $ | 3,041,337 | $ | 3,040,818 | |||||||||||||||
LHFI outstanding at end of period: | 3,719,388 | 2,960,919 | 3,719,388 | 2,960,919 | |||||||||||||||||||
Allowance for Credit Losses: | |||||||||||||||||||||||
Balance at beginning of period | $ | 32,400 | $ | 32,457 | $ | 30,742 | $ | 35,820 | |||||||||||||||
ASC 326 adoption adjustment | — | — | — | 397 | |||||||||||||||||||
Initial allowance on PCD loans | 1,303 | — | 1,303 | — | |||||||||||||||||||
Provision: | |||||||||||||||||||||||
Initial provision for acquired non-PCD loans | 3,855 | — | 3,855 | — | |||||||||||||||||||
Provision for credit losses charged to expense | 445 | — | 895 | — | |||||||||||||||||||
Charge-offs: | |||||||||||||||||||||||
Commercial, financial and agriculture | — | 142 | 146 | 1,618 | |||||||||||||||||||
Commercial real estate | — | 59 | 27 | 3,066 | |||||||||||||||||||
Consumer real estate | 55 | 19 | 202 | 282 | |||||||||||||||||||
Consumer installment | 186 | 166 | 523 | 431 | |||||||||||||||||||
Total Charge-offs | 241 | 386 | 898 | 5,397 | |||||||||||||||||||
Recoveries: | |||||||||||||||||||||||
Commercial, financial and agriculture | 292 | 57 | 388 | 382 | |||||||||||||||||||
Commercial real estate | 18 | 180 | 532 | 473 | |||||||||||||||||||
Consumer real estate | 39 | 39 | 987 | 276 | |||||||||||||||||||
Consumer installment | 245 | 71 | 552 | 467 | |||||||||||||||||||
Total Recoveries | 594 | 347 | 2,459 | 1,598 | |||||||||||||||||||
Net loan charge offs (recoveries) | (353) | 39 | (1,561) | 3,799 | |||||||||||||||||||
Balance at end of period | $ | 38,356 | $ | 32,418 | $ | 38,356 | $ | 32,418 | |||||||||||||||
RATIOS | |||||||||||||||||||||||
Net Charge-offs (recoveries) to average LHFI (annualized) | 0.0 | % | 0.0 | % | (0.1) | % | 0.2 | % | |||||||||||||||
ACL to LHFI at end of period | 1.0 | % | 1.1 | % | 1.0 | % | 1.1 | % | |||||||||||||||
Net Loan Charge-offs (recoveries) to PCL | (79.3) | % | 0.0 | % | (174.4) | % | 0.0 | % |
$3.9 million and an initial allowance on PCD loans of $1.3 million was recorded as of September 30, 2022 due to the acquisition of BBI.
| | | | | | |
($ in thousands) |
| March 31, 2022 | | December 31, 2021 | ||
|
| Amount |
| Amount | ||
Commercial, financial and agriculture | | $ | 4,874 | | $ | 4,873 |
Commercial real estate | |
| 17,773 | |
| 17,552 |
Consumer real estate | |
| 8,492 | |
| 7,889 |
Consumer installment | |
| 481 | |
| 428 |
Total | | $ | 31,620 | | $ | 30,742 |
($ in thousands) | September 30, 2022 | December 31, 2021 | |||||||||
Commercial, financial and agriculture | $ | 5,900 | $ | 4,873 | |||||||
Commercial real estate | 20,925 | 17,552 | |||||||||
Consumer real estate | 10,984 | 7,889 | |||||||||
Consumer installment | 547 | 428 | |||||||||
Total | $ | 38,356 | $ | 30,742 |
The increase in the ACL on OBSC exposures for the nine months ended September 30, 2022 was primarily due to an increase in unfunded commitments.
40
(checks), the level of cash maintained on hand at our branches, and our reserve requirement among other things, and is subject to significant fluctuation in the normal course of business. While cash flows are normally predictable within limits, those limits are fairly broad and the Company manages its short-term cash position through the utilization of overnight loans to and borrowings from correspondent banks, including the Federal Reserve Bank and the Federal Home Loan Bank (“FHLB”). Should a large “short” overnight position persist for any length of time, the Company typically raises money through focused retail deposit gathering efforts or by adding brokered time deposits. If a “long” position is prevalent, the Company will let brokered deposits or other wholesale borrowings roll off as they mature, or might invest excess liquidity in higher-yielding, longer-term bonds.
2021, due to the BBI acquisition.
The acquisition of BBI accounted for approximately $8.1 million of the increase.
41
down the Company’s correspondent bank deposit accounts, or by liquidating unpledged investments or other readily saleable assets. In addition, the Company can raise immediate cash for temporary needs by selling under agreement to repurchase those investments in its portfolio which are not pledged as collateral. As of March 31,September 30, 2022, the market value of unpledged debt securities plus pledged securities in excess of current pledging requirements comprised $985.4 million$1.097 billion of the Company’s investment balances, compared to $985.4 million at December 31, 2021. Other forms of balance sheet liquidity include but are not necessarily limited to any outstanding federal funds sold and vault cash. The Company has a higher level of actual balance sheet liquidity than might otherwise be the case, since it utilizes a letter of credit from the FHLB rather than investment securities for certain pledging requirements.
September 30, 2022 | Policy Maximum | Policy Compliance | |||||||||||||||
Loans to Deposits (including FHLB advances) | 66.4 | % | 90.0 | % | In Policy | ||||||||||||
Net Non-core Funding Dependency Ratio | 1.3 | % | 20.0 | % | In Policy | ||||||||||||
Fed Funds Purchased / Total Assets | 0.2 | % | 10.0 | % | In Policy | ||||||||||||
FHLB Advances / Total Assets | 1.2 | % | 20.0 | % | In Policy | ||||||||||||
FRB Advances / Total Assets | 0.0 | % | 10.0 | % | In Policy | ||||||||||||
Pledged Securities to Total Securities | 45.6 | % | 90.0 | % | In Policy |
| | | | | | |
|
| March 31, 2022 |
| Policy Maximum |
| Policy Compliance |
Loans to Deposits (including FHLB advances) |
| 54.1 | % | 90.0 | % | In Policy |
Net Non-core Funding Dependency Ratio | | (11.3) | % | 20.0 | % | In Policy |
Fed Funds Purchased / Total Assets | | 0.0 | % | 10.0 | % | In Policy |
FHLB Advances / Total Assets | | 0.0 | % | 20.0 | % | In Policy |
FRB Advances / Total Assets | | 0.0 | % | 10.0 | % | In Policy |
Pledged Securities to Total Securities | | 43.6 | % | 90.0 | % | In Policy |
| | | | | | |
10-K.
42
showing the year-to-date average balance and percentage of total deposits by type is presented for the noted periods in the following table.
| | | | | | | | | | | |
| | | | | | | | | | | |
Deposit Distribution |
| March 31, 2022 | | December 31, 2021 | | ||||||
| | | | | Average | | | | | Average | |
|
| Average | | Rate | | Average | | Rate | | ||
($ in thousands) |
| Balance |
| Paid |
| Balance |
| Paid | | ||
Non-interest-bearing demand deposits |
| $ | 339,823 | | — | | $ | 253,324 | | — | |
Interest bearing deposits: | | | | | | | | | | | |
NOW accounts and other |
| | 1,880,102 |
| 0.33 | % | | 1,529,293 |
| 0.48 | % |
Money market accounts | | | 2,052,243 |
| 0.03 | % | | 1,870,156 |
| 0.08 | % |
Savings accounts | | | 515,261 |
| 0.02 | % | | 440,997 |
| 0.03 | % |
Time deposits | | | 574,051 | | 0.38 | % | | 537,538 | | 0.57 | % |
Total interest-bearing deposits | | | 5,021,657 | | 0.18 | % | | 4,377,964 | | 0.27 | % |
Total deposits | | $ | 5,361,480 |
| 0.17 | % | $ | 4,631,288 |
| 0.26 | % |
Deposits at December 31, 2021 are shown without reclassification for consistency with the current period presentation.
Deposit Distribution | September 30, 2022 | December 31, 2021 | |||||||||||||||||||||
($ in thousands) | Average Balance | Average Rate Paid | Average Balance | Average Rate Paid | |||||||||||||||||||
Non-interest-bearing demand deposits | $ | 1,647,205 | — | $ | 1,366,529 | — | |||||||||||||||||
Interest bearing deposits: | |||||||||||||||||||||||
NOW accounts and other | 1,836,462 | 0.34 | % | 1,529,293 | 0.48 | % | |||||||||||||||||
Money market accounts | 825,400 | 0.11 | % | 756,951 | 0.20 | % | |||||||||||||||||
Savings accounts | 531,304 | 0.02 | % | 440,977 | 0.03 | % | |||||||||||||||||
Time deposits | 562,912 | 0.35 | % | 537,538 | 0.59 | % | |||||||||||||||||
Total interest-bearing deposits | 3,756,078 | 0.25 | % | 3,264,759 | 0.37 | % | |||||||||||||||||
Total deposits | $ | 5,403,283 | 0.17 | % | $ | 4,631,288 | 0.26 | % |
43
in accumulated comprehensive loss related to the effect of rising interest rates on the market value of our available-for-sale securities, treasury stock acquired of $22.2 million, and $3.5$11.7 million in cash dividends paid, whichthese decreases in total shareholders’ equity were offset by capital added through net earnings of $16.8$46.6 million.
| | | | | | | | | |
|
| |
| |
| |
| Minimum Capital | |
| | March 31, | | December 31, | | Minimum Required to |
| Required Basel III Fully | |
Regulatory Capital Ratios The First, A National Banking Association | | 2022 | | 2021 | | be Well Capitalized |
| Phased In | |
Common Equity Tier 1 Capital Ratio |
| 16.5 | % | 16.6 | % | 6.5 | % | 7.0 | % |
Tier 1 Capital Ratio |
| 16.5 | % | 16.6 | % | 8.0 | % | 8.5 | % |
Total Capital Ratio |
| 17.3 | % | 17.4 | % | 10.0 | % | 10.5 | % |
Tier 1 Leverage Ratio |
| 10.1 | % | 10.8 | % | 5.0 | % | 7.0 | % |
| | | | | | | | |
|
| |
| |
| |
| Minimum Capital |
| | March 31 | | December 31, | | Minimum Required to |
| Required Basel III Fully |
Regulatory Capital Ratios The First Bancshares, Inc. | | 2022 | | 2021 | | be Well Capitalized |
| Phased In |
Common Equity Tier 1 Capital Ratio* |
| 13.0 | % | 13.7 | % | N/A | | N/A |
Tier 1 Capital Ratio** |
| 13.5 | % | 14.1 | % | N/A | | N/A |
Total Capital Ratio |
| 17.8 | % | 18.6 | % | N/A | | N/A |
Tier 1 Leverage Ratio |
| 8.2 | % | 9.2 | % | N/A | | N/A |
44
Regulatory Capital Ratios The First Bank | September 30, 2022 | December 31, 2021 | Minimum Required to be Well Capitalized | Minimum Capital Required Basel III Fully Phased In | ||||||||||||||||||||||
Common Equity Tier 1 Capital Ratio | 15.5 | % | 16.6 | % | 6.5 | % | 7.0 | % | ||||||||||||||||||
Tier 1 Capital Ratio | 15.5 | % | 16.6 | % | 8.0 | % | 8.5 | % | ||||||||||||||||||
Total Capital Ratio | 16.4 | % | 17.4 | % | 10.0 | % | 10.5 | % | ||||||||||||||||||
Tier 1 Leverage Ratio | 10.6 | % | 10.8 | % | 5.0 | % | 7.0 | % |
Regulatory Capital Ratios The First Bancshares, Inc. | September 30, 2022 | December 31, 2021 | Minimum Required to be Well Capitalized | Minimum Capital Required Basel III Fully Phased In | ||||||||||||||||||||||
Common Equity Tier 1 Capital Ratio* | 12.6 | % | 13.7 | % | N/A | N/A | ||||||||||||||||||||
Tier 1 Capital Ratio** | 12.9 | % | 14.1 | % | N/A | N/A | ||||||||||||||||||||
Total Capital Ratio | 16.7 | % | 18.6 | % | N/A | N/A | ||||||||||||||||||||
Tier 1 Leverage Ratio | 9.3 | % | 9.2 | % | N/A | N/A |
Our capital ratios remain very strong relative to the median for peer financial institutions, and at March 31,September 30, 2022 were well above the threshold for the Company and the Bank to be classified as “well capitalized,” the highest rating of the categories defined under the Bank Holding Company Act and the Federal Deposit Insurance Corporation Improvement Act of 1991. Basel III rules require a “capital conservation buffer” for both the Company and the Bank. The capital conservation buffer is subject to a three-year phase-in period that began January 1, 2016 and was fully phased-in on January 1, 2019 at 2.5%. Under this guidance banking institutions with a CETI, Tier 1 Capital Ratio and Total Risk Based Capital above the minimum regulatory adequate capital ratios but below the capital conservation buffer will face constraints on their ability to pay dividends, repurchase equity and pay discretionary bonuses to executive officers, based on the amount of the shortfall.
45
On September 25, 2020, The Company entered into a Subordinated Note Purchase Agreement with certain qualified institutional buyers pursuant to which the Company sold and issued $65.0 million in aggregate principal amount of its 4.25% Fixed to Floating Rate Subordinated Notes due 2030. The Notes are unsecured and have a ten-year term, maturing October 1, 2030, and will bear interest at a fixed annual rate of 4.25%, payable semi-annually in arrears, for the first five years of the term. Thereafter, the interest rate will reset quarterly to an interest rate per annum equal to a benchmark rate (which is expected to be the Three-Month Term Secured Overnight Financing Rate (“SOFR”) plus 412.6 basis points), payable quarterly in arrears. As provided in the Notes, under specified conditions the interest rate on the Notes during the applicable floating rate period may be determined based on a rate other than Three-Month Term SOFR.
| | | | | | |
($ in thousands) |
| Three Months |
| Three Months | ||
| | Ended | | Ended | ||
| | March 31, 2022 | | March 31, 2021 | ||
Net income available to common shareholders | | $ | 16,829 | | $ | 16,644 |
Acquisition and charter conversion charges | |
| 408 | |
| — |
Tax on acquisition and charter conversion charges | |
| (103) | |
| — |
Treasury awards | |
| (702) | |
| — |
Tax on Treasury awards | |
| 178 | |
| — |
BOLI income from death proceeds | | | (1,630) | | | — |
Net earnings available to common shareholders, operating | | $ | 14,980 | | $ | 16,644 |
46
($ in thousands) | Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | |||||||||||||||||||
Net income available to common shareholders | $ | 14,043 | $ | 16,132 | $ | 46,624 | $ | 48,376 | |||||||||||||||
Acquisition and charter conversion charges | 3,640 | 5 | 5,220 | 5 | |||||||||||||||||||
Tax on acquisition and charter conversion charges | (919) | (1) | (1,318) | (1) | |||||||||||||||||||
Initial provision for acquired loans | 3,855 | — | 3,855 | — | |||||||||||||||||||
Tax on initial provision for acquired loans | (976) | — | (976) | — | |||||||||||||||||||
Bargain purchase gain and loss on sale of fixed assets | — | 397 | (165) | 397 | |||||||||||||||||||
Tax on bargain purchase gain and loss on sale of fixed assets | — | (100) | 42 | (100) | |||||||||||||||||||
Treasury awards | — | (1,826) | (872) | (1,826) | |||||||||||||||||||
Tax on Treasury awards | — | 462 | 220 | 462 | |||||||||||||||||||
BOLI income from death proceeds | — | — | (1,630) | — | |||||||||||||||||||
Contributions related to Treasury awards | — | 1,400 | 165 | 1,400 | |||||||||||||||||||
Tax on contributions related to Treasury awards | — | (354) | (42) | (354) | |||||||||||||||||||
Net earnings available to common shareholders, operating | $ | 19,643 | $ | 16,115 | $ | 51,123 | $ | 48,359 |
Diluted Operating Earnings per Share
| | | | | | |
($ in thousands) |
| Three Months |
| Three Months | ||
| | Ended | | Ended | ||
| | March 31, 2022 | | March 31, 2021 | ||
Diluted earnings per share | | $ | 0.81 | | $ | 0.79 |
Acquisition and charter conversion charges | |
| 0.02 | |
| — |
Tax on acquisition and charter conversion charges | |
| — | |
| — |
Effect of Treasury awards | |
| (0.03) | |
| — |
Tax on Treasury awards | |
| — | |
| — |
BOLI income from death proceeds | | | (0.08) | | | — |
Diluted earnings per share, operating | | $ | 0.72 | | $ | 0.79 |
($ in thousands) | Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | |||||||||||||||||||
Diluted earnings per share | $ | 0.61 | $ | 0.76 | $ | 2.17 | $ | 2.28 | |||||||||||||||
Acquisition and charter conversion charges | 0.16 | — | 0.24 | — | |||||||||||||||||||
Tax on acquisition and charter conversion charges | (0.05) | — | (0.06) | — | |||||||||||||||||||
Initial provision for acquired loans | 0.17 | — | 0.18 | — | |||||||||||||||||||
Tax on initial provision for acquired loans | (0.04) | — | (0.04) | — | |||||||||||||||||||
Bargain purchase gain and loss on sale of fixed assets | — | 0.02 | (0.01) | 0.02 | |||||||||||||||||||
Effect of Treasury awards | — | (0.09) | (0.04) | (0.09) | |||||||||||||||||||
Tax on Treasury awards | — | 0.02 | 0.01 | 0.02 | |||||||||||||||||||
BOLI income from death proceeds | — | — | (0.08) | — | |||||||||||||||||||
Contributions related to Treasury awards | — | 0.07 | 0.01 | 0.07 | |||||||||||||||||||
Tax on contributions related to Treasury awards | — | (0.02) | — | (0.02) | |||||||||||||||||||
Diluted earnings per share, operating | $ | 0.85 | $ | 0.76 | $ | 2.38 | $ | 2.28 |
| | | | | | | |
($ in thousands) |
| Three Months |
| Three Months |
| ||
| | Ended | | Ended |
| ||
| | March 31, 2022 | | March 31, 2021 |
| ||
Net interest income | | $ | 38,639 | | $ | 39,229 | |
Tax exempt investment income | |
| (2,422) | |
| (1,935) | |
Taxable investment income | |
| 3,242 | |
| 2,590 | |
Net interest income, FTE | | $ | 39,459 | | $ | 39,884 | |
| | | | | | | |
Average earning assets | | $ | 5,669,057 | | $ | 4,778,335 | |
Net interest margin, FTE | |
| 2.78 | % |
| 3.34 | % |
($ in thousands) | Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | |||||||||||||||||||
Net interest income | $ | 49,148 | $ | 40,028 | $ | 129,887 | $ | 117,307 | |||||||||||||||
Tax exempt investment income | (2,875) | (1,905) | (8,077) | (5,748) | |||||||||||||||||||
Taxable investment income | 3,849 | 2,550 | 10,812 | 7,694 | |||||||||||||||||||
Net interest income, FTE | $ | 50,122 | $ | 40,673 | $ | 132,622 | $ | 119,253 | |||||||||||||||
Average earning assets | $ | 5,727,211 | $ | 5,005,093 | $ | 5,655,430 | $ | 4,903,343 | |||||||||||||||
Net interest margin, FTE | 3.50 | % | 3.25 | % | 3.13 | % | 3.24 | % |
($ in thousands) | Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | |||||||||||||||||||
Earnings before income taxes | $ | 17,967 | $ | 20,561 | $ | 58,382 | $ | 61,418 | |||||||||||||||
Acquisition and charter conversion charges | 3,640 | 5 | 5,220 | 5 | |||||||||||||||||||
Provision for credit loss | 4,300 | — | 4,900 | — | |||||||||||||||||||
Bargain purchase gain and loss on sale of fixed assets | — | 397 | (165) | 397 | |||||||||||||||||||
Treasury awards | — | (1,826) | (872) | (1,826) | |||||||||||||||||||
BOLI income from death proceeds | — | — | (1,630) | — | |||||||||||||||||||
Contributions related to Treasury awards | — | 1,400 | 165 | 1,400 | |||||||||||||||||||
Pre-Tax, Pre-Provision Operating Earnings | $ | 25,907 | $ | 20,537 | $ | 66,000 | $ | 61,394 |
| | | | | | |
($ in thousands) |
| Three Months |
| Three Months | ||
| | Ended | | Ended | ||
| | March 31, 2022 | | March 31, 2021 | ||
Earnings before income taxes | | $ | 21,206 | | $ | 21,437 |
Acquisition and charter conversion charges | |
| 408 | |
| — |
Treasury awards | |
| (702) | |
| — |
BOLI income from death proceeds | | | (1,630) | | | — |
Pre-Tax, Pre-Provision Operating Earnings | | $ | 19,282 | | $ | 21,437 |
| | | | | | | |
($ in thousands) |
| Three Months |
| Three Months |
| ||
| | Ended | | Ended |
| ||
| | March 31, 2022 | | March 31, 2021 |
| ||
Total interest income | | $ | 42,741 | | $ | 45,187 | |
Tax-exempt investment income | |
| (2,422) | |
| (1,935) | |
Taxable investment income | |
| 3,242 | |
| 2,590 | |
Total interest income, FTE | | $ | 43,561 | | $ | 45,842 | |
| | | | | | | |
Yield on average earning assets, FTE | | | 3.07 | % | | 3.84 | % |
47
($ in thousands) | Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | |||||||||||||||||||
Total interest income | $ | 53,874 | $ | 44,435 | $ | 142,462 | $ | 132,860 | |||||||||||||||
Tax-exempt investment income | (2,875) | (1,905) | (8,077) | (5,748) | |||||||||||||||||||
Taxable investment income | 3,849 | 2,550 | 10,812 | 7,694 | |||||||||||||||||||
Total interest income, FTE | $ | 54,848 | $ | 45,080 | $ | 145,197 | $ | 134,806 | |||||||||||||||
Yield on average earning assets, FTE | 3.83 | % | 3.60 | % | 3.42 | % | 3.67 | % |
Interest Income Investment Securities, Fully Tax Equivalent
| | | | | | | |
($ in thousands) |
| Three Months |
| Three Months |
| ||
| | Ended | | Ended |
| ||
| | March 31, 2022 | | March 31, 2021 |
| ||
Interest income investment securities | | $ | 8,574 | | $ | 5,526 | |
Tax-exempt investment income | |
| (2,422) | |
| (1,935) | |
Taxable investment income | |
| 3,242 | |
| 2,590 | |
Interest income investment securities, FTE | | $ | 9,394 | | $ | 6,181 | |
| | | | | | | |
Average investment securities | | $ | 1,897,303 | | $ | 1,066,907 | |
| | | | | | | |
Yield on investment securities, FTE | | | 1.98 | % | | 2.32 | % |
($ in thousands) | Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | |||||||||||||||||||
Interest income investment securities | $ | 11,598 | $ | 6,938 | $ | 31,324 | $ | 18,389 | |||||||||||||||
Tax-exempt investment income | (2,875) | (1,905) | (8,077) | (5,748) | |||||||||||||||||||
Taxable investment income | 3,849 | 2,550 | 10,812 | 7,694 | |||||||||||||||||||
Interest income investment securities, FTE | $ | 12,572 | $ | 7,583 | $ | 34,059 | $ | 20,335 | |||||||||||||||
Average investment securities | $ | 2,091,234 | $ | 1,364,431 | $ | 2,038,921 | $ | 1,218,451 | |||||||||||||||
Yield on investment securities, FTE | 2.40 | % | 2.15 | % | 2.23 | % | 2.23 | % |
| | | | | | | | | |
March 31, 2022 | | Net Interest Income at Risk | | Market Value of Equity |
| ||||
Change in Interest |
| % Change |
| |
| % Change |
| |
|
Rates | | from Base | | Policy Limit | | from Base | | Policy Limit |
|
Up 400 bps |
| 7.7 | % | (20.0) | % | (2.2) | % | (40.0) | % |
Up 300 bps |
| 8.3 | % | (15.0) | % | 1.4 | % | (30.0) | % |
Up 200 bps |
| 7.3 | % | (10.0) | % | 3.2 | % | (20.0) | % |
Up 100 bps |
| 4.5 | % | (5.0) | % | 2.8 | % | (10.0) | % |
Down 100 bps |
| (4.1) | % | (5.0) | % | (7.0) | % | (10.0) | % |
Down 200 bps |
| (5.0) | % | (10.0) | % | (17.8) | % | (20.0) | % |
September 30, 2022 | Net Interest Income at Risk | Market Value of Equity | ||||||||||||||||||||||||
Change in Interest Rates | % Change from Base | Policy Limit | % Change from Base | Policy Limit | ||||||||||||||||||||||
Up 400 bps | (1.8) | % | (20.0) | % | (11.6) | % | (40.0) | % | ||||||||||||||||||
Up 300 bps | 0.9 | % | (15.0) | % | (6.3) | % | (30.0) | % | ||||||||||||||||||
Up 200 bps | 2.2 | % | (10.0) | % | (2.5) | % | (20.0) | % | ||||||||||||||||||
Up 100 bps | 1.9 | % | (5.0) | % | (0.4) | % | (10.0) | % | ||||||||||||||||||
Down 100 bps | (4.3) | % | (5.0) | % | (2.4) | % | (10.0) | % | ||||||||||||||||||
Down 200 bps | (10.3) | % | (10.0) | % | (7.3) | % | (20.0) | % |
48
September 30, 2022, the Company had the following estimated net interest income sensitivity profile, without factoring in any potential negative impact on spreads resulting from competitive pressures or credit quality deterioration:
| | | | | | | | | | | | | | | |
March 31, 2022 | | Net Interest Income at Risk – Sensitivity Year 1 | | ||||||||||||
($ in thousands) |
| -200 bp |
| -100 bp |
| STATIC |
| +100 bp |
| +200 bp |
| +300 bp |
| +400 bp |
|
Net Interest Income | | 148,844 | | 150,225 | | 156,686 | | 163,697 | | 168,128 | | 169,729 | | 168,782 | |
Dollar Change | | (7,842) |
| (6,461) |
| | | 7,011 |
| 11,442 |
| 13,043 |
| 12,096 | |
NII @ Risk - Sensitivity Y1 | | (5.0) | % | (4.1) | % | | | 4.5 | % | 7.3 | % | 8.3 | % | 7.7 | % |
Policy Limits | | (10.0) | % | (5.0) | % | — | | (5.0) | % | (10.0) | % | (15.0) | % | (20.0) | % |
September 30, 2022 | Net Interest Income at Risk – Sensitivity Year 1 | |||||||||||||||||||||||||||||||||||||||||||
($ in thousands) | -200 bp | -100 bp | STATIC | +100 bp | +200 bp | +300 bp | +400 bp | |||||||||||||||||||||||||||||||||||||
Net Interest Income | 193,088 | 205,914 | 215,168 | 219,276 | 219,795 | 217,136 | 211,335 | |||||||||||||||||||||||||||||||||||||
Dollar Change | (22,080) | (9,254) | 4,108 | 4,627 | 1,968 | (3,833) | ||||||||||||||||||||||||||||||||||||||
NII @ Risk - Sensitivity Y1 | (10.3) | % | (4.3) | % | 1.9 | % | 2.2 | % | 0.9 | % | (1.8) | % | ||||||||||||||||||||||||||||||||
Policy Limits | (10.0) | % | (5.0) | % | (5.0) | % | (10.0) | % | (15.0) | % | (20.0) | % |
49
fixed-rate financial liabilities gain in value as interest rates rise and lose value as interest rates decline. The longer the duration of the financial instrument, the greater the impact a rate change will have on its value. In our economic value simulations, estimated prepayments are factored in for financial instruments with stated maturity dates, and decay rates for non-maturity deposits are projected based on historical patterns and management’s best estimates. The table below shows estimated changes in the Company’s EVE as of March 31,September 30, 2022, under different interest rate scenarios relative to a base case of current interest rates:
| | | | | | | | | | | | | | | |
March 31, 2022 | | Balance Sheet Shock |
| ||||||||||||
| | | | | | STATIC | | | | | | | | | |
($ in thousands) |
| -200 bp |
| -100 bp |
| (Base) |
| +100 bp |
| +200 bp |
| +300 bp |
| +400 bp | |
Market Value of Equity | | 1,015,981 | | 1,149,849 | | 1,236,418 | | 1,271,555 | | 1,276,312 | | 1,253,749 | | 1,209,892 | |
Change in EVE from base | | (220,437) | | (86,569) | | | | 35,137 | | 39,894 | | 17,331 | | (26,526) | |
% Change | | (17.8) | % | (7.0) | % | | | 2.8 | % | 3.2 | % | 1.4 | % | (2.2) | % |
Policy Limits | | (20.0) | % | (10.0) | % | | | (10.0) | % | (20.0) | % | (30.0) | % | (40.0) | % |
September 30, 2022 | Balance Sheet Shock | |||||||||||||||||||||||||||||||||||||||||||
($ in thousands) | -200 bp | -100 bp | STATIC (Base) | +100 bp | +200 bp | +300 bp | +400 bp | |||||||||||||||||||||||||||||||||||||
Market Value of Equity | 1,269,941 | 1,336,504 | 1,369,428 | 1,363,441 | 1,335,225 | 1,282,932 | 1,210,445 | |||||||||||||||||||||||||||||||||||||
Change in EVE from base | (99,487) | (32,924) | (5,987) | (34,203) | (86,496) | (158,983) | ||||||||||||||||||||||||||||||||||||||
% Change | (7.3) | % | (2.4) | % | (0.4) | % | (2.5) | % | (6.3) | % | (11.6) | % | ||||||||||||||||||||||||||||||||
Policy Limits | (20.0) | % | (10.0) | % | (10.0) | % | (20.0) | % | (30.0) | % | (40.0) | % |
50
The following table provides information with respect to purchases of common stock of the Company made during the three months ended March 31, 2022, by the Company or any “affiliated purchaser” of the Company as defined in Rule 10b-18(a)(3) under the Exchange Act:
| | | | | | | | | | |
| | Current Program | ||||||||
| | | | | | | | | Maximum | |
| | | | | | | | | | Approximate Dollar |
| | | | | | | | | Value of | |
| | | | | | | | | Shares that | |
| | | | | | | | | May Yet Be | |
| | | | | | | Total Number of | | Purchased | |
| | Total | | | | | Shares Purchased | | Under the | |
| | Number of | | Average | | as Part of Publicly | | Plans or | ||
| | Shares | | Price Paid | | Announced Plans | | Programs | ||
Period | | Purchased | | Per Share | | or Programs | | (in thousands) | ||
January 1 – January 31 |
| — |
| $ | — | | — | | $ | 25,079 |
February 1 – February 28 |
| 615,479 |
| | 36.37 | | 615,479 | |
| 3 |
March 1 – March 31 |
| — |
| | — | | — | |
| 30,000 |
Total |
| 615,479 | | $ | 36.37 | | 615,479 | |
| |
600,000 shares were repurchased under the 2021 Repurchase Program in the first quarter of 2022. The 2021 Repurchase Program was completed in February 2022 when the Company’s repurchases under the program approached the maximum authorized amount. The 2022 Repurchase Program expires on December 31, 2022. As of March 31, 2022, $30.0 million remained available for further share repurchases of common stock under the 2022 Repurchase Programs. As of March 31, 2022, the Company withheld 15,479 shares in order to satisfy employee tax obligations for vesting of restricted stock awards.
51
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| Description | ||||||
2.1 | ||||||||
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3.1 | ||||||||
3.2 |
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3.3 |
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3.4 |
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4.1 |
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4.2 |
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4.3 |
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4.4 |
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4.5 |
| |||||||
31.1 |
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31.2 |
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32.1 |
| |||||||
32.2 |
| |||||||
| 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 | |||||||
| 101.LAB XBRL Taxonomy Extension Label Linkbase | |||||||
| 101.PRE XBRL Taxonomy Extension Presentation Linkbase |
52
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THE FIRST BANCSHARES, INC. | ||||||||
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| (Registrant) | |||||||
November 9, 2022 | /s/ M. RAY (HOPPY) COLE, JR. | |||||||
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(Date) |
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November 9, 2022 | /s/ DONNA T. (DEE DEE) LOWERY | |||||||
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(Date) |
53