UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2017March 31, 2024
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 333-205986
RIVER FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
ALABAMA | 46-1422125 | |
( State or other jurisdiction of incorporation or organization) | (I.R.S. Employer | |
2611 Legends Drive Prattville, Alabama | 36066 | |
(Address of principal executive offices) | (Zip Code) |
(334) 290-1012
“Registrant’s telephone number, including area code: (334) 290-1012code”
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
None | None | None |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer |
| |||
Non-accelerated filer | ☐ | Smaller reporting company | ☒ | |||
|
|
|
| |||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 2, 2017,May 1, 2024, the registrant had 5,090,0247,664,055 shares of common stock, $1.00 par value per share, outstanding.
Auditor Firm Id: | 669 | Auditor Name: | Mauldin & Jenkins, LLC | Auditor Location: | Birmingham, Alabama, USA |
Page | ||
PART I. | FINANCIAL INFORMATION | |
Item 1. | 5 | |
5 | ||
6 | ||
7 | ||
8 | ||
9 | ||
10 | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
Item 3. |
| |
Item 4. |
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PART II. | OTHER INFORMATION | |
Item 1. |
| |
Item 1A. |
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Item 2. |
| |
Item 3. |
| |
Item 4. |
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Item 5. |
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Item 6. |
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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q of River Financial Corporation (“we”, “our” or “us” on a consolidated basis) contains forward-looking statements that reflect our current views with respect to, among other things, future events and financial performance, which involve substantial risks and uncertainties. Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of The PrivateSection 27A of the Securities Litigation Reform Act of 1995. Such1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act. Forward-looking statements include projections, predictions, expectations or statements as to beliefs or future events or results or refer to other matters that are not historical facts. Forward-lookingfacts and include any statement that, without limitation, may predict, forecast, indicate or imply future results, performance or achievements instead of historical or current facts and may contain words like “anticipates,” “approximately,” “believes,” “budget,” “can,” “could,” “continues,” “contemplates,” “estimates,” “expects,” “forecast,” “intends,” “may,” “might,” “objective,” “outlook,” “predicts,” “probably,” “plans,” “potential,” “project,” “seeks,” “shall,” “should,” “target,” “will,” or the negative of these terms and other words, phrases, or expressions with similar meaning.
Any forward-looking statements contained in this Quarterly Report on Form 10-Q are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations will be achieved. Such forward-looking statements are subject to knownvarious risks and unknown risks, uncertainties and other factors that couldassumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Forward-looking statements involve risks and uncertainties which may cause the actual results to differ materially from those contemplated byprojected in the statements. The forward-looking statements, contained in this annual report are based on various factors and were derived using numerous assumptions. In some cases, you can identifythe Company cannot give assurances that such statements will prove to be correct. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information or otherwise. Given these forward-looking statements by words like “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “intend”, “believe”, “estimate”, “predict”, “potential”, or “continue” oruncertainties, the negative of those words and other comparable words. Youreader should be aware that those statements reflect only our predictions. If known or unknown risks or uncertainties should materialize, or if any one or more of our material underlying assumptions should prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. You should bear this in mind when reading this annual report and not place undue reliance on these forward-looking statements.statements as a prediction of actual results. Factors that could cause actual results to differ materially from those projected or estimated by us include those that are discussed herein as well as in our Annual Report on Form 10-K for the year ended December 31, 2023, under “Part I, Item 1A. – Risk Factors,” as well as other unknown risks and uncertainties. Factors that might cause such differences include, but are not limited to:
Acquisition related factors:
The businesses of any bank acquired by us may not be integrated successfully or the integration may be more difficult, time-consuming or costly than expected;
The expected growth opportunities or costs savings from such transactions may not be fully realized or may take longer to realize than expected;
Revenues following such transactions may be lower than expected as a result of losses of customers or other reasons;
Deposit attrition, operating costs, customer loss and business disruption following such transactions, including difficulties in maintaining relationships with employees, may be greater than expected;
Governmental approvals of such transactions may not be obtained on the proposed terms or expected timeframe;
Reputational risks and the reaction of the companies’ customers to such transactions;
Diversion of management time on merger related issues;
Factors affecting our Bank generally:
Changes in asset quality and credit risk of our bank;
Inflation;
Customer acceptance of the our products and services;
Customer borrowing, repayment, investment and deposit practices;
The negative impact on profitability imposed on us by a compressed net interest margin on loans and other extensions of credit that affects our ability to lend profitably and to price loans effectively in the face of competitive pressures;
Our liquidity requirements could be adversely affected by changes in our assets and liabilities;
Our ability to attract, develop and retain qualified banking professionals;
Failure to attract or retain stable deposits at reasonable cost that is competitive with the larger international, national, and regional financial service providers with which we compete;
Significant reliance on loans secured by real estate and the associated vulnerability to downturns in the local real estate market, natural disasters and other variables impacting the value of real estate;
3
The impact, extent, and timing of technological changes;
A weakening of the economies in which we conduct operations may adversely affect our operating results;
The U.S. legal and regulatory framework, or changes in such framework, or official or informal mandates directed by state and federal regulators in reports of examination or other mandates could adversely affect our operating results;
The interest rate environment may compress margins and adversely affect net interest income;income and
Competition from other financial services companies in our markets could adversely affect operations.
You should also consider carefully the risk factors discussedreferred to in Item 1A of Part IIof this Form 10-Q, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements and could materially and adversely affect our business, operating results and financial condition. The risks discussed in this report are factors that, individually or in the aggregate, management believes could cause our actual results to differ materially from expected and historical results. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider such disclosures to be a complete discussion of all potential risks or uncertainties. Factors not here or there listed may develop or, if currently extant, we may not have yet recognized them.
The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
4
PART I – FINANCIALFINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
RIVER FINANCIAL CORPORATION
Consolidated Statements of Financial Condition
(in thousands except share data)
|
| September 30, 2017 |
|
| December 31, 2016 |
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||||
|
| Unaudited |
|
| Audited |
|
| Unaudited |
|
| Audited |
| ||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Cash and due from banks |
| $ | 11,644 |
|
| $ | 17,329 |
|
| $ | 33,038 |
|
| $ | 32,572 |
|
Interest-bearing deposits in banks |
|
| 6,276 |
|
|
| 25,170 |
|
|
| 134,893 |
|
|
| 7,975 |
|
Federal funds sold |
|
| 46,000 |
|
|
| 32,000 |
| ||||||||
Cash and cash equivalents |
|
| 17,920 |
|
|
| 42,499 |
|
|
| 213,931 |
|
|
| 72,547 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Certificates of deposit in banks |
|
| 5,214 |
|
|
| 5,463 |
|
|
| 4,218 |
|
|
| 4,218 |
|
Securities available-for-sale |
|
| 203,969 |
|
|
| 183,361 |
| ||||||||
Securities held-to-maturity, at amortized cost (fair value of $100,538 and $103,174, respectively) |
|
| 125,711 |
|
|
| 126,793 |
| ||||||||
Securities available-for-sale, at fair value (amortized cost of $671,255 and $703,915, respectively) |
|
| 584,438 |
|
|
| 621,091 |
| ||||||||
Loans held for sale |
|
| 4,278 |
|
|
| 7,734 |
|
|
| 4,554 |
|
|
| 4,595 |
|
Loans, net of deferred fees and discounts |
|
| 523,289 |
|
|
| 516,441 |
|
|
| 2,269,845 |
|
|
| 2,240,006 |
|
Less allowance for loan losses |
|
| (5,004 | ) |
|
| (4,007 | ) | ||||||||
Less allowance for credit losses |
|
| (29,856 | ) |
|
| (28,991 | ) | ||||||||
Net loans |
|
| 518,285 |
|
|
| 512,434 |
|
|
| 2,239,989 |
|
|
| 2,211,015 |
|
Premises and equipment, net |
|
| 22,003 |
|
|
| 21,472 |
|
|
| 45,536 |
|
|
| 45,216 |
|
Accrued interest receivable |
|
| 2,322 |
|
|
| 2,376 |
|
|
| 14,090 |
|
|
| 14,091 |
|
Bank owned life insurance |
|
| 15,067 |
|
|
| 15,161 |
|
|
| 47,342 |
|
|
| 47,001 |
|
Foreclosed assets |
|
| 1,485 |
|
|
| 1,151 |
|
|
| 924 |
|
|
| 92 |
|
Deferred income taxes |
|
| 2,525 |
|
|
| 3,352 |
| ||||||||
Deferred income taxes, net |
|
| 30,784 |
|
|
| 29,901 |
| ||||||||
Core deposit intangible |
|
| 1,691 |
|
|
| 2,119 |
|
|
| 1,306 |
|
|
| 1,445 |
|
Goodwill |
|
| 10,050 |
|
|
| 10,050 |
|
|
| 27,817 |
|
|
| 27,817 |
|
Restricted equity securities |
|
| 12,526 |
|
|
| 13,433 |
| ||||||||
Other assets |
|
| 4,361 |
|
|
| 3,245 |
|
|
| 15,394 |
|
|
| 15,995 |
|
Total assets |
| $ | 809,170 |
|
| $ | 810,417 |
|
| $ | 3,368,560 |
|
| $ | 3,235,250 |
|
Liabilities and Shareholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Noninterest-bearing deposits |
| $ | 165,897 |
|
| $ | 185,270 |
|
| $ | 647,499 |
|
| $ | 628,415 |
|
Interest-bearing deposits |
|
| 516,776 |
|
|
| 519,643 |
|
|
| 2,246,263 |
|
|
| 2,102,240 |
|
Total deposits |
|
| 682,673 |
|
|
| 704,913 |
|
|
| 2,893,762 |
|
|
| 2,730,655 |
|
Securities sold under agreements to repurchase |
|
| 12,608 |
|
|
| 13,034 |
|
|
| 14,588 |
|
|
| 16,731 |
|
Federal Home Loan Bank advances |
|
| 15,000 |
|
|
| - |
|
|
| 205,000 |
|
|
| 230,000 |
|
Note payable |
|
| 5,625 |
|
|
| 6,428 |
| ||||||||
Subordinated debentures, net of loan costs |
|
| 39,510 |
|
|
| 39,492 |
| ||||||||
Accrued interest payable and other liabilities |
|
| 3,601 |
|
|
| 3,592 |
|
|
| 13,490 |
|
|
| 15,551 |
|
Total liabilities |
|
| 719,507 |
|
|
| 727,967 |
|
|
| 3,166,350 |
|
|
| 3,032,429 |
|
Common stock related to 401(k) Employee Stock Ownership Plan |
|
| 734 |
|
|
| 623 |
|
|
| 4,484 |
|
|
| 4,483 |
|
Stockholders' Equity: |
|
|
|
|
|
|
|
| ||||||||
Common stock ($1 par value; 10,000,000 shares authorized; 5,113,951 and 5,090,901 shares issued; 5,098,034 and 5,080,857 shares outstanding, respectively) |
|
| 5,114 |
|
|
| 5,091 |
| ||||||||
Additional paid in capital |
|
| 64,924 |
|
|
| 64,656 |
| ||||||||
Stockholders' Equity |
|
|
|
|
| |||||||||||
Preferred stock ($0.01 par value; 1,000,000 shares authorized; no shares issued or outstanding) |
|
| - |
|
|
| - |
| ||||||||
Common stock ($1 par value; 15,000,000 shares authorized; 7,677,124 and 7,670,318 shares issued; 7,664,055 and 7,655,860 shares outstanding at March 31, 2024 and December 31, 2023, respectively) |
|
| 7,677 |
|
|
| 7,670 |
| ||||||||
Additional paid-in capital |
|
| 137,195 |
|
|
| 137,017 |
| ||||||||
Retained earnings |
|
| 20,660 |
|
|
| 15,032 |
|
|
| 126,310 |
|
|
| 124,333 |
|
Accumulated other comprehensive loss |
|
| (664 | ) |
|
| (2,153 | ) |
|
| (66,934 | ) |
|
| (64,003 | ) |
Treasury stock at cost (15,917 and 10,044 shares, respectively) |
|
| (371 | ) |
|
| (176 | ) | ||||||||
Unvested restricted stock |
|
| (1,585 | ) |
|
| (1,700 | ) | ||||||||
Treasury stock at cost (13,069 and 14,458 shares, respectively) |
|
| (453 | ) |
|
| (496 | ) | ||||||||
Common stock related to 401(k) Employee Stock Ownership Plan |
|
| (734 | ) |
|
| (623 | ) |
|
| (4,484 | ) |
|
| (4,483 | ) |
Total stockholders' equity |
|
| 88,929 |
|
|
| 81,827 |
|
|
| 197,726 |
|
|
| 198,338 |
|
Total equity |
|
| 89,663 |
|
|
| 82,450 |
|
|
| 202,210 |
|
|
| 202,821 |
|
Total liabilities and stockholders' equity |
| $ | 809,170 |
|
| $ | 810,417 |
|
| $ | 3,368,560 |
|
| $ | 3,235,250 |
|
The accompanying notes are an integral part of these financial statements.
5
Unaudited Consolidated Statements of Income
(in thousands except per share data)
|
| For the Three Months Ended: |
|
| For the Nine Months Ended: |
|
| For the Three Months Ended: |
| |||||||||||||||
|
| September 30, |
|
| September 30, |
|
| March 31, |
| |||||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2024 |
|
| 2023 |
| ||||||
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Loans, including fees |
| $ | 7,097 |
|
| $ | 7,016 |
|
| $ | 20,858 |
|
| $ | 20,283 |
|
| $ | 33,948 |
|
| $ | 23,751 |
|
Taxable securities |
|
| 756 |
|
|
| 432 |
|
|
| 2,226 |
|
|
| 1,222 |
|
|
| 3,390 |
|
|
| 3,657 |
|
Nontaxable securities |
|
| 278 |
|
|
| 279 |
|
|
| 843 |
|
|
| 822 |
|
|
| 346 |
|
|
| 467 |
|
Federal funds sold |
|
| - |
|
|
| 15 |
|
|
| - |
|
|
| 29 |
|
|
| 419 |
|
|
| 153 |
|
Other interest income |
|
| 46 |
|
|
| 49 |
|
|
| 157 |
|
|
| 147 |
|
|
| 932 |
|
|
| 617 |
|
Total interest income |
|
| 8,177 |
|
|
| 7,791 |
|
|
| 24,084 |
|
|
| 22,503 |
|
|
| 39,035 |
|
|
| 28,645 |
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Deposits |
|
| 587 |
|
|
| 521 |
|
|
| 1,653 |
|
|
| 1,537 |
|
|
| 14,644 |
|
|
| 7,820 |
|
Short-term borrowings |
|
| 12 |
|
|
| 4 |
|
|
| 34 |
|
|
| 11 |
|
|
| 132 |
|
|
| 99 |
|
Federal Home Loan Bank advances |
|
| 32 |
|
|
| 5 |
|
|
| 57 |
|
|
| 35 |
|
|
| 2,257 |
|
|
| 1,187 |
|
Subordinated debentures |
|
| 418 |
|
|
| 415 |
| ||||||||||||||||
Note payable |
|
| 64 |
|
|
| 62 |
|
|
| 188 |
|
|
| 190 |
|
|
| - |
|
|
| 87 |
|
Total interest expense |
|
| 695 |
|
|
| 592 |
|
|
| 1,932 |
|
|
| 1,773 |
|
|
| 17,451 |
|
|
| 9,608 |
|
Net interest income |
|
| 7,482 |
|
|
| 7,199 |
|
|
| 22,152 |
|
|
| 20,730 |
|
|
| 21,584 |
|
|
| 19,037 |
|
Provision for loan losses |
|
| 660 |
|
|
| 215 |
|
|
| 1,380 |
|
|
| 662 |
| ||||||||
Net interest income after provision for loan losses |
|
| 6,822 |
|
|
| 6,984 |
|
|
| 20,772 |
|
|
| 20,068 |
| ||||||||
Provision for credit losses |
|
| 1,309 |
|
|
| 1,311 |
| ||||||||||||||||
Net interest income after provision for credit losses |
|
| 20,275 |
|
|
| 17,726 |
| ||||||||||||||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Service charges and fees |
|
| 746 |
|
|
| 633 |
|
|
| 2,159 |
|
|
| 1,826 |
|
|
| 1,985 |
|
|
| 1,738 |
|
Investment brokerage revenue |
|
| 18 |
|
|
| 48 |
|
|
| 49 |
|
|
| 182 |
|
|
| 191 |
|
|
| 163 |
|
Mortgage operations |
|
| 516 |
|
|
| 437 |
|
|
| 1,410 |
|
|
| 982 |
|
|
| 953 |
|
|
| 650 |
|
Bank owned life insurance income |
|
| 769 |
|
|
| 109 |
|
|
| 976 |
|
|
| 323 |
|
|
| 341 |
|
|
| 310 |
|
Net gain on sale of investment securities |
|
| - |
|
|
| - |
|
|
| 3 |
|
|
| 14 |
| ||||||||
Net loss on sales of investment securities |
|
| (1,432 | ) |
|
| - |
| ||||||||||||||||
Other noninterest income |
|
| 120 |
|
|
| 112 |
|
|
| 251 |
|
|
| 257 |
|
|
| 524 |
|
|
| 219 |
|
Total noninterest income |
|
| 2,169 |
|
|
| 1,339 |
|
|
| 4,848 |
|
|
| 3,584 |
|
|
| 2,562 |
|
|
| 3,080 |
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Salaries and employee benefits |
|
| 3,123 |
|
|
| 2,876 |
|
|
| 8,791 |
|
|
| 8,089 |
|
|
| 9,191 |
|
|
| 8,568 |
|
Occupancy expenses |
|
| 367 |
|
|
| 345 |
|
|
| 1,051 |
|
|
| 968 |
|
|
| 981 |
|
|
| 908 |
|
Equipment rentals, depreciation, and maintenance |
|
| 233 |
|
|
| 111 |
|
|
| 630 |
|
|
| 580 |
|
|
| 524 |
|
|
| 472 |
|
Telephone and communications |
|
| 63 |
|
|
| 42 |
|
|
| 202 |
|
|
| 166 |
|
|
| 126 |
|
|
| 141 |
|
Advertising and business development |
|
| 179 |
|
|
| 70 |
|
|
| 538 |
|
|
| 274 |
|
|
| 249 |
|
|
| 295 |
|
Data processing |
|
| 416 |
|
|
| 410 |
|
|
| 1,289 |
|
|
| 1,325 |
|
|
| 1,026 |
|
|
| 1,020 |
|
Foreclosed assets, net |
|
| 66 |
|
|
| (76 | ) |
|
| 137 |
|
|
| 23 |
|
|
| 35 |
|
|
| 10 |
|
Federal deposit insurance and other regulatory assessments |
|
| 76 |
|
|
| 113 |
|
|
| 251 |
|
|
| 335 |
|
|
| 724 |
|
|
| 571 |
|
Legal and other professional services |
|
| 122 |
|
|
| 196 |
|
|
| 382 |
|
|
| 624 |
|
|
| 352 |
|
|
| 365 |
|
Other operating expense |
|
| 903 |
|
|
| 1,006 |
|
|
| 2,510 |
|
|
| 2,718 |
| ||||||||
Other operating expenses |
|
| 2,074 |
|
|
| 1,982 |
| ||||||||||||||||
Total noninterest expense |
|
| 5,548 |
|
|
| 5,093 |
|
|
| 15,781 |
|
|
| 15,102 |
|
|
| 15,282 |
|
|
| 14,332 |
|
Income before income taxes |
|
| 3,443 |
|
|
| 3,230 |
|
|
| 9,839 |
|
|
| 8,550 |
|
|
| 7,555 |
|
|
| 6,474 |
|
Provision for income taxes |
|
| 880 |
|
|
| 1,014 |
|
|
| 2,939 |
|
|
| 2,630 |
|
|
| 1,745 |
|
|
| 1,367 |
|
Net income |
| $ | 2,563 |
|
| $ | 2,216 |
|
| $ | 6,900 |
|
| $ | 5,920 |
|
| $ | 5,810 |
|
| $ | 5,107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Basic net earnings per common share |
| $ | 0.50 |
|
| $ | 0.44 |
|
| $ | 1.35 |
|
| $ | 1.18 |
|
| $ | 0.76 |
|
| $ | 0.77 |
|
Diluted net earnings per common share |
| $ | 0.49 |
|
| $ | 0.43 |
|
| $ | 1.33 |
|
| $ | 1.17 |
|
| $ | 0.75 |
|
| $ | 0.76 |
|
Dividends per common share |
| $ | - |
|
| $ | - |
|
| $ | 0.25 |
|
| $ | 0.16 |
|
| $ | 0.50 |
|
| $ | 0.48 |
|
The accompanying notes are an integral part of these financial statements.
6
Unaudited Consolidated Statements of Comprehensive Income
(in thousands)
|
| For the Three Months Ended |
|
| For the Nine Months Ended |
|
| For the Three Months Ended |
| |||||||||||||||
|
| September 30, |
|
| September 30, |
|
| March 31, |
| |||||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2024 |
|
| 2023 |
| ||||||
Net income |
| $ | 2,563 |
|
| $ | 2,216 |
|
| $ | 6,900 |
|
| $ | 5,920 |
|
| $ | 5,810 |
|
| $ | 5,107 |
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Other comprehensive (loss) income, net of tax: |
|
|
|
|
| |||||||||||||||||||
Investment securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Net unrealized gains (losses) |
|
| (191 | ) |
|
| (270 | ) |
|
| 2,363 |
|
|
| 774 |
| ||||||||
Reclassification adjustments for net gains realized in net income |
|
| - |
|
|
| - |
|
|
| (3 | ) |
|
| (14 | ) | ||||||||
Net unrealized (losses) gains |
|
| (5,263 | ) |
|
| 12,607 |
| ||||||||||||||||
Income tax effect |
|
| 70 |
|
|
| 101 |
|
|
| (871 | ) |
|
| (280 | ) |
|
| 1,321 |
|
|
| (3,166 | ) |
Other comprehensive income (loss) |
|
| (121 | ) |
|
| (169 | ) |
|
| 1,489 |
|
|
| 480 |
| ||||||||
Reclassification adjustments for losses realized in net income |
|
| 1,432 |
|
|
| - |
| ||||||||||||||||
Income tax effect |
|
| (360 | ) |
|
| - |
| ||||||||||||||||
Reclassification adjustment for accretion of unrealized holding loss included in accumulated other comprehensive loss from the transfer of securities from available-for-sale to held-to-maturity |
|
| (82 | ) |
|
| (2,896 | ) | ||||||||||||||||
Income tax effect |
|
| 21 |
|
|
| 727 |
| ||||||||||||||||
Other comprehensive (loss) income, net of tax |
|
| (2,931 | ) |
|
| 7,272 |
| ||||||||||||||||
Comprehensive income |
| $ | 2,442 |
|
| $ | 2,047 |
|
| $ | 8,389 |
|
| $ | 6,400 |
|
| $ | 2,879 |
|
| $ | 12,379 |
|
The accompanying notes are an integral part of these financial statements.
7
Unaudited Consolidated Statements of Changes in Stockholders' Equity
(in thousands except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
| Common |
|
|
|
|
| ||
|
|
|
|
|
| Additional |
|
|
|
|
|
| Other |
|
|
|
|
|
| Stock |
|
| Total |
| ||||
|
| Common |
|
| Paid In |
|
| Retained |
|
| Comprehensive |
|
| Treasury |
|
| Related to |
|
| Stockholders' |
| |||||||
|
| Stock |
|
| Capital |
|
| Earnings |
|
| Income (Loss) |
|
| Stock |
|
| KSOP |
|
| Equity |
| |||||||
Balance at December 31, 2016 |
| $ | 5,091 |
|
| $ | 64,656 |
|
| $ | 15,032 |
|
| $ | (2,153 | ) |
| $ | (176 | ) |
| $ | (623 | ) |
| $ | 81,827 |
|
Net income |
|
| - |
|
|
| - |
|
|
| 6,900 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 6,900 |
|
Other comprehensive income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,489 |
|
|
| - |
|
|
| - |
|
|
| 1,489 |
|
Exercise of stock options and warrants (25,096 shares) |
|
| 19 |
|
|
| 136 |
|
|
| - |
|
|
| - |
|
|
| 108 |
|
|
| - |
|
|
| 263 |
|
Purchase of treasury stock (17,674 shares) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (407 | ) |
|
| - |
|
|
| (407 | ) |
Sale of treasury shares (5,551 shares) |
|
| - |
|
|
| 9 |
|
|
| - |
|
|
| - |
|
|
| 104 |
|
|
|
|
|
|
| 113 |
|
Issuance of common stock (4,204 shares) |
|
| 4 |
|
|
| 81 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 85 |
|
Dividends declared ($0.25 per share) |
|
| - |
|
|
| - |
|
|
| (1,272 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,272 | ) |
Stock compensation expense |
|
| - |
|
|
| 42 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 42 |
|
Change for KSOP related shares |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (111 | ) |
|
| (111 | ) |
Balance at September 30, 2017 |
| $ | 5,114 |
|
| $ | 64,924 |
|
| $ | 20,660 |
|
| $ | (664 | ) |
| $ | (371 | ) |
| $ | (734 | ) |
| $ | 88,929 |
|
|
| Common |
| Additional |
| Retained |
| Accumulated |
| Unvested |
| Treasury |
| Common |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2023 |
| $7,670 |
| $137,017 |
| $124,333 |
| $(64,003) |
| $(1,700) |
| $(496) |
| $(4,483) |
| $198,338 |
Net income |
| - |
| - |
| 5,810 |
| - |
| - |
| - |
| - |
| 5,810 |
Other comprehensive loss, net of tax |
| - |
| - |
| - |
| (2,931) |
| - |
| - |
| - |
| (2,931) |
Exercise of stock options (6,806 shares) |
| 7 |
| 151 |
| - |
| - |
| - |
| - |
| - |
| 158 |
Purchase of treasury stock (3,476 shares) |
| - |
| - |
| - |
| - |
| - |
| (118) |
| - |
| (118) |
Sale of treasury shares (4,865 shares) |
| - |
| 4 |
| - |
| - |
| - |
| 161 |
| - |
| 165 |
Dividends declared ($0.50 per share) |
| - |
| - |
| (3,833) |
| - |
| - |
| - |
| - |
| (3,833) |
Stock-based compensation expense |
| - |
| 23 |
| - |
| - |
| 115 |
| - |
| - |
| 138 |
Change for ESOP related shares |
| - |
| - |
| - |
| - |
| - |
| - |
| (1) |
| (1) |
Balance at March 31, 2024 |
| $7,677 |
| $137,195 |
| $126,310 |
| $(66,934) |
| $(1,585) |
| $(453) |
| $(4,484) |
| $197,726 |
The accompanying notes are an integral part of these financial statements.
8
Unaudited Consolidated Statements of Cash Flows
(in thousands)
|
| For the Three Months |
| |||||
|
| Ended March 31, |
| |||||
|
| 2024 |
|
| 2023 |
| ||
Cash Flows From Operating Activities: |
|
|
|
|
|
| ||
Net Income |
| $ | 5,810 |
|
| $ | 5,107 |
|
Adjustments to reconcile net income to net cash from operating activities: |
|
|
|
|
|
| ||
Provision for credit losses |
|
| 1,309 |
|
|
| 1,311 |
|
Provision for losses on foreclosed assets |
|
| 15 |
|
|
| 30 |
|
Amortization of securities |
|
| 648 |
|
|
| 746 |
|
Accretion of securities |
|
| (102 | ) |
|
| (116 | ) |
Realized net loss on sales of securities available-for-sale |
|
| 1,432 |
|
|
| - |
|
Accretion of discount on acquired loans |
|
| (2 | ) |
|
| (3 | ) |
Accretion of deferred loan fees / costs |
|
| (1,117 | ) |
|
| (969 | ) |
Amortization of core deposit intangible asset |
|
| 139 |
|
|
| 186 |
|
Amortization of debt issuance costs |
|
| 18 |
|
|
| 19 |
|
Stock-based compensation expense |
|
| 138 |
|
|
| 134 |
|
Bank owned life insurance income |
|
| (341 | ) |
|
| (310 | ) |
Depreciation and amortization of premises and equipment |
|
| 800 |
|
|
| 666 |
|
(Gain) loss on sales of foreclosed assets |
|
| - |
|
|
| (45 | ) |
Deferred income tax benefit |
|
| 99 |
|
|
| (114 | ) |
(Increase) decrease in operating assets and (decrease) increase in operating liabilities: |
|
|
|
|
|
| ||
Loans held-for-sale |
|
| 41 |
|
|
| (2,023 | ) |
Accrued interest receivable |
|
| 1 |
|
|
| (40 | ) |
Other assets |
|
| 601 |
|
|
| (549 | ) |
Accrued interest payable and other liabilities |
|
| (2,061 | ) |
|
| 1,072 |
|
Net cash from operating activities |
|
| 7,428 |
|
|
| 5,102 |
|
Cash Flows From (Used For) Investing Activities: |
|
|
|
|
|
| ||
Maturity of certificate of deposit |
|
| - |
|
|
| 245 |
|
Activity in securities available-for-sale: |
|
|
|
|
|
| ||
Sales of securities available-for-sale |
|
| 33,681 |
|
|
| - |
|
Maturities, payments, calls of securities available-for-sale |
|
| 10,610 |
|
|
| 10,072 |
|
Purchases of securities available-for-sale |
|
| (13,562 | ) |
|
| (4,943 | ) |
Activity in securities held-to-maturity: |
|
|
|
|
|
| ||
Maturities, payments, calls of securities held-to-maturity |
|
| 1,115 |
|
|
| 1,172 |
|
Loan principal originations, net |
|
| (30,014 | ) |
|
| (106,407 | ) |
Proceeds from sale of foreclosed assets |
|
| 3 |
|
|
| 426 |
|
Purchases of premises and equipment |
|
| (1,120 | ) |
|
| (1,514 | ) |
Redemption (purchase) of restricted equity securities, net |
|
| 907 |
|
|
| (219 | ) |
Net cash from (used for) investing activities |
|
| 1,620 |
|
|
| (101,168 | ) |
Cash Flows From Financing Activities: |
|
|
|
|
|
| ||
Net increase in deposits |
|
| 163,107 |
|
|
| 149,735 |
|
Net (decrease) increase in securities sold under agreements to repurchase |
|
| (2,143 | ) |
|
| 8,523 |
|
Proceeds from Federal Home Loan Bank advances |
|
| - |
|
|
| 70,000 |
|
Repayment of Federal Home Loan Bank advances |
|
| (25,000 | ) |
|
| (70,000 | ) |
Proceeds from issuance of line of credit |
|
| - |
|
|
| 12,000 |
|
Repayment of Federal Reserve Bank discount window borrowings |
|
| - |
|
|
| (25,000 | ) |
Proceeds from exercise of common stock options |
|
| 158 |
|
|
| 254 |
|
Purchase of treasury stock |
|
| (118 | ) |
|
| (472 | ) |
Sale of treasury stock |
|
| 165 |
|
|
| 159 |
|
Cash dividends |
|
| (3,833 | ) |
|
| (3,208 | ) |
Net cash from financing activities |
|
| 132,336 |
|
|
| 141,991 |
|
Net Change In Cash And Cash Equivalents |
|
| 141,384 |
|
|
| 45,925 |
|
Cash and Cash Equivalents At Beginning Of Period |
|
| 72,547 |
|
|
| 74,826 |
|
Cash and Cash Equivalents At End Of Period |
| $ | 213,931 |
|
| $ | 120,751 |
|
|
|
|
|
|
|
| ||
Supplemental Disclosures Of Cash Flows Information: |
|
|
|
|
|
| ||
Cash Payments For: |
|
|
|
|
|
| ||
Interest paid to depositors |
| $ | 14,384 |
|
| $ | 7,696 |
|
Interest paid on borrowings |
| $ | 2,752 |
|
| $ | 1,835 |
|
Non-cash investing and financing activities: |
|
|
|
|
|
| ||
Transfer of loans to foreclosed assets |
| $ | 850 |
|
| $ | - |
|
Restricted stock grant |
| $ | - |
|
| $ | 53 |
|
|
| For the Nine Months |
| |||||
|
| Ended September 30, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Cash Flows From (Used For) Operating Activities: |
|
|
|
|
|
|
|
|
Net Income |
| $ | 6,900 |
|
| $ | 5,920 |
|
Adjustments to reconcile net income to net cash from operating activities: |
|
|
|
|
|
|
|
|
Provision for loan losses |
|
| 1,380 |
|
|
| 662 |
|
Provision for losses on foreclosed assets |
|
| 115 |
|
|
| 135 |
|
Amortization of securities available-for-sale |
|
| 1,723 |
|
|
| 1,251 |
|
Accretion of securities available-for-sale |
|
| (24 | ) |
|
| (24 | ) |
Realized net gain on securities available-for-sale |
|
| (3 | ) |
|
| (14 | ) |
Accretion of discount on acquired loans |
|
| (1,896 | ) |
|
| (1,744 | ) |
Amortization of deferred loan fees |
|
| (784 | ) |
|
| (790 | ) |
Amortization of core deposit intangible asset |
|
| 428 |
|
|
| 491 |
|
Stock compensation expense |
|
| 42 |
|
|
| 43 |
|
Bank owned life insurance income |
|
| (976 | ) |
|
| (323 | ) |
Depreciation and amortization of premises and equipment |
|
| 702 |
|
|
| 630 |
|
Gain on sale of foreclosed assets |
|
| (55 | ) |
|
| (133 | ) |
Deferred income tax (benefit) |
|
| (43 | ) |
|
| 563 |
|
(Increase) decrease in operating assets and (decrease) increase in operating liabilities: |
|
|
|
|
|
|
|
|
Loans held-for-sale |
|
| 3,456 |
|
|
| (3,232 | ) |
Accrued interest receivable |
|
| 54 |
|
|
| 125 |
|
Other assets |
|
| (395 | ) |
|
| 237 |
|
Accrued interest payable and other liabilities |
|
| (41 | ) |
|
| (1,591 | ) |
Net cash from operating activities |
|
| 10,583 |
|
|
| 2,206 |
|
Cash Flows From (Used For) Investing Activities: |
|
|
|
|
|
|
|
|
Maturity of certificate of deposit |
|
| 498 |
|
|
| - |
|
Purchase of certificate of deposit |
|
| (249 | ) |
|
| - |
|
Activity in securities available-for-sale: |
|
|
|
|
|
|
|
|
Sales |
|
| 13,246 |
|
|
| 10,115 |
|
Maturities, payments, calls |
|
| 19,396 |
|
|
| 18,391 |
|
Purchases |
|
| (52,587 | ) |
|
| (55,347 | ) |
Loan principal originations, net |
|
| (6,962 | ) |
|
| (18,501 | ) |
Proceeds from sale of foreclosed assets |
|
| 2,017 |
|
|
| 1,055 |
|
Payment to Keystone shareholders |
|
| - |
|
|
| (7,274 | ) |
Purchases of premises and equipment |
|
| (1,183 | ) |
|
| (1,204 | ) |
(Purchase) sale of restricted equity securities, net |
|
| (721 | ) |
|
| 349 |
|
Proceeds from bank owned life insurance |
|
| 1,070 |
|
|
| - |
|
Net cash used for investing activities |
|
| (25,475 | ) |
|
| (52,416 | ) |
Cash Flows From (Used For) Financing Activities: |
|
|
|
|
|
|
|
|
Net (decrease) increase in deposits |
|
| (22,240 | ) |
|
| 50,770 |
|
Net decrease in securities sold under agreements to repurchase |
|
| (426 | ) |
|
| (113 | ) |
Proceeds from Federal Home Loan Bank advances |
|
| 40,000 |
|
|
| 6,750 |
|
Repayment of Federal Home Loan Bank advances |
|
| (25,000 | ) |
|
| (15,250 | ) |
Proceeds from issuance of note payable |
|
| - |
|
|
| 7,500 |
|
Repayment of note payable |
|
| (803 | ) |
|
| (804 | ) |
Proceeds from issuance of common stock |
|
| 85 |
|
|
| 131 |
|
Proceeds from exercise of common stock options and warrants |
|
| 263 |
|
|
| 2,506 |
|
Purchase of treasury stock |
|
| (407 | ) |
|
| (354 | ) |
Sale of treasury stock |
|
| 113 |
|
|
| 26 |
|
Cash dividends |
|
| (1,272 | ) |
|
| (812 | ) |
Net cash from (used for) financing activities |
|
| (9,687 | ) |
|
| 50,350 |
|
Net Change In Cash And Cash Equivalents |
|
| (24,579 | ) |
|
| 140 |
|
Cash and Cash Equivalents At Beginning Of Period |
|
| 42,499 |
|
|
| 31,002 |
|
Cash and Cash Equivalents At End Of Period |
| $ | 17,920 |
|
| $ | 31,142 |
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures Of Cash Flows Information: |
|
|
|
|
|
|
|
|
Cash Payments For: |
|
|
|
|
|
|
|
|
Interest paid to depositors |
| $ | 1,771 |
|
| $ | 1,727 |
|
Interest paid on borrowings |
| $ | 271 |
|
| $ | 237 |
|
Income taxes |
| $ | 2,874 |
|
| $ | 1,825 |
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Transfer of loans to foreclosed assets |
| $ | 2,411 |
|
| $ | - |
|
The accompanying notes are an integral part of these financial statements.
9
Notes to Unaudited Consolidated Financial Statements
(amounts in thousands, except share and per share data)
Note 1 – Basis of Presentation
General
The unaudited consolidated financial statements include the accounts of River Financial Corporation (“River” or the “Company”) and its wholly owned subsidiary, River Bank & Trust (“Bank”). The Bank provides a full range of commercial and consumer banking services primarily in the Montgomery, Alabama metropolitan area, Autauga, Baldwin, Chilton, Coffee, Elmore, Etowah, Houston, Jefferson, Lee, Madison, Mobile, Morgan and EtowahTallapoosa counties and surrounding counties in Alabama. The Bank is primarily regulated by the Federal Deposit Insurance Corporation (“FDIC”)(FDIC) and undergoes periodic examinations by this regulatory agency and the Alabama Banking Department. The Company is regulated by the Federal Reserve Bank (FRB) and is also subject to periodic examinations.
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly River Financial Corporation’s consolidated statements of financial condition, statements of income, statements of comprehensive income, statements of changes in stockholders’ equity and statements of cash flows for the periods presented, and all such adjustments are of a normal recurring nature. All material intercompany accounts and transactions are eliminated.have been eliminated in consolidation. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the entire year.
These interim consolidated financial statements have been prepared according toin accordance with the rules and regulations of the Securities and Exchange Commission and, therefore, certain information and note disclosures normally presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)(U.S. GAAP) have been omitted or abbreviated. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes as of December 31, 2016,2023, which are contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2023.
Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions Riverthe Company may undertake in the future. Estimates are used in accounting for, among other items, the allowance for loancredit losses, foreclosed asset valuations, useful lives for depreciation and amortization, fair value of financial instruments, deferred taxes, and contingencies. Estimates that are particularly susceptible to significant change for Riverthe Company include the determination of the allowance for loancredit losses, investment securities impairment, and assessment of deferred tax assets and liabilities, and business combination related fair value estimates, and therefore are critical accounting policies. Management does not anticipate any material changes to estimates in the near term. Factors that may cause sensitivity to the aforementioned estimates include but are not limited to: external market factors such as market interest rates and employment rates, changes to operating policies and procedures, economic conditions in our markets, and changes in applicable banking regulations. Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual reporting period presented.
Significant Accounting Policies
Allowance for credit losses and provision for credit losses
The allowance for credit losses represents management’s estimate of lifetime credit losses inherent in loans as of the balance sheet date. The allowance for credit losses is estimated by management using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The Bank measures expected credit losses for loans on a pooled basis when similar risk characteristics exist. Generally, collectively assessed loans are grouped by call report code and then risk grade grouping. Risk grade is grouped within each call report code by pass, watch, special mention, substandard, and doubtful. Other loan types are separated into their own cohorts due to specific risk characteristics for that pool of loans.
The Bank has elected a non-discounted cash flow methodology with a probability of default (PD) and loss-given default (LGD) for all cohorts. The PD calculation looks at the historical loan portfolio at particular points in time (each month during the lookback period) to determine the probability that loans in a certain cohort will default over the next 12-month period. A default is defined as a loan that has moved to past due 90 days and greater, nonaccrual status, or experienced a charge-off during the period. Currently, the Bank’s historical data is insufficient due to a minimal amount of default activity or zero defaults, therefore management uses index PDs comprised of rates derived from the PD experience of other community banks in place of the Bank’s historical PDs.
10
The LGD calculation looks at actual losses (net charge-offs) experienced over the entire lookback period for each cohort of loans. The aggregate loss amount is divided by the exposure at default to determine an LGD rate. All defaults (non-accrual, charge-off, or greater than 90 days past due) occurring during the lookback period are included in the denominator, whether a loss occurred or not and exposure at default is determined by the loan balance immediately preceding the default event (i.e. nonaccrual or charge-off). Due to the very limited charge-off history, management uses index LGDs comprised of rates derived from the LGD experience of other community banks in place of the Bank’s historical LGDs.
The Bank utilizes reasonable and supportable forecasts of future economic conditions when estimating the allowance for credit losses on loans. The calculation includes a 12-month PD forecast based on the peer index regression model comparing peer defaults to the national unemployment rate. After the forecast period, PD rates revert on a straight-line basis back to long-term historical average rates over 12 months.
The Bank recognizes that all significant factors that affect the collectability of the loan portfolio must be considered to determine the estimated credit losses as of the evaluation date. Furthermore, the methodology, in and of itself and even when selectively adjusted by comparison to market and peer data, does not provide a sufficient basis to determine the estimated credit losses. The Bank adjusts the modeled historical losses by a qualitative adjustment to incorporate all significant risks to form a sufficient basis to estimate the credit losses. These qualitative adjustments may increase or reduce reserve levels and include adjustments for lending management experience, loan review and audit results, asset quality and portfolio trends, loan portfolio growth, and concentrations, trends in underlying collateral, as well as external factors and economic conditions not already captured.
Loans that do not share risk characteristics are evaluated on an individual basis. Generally, this population includes loans on non-accrual status, however, they can also include any loan that does not share risk characteristics with its respective pool. When management determines that foreclosure is probable and the borrower is experiencing financial difficulty, the expected credit losses are based on the fair value of the collateral at the reporting date unadjusted for selling costs as appropriate. When the expected source of repayment is from a source other than the underlying collateral, impairment will generally be measured based on the present value of expected proceeds discounted at the contractual interest rate.
The loss allocations for individually assessed and collectively assessed loans are totaled to determine the total required allowance for credit losses. This total is compared to the current allowance on the Bank’s books and adjustments made accordingly by a charge or credit to the provision for credit losses.
Investment Securities Impairment
Effective January 1, 2023, the Company estimates and recognizes an allowance for credit losses for held-to-maturity (HTM) debt securities pursuant to ASU No. 2016-13. The Company has a zero loss expectation for its HTM securities portfolio, except for U.S. State and Municipal securities, and therefore it is not required to estimate an allowance for credit losses related to these securities. For HTM securities that do not have a zero loss expectation, the allowance for credit losses is based on the security’s amortized cost, excluding interest receivable, and represents the portion of the amortized cost that the Company does not expect to collect over the life of the security. The allowance for credit losses is determined using average industry credit ratings and historical loss experience, and is initially recognized upon acquisition of the securities, and subsequently remeasured on a recurring basis. The Company evaluates available for sale (AFS) debt securities that experienced a decline in fair value below amortized cost for credit impairment. In performing an assessment of whether any decline in fair value is due to a credit loss, the Company considers the extent to which the fair value is less than the amortized cost, changes in credit ratings, any adverse economic conditions, as well as all relevant information at the individual security level, such as credit deterioration of the issuer, explicit or implicit guarantees by the federal government or collateral underlying the security. If it is determined that the decline in fair value was due to credit losses, an allowance for credit losses is recorded, limited to the amount the fair value is less than the amortized cost basis. The non-credit related decrease in the fair value, such as a decline due to changes in market interest rates, is recorded in other comprehensive income, net of tax. The Company recognizes a credit impairment if the Company has the intent to sell the security, or it is more likely than not that the Bank will be required to sell the security before recovery of its amortized cost. Prior to the adoption of ASU No. 2016-13 Management evaluated AFS and HTM debt securities for other-than-temporary-impairment on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.
Note 2 – Reclassifications
Certain prior period amounts have been reclassified to conform to the presentation used in 2017.2024. These reclassifications had no material effect on the operations, financial condition or cash flows of the Company.
11
The Company’s 401(k) employee stock ownership plan (KSOP) includes a "put option" for shares of the Company’s common stock distributed from the KSOP. Shares are distributed from the KSOP primarily to separate vested participants and certain eligible participants who elect to diversify their account balances. Since the Company’s common stock is not currently traded on an established securities market, if the owners of distributed shares desire to sell their shares, the Company is required to purchase the shares at fair value during two put option periods following the distribution of the shares from the KSOP. The first put option period is within sixty days following the distribution of the shares from the KSOP. The second put option period begins on the first day of the fifth month of the plan year for a sixty day period. The distributed shares subject to the put option and the shares held by the KSOP (KSOP shares) were previously recorded in permanent equity. Due to the Company’s obligation under the put option, the distributed shares and KSOP shares should be classified as temporary equity in the mezzanine section of the consolidated statements of financial condition. This change in classification resulted in the December 31, 2016 permanent equity decreasing $623 thousand and temporary equity increasing by $623 thousand from amounts previously reported. Based on an analysis of quantitative and qualitative factors, this change in classification was deemed immaterial for all periods previously reported. See Note 9.
Basic earnings per common share are computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share are computed by dividing net income by the effect of the issuance of potential common shares that are dilutive and by the sum of the weighted-average number of shares of common stock outstanding. All shares owned by the Company’s 401(k) Employee Stock Ownership Plan (KSOP)(ESOP) are included in the earnings per share calculations.
The reconciliation of the components of the basic and diluted earnings per share is as follows:follows (amounts in thousands):
|
| For the Three Months | ||
|
| Ended March 31, | ||
|
| 2024 |
| 2023 |
Net earnings available to common shareholders |
| $5,810 |
| $5,107 |
Weighted average common shares outstanding |
| 7,662,887 |
| 6,666,765 |
Dilutive effect of stock options |
| 77,294 |
| 91,882 |
Diluted common shares |
| 7,740,181 |
| 6,758,647 |
Basic earnings per common share |
| $0.76 |
| $0.77 |
Diluted earnings per common share |
| $0.75 |
| $0.76 |
|
| For the Three Months |
|
| For the Nine Months |
| ||||||||||
|
| Ended September 30, |
|
| Ended September 30, |
| ||||||||||
|
| 2017 |
|
|
| 2016 |
|
| 2017 |
|
|
| 2016 |
| ||
Net earnings available to common shareholders |
| $ | 2,563 |
|
| $ | 2,216 |
|
| $ | 6,900 |
|
| $ | 5,920 |
|
Weighted average common shares outstanding |
|
| 5,110,644 |
|
|
| 5,078,186 |
|
|
| 5,096,275 |
|
|
| 5,007,394 |
|
Dilutive effect of stock options |
|
| 86,559 |
|
|
| 36,069 |
|
|
| 81,189 |
|
|
| 56,315 |
|
Dilutive effect of stock warrants |
|
| - |
|
|
| 3,351 |
|
|
| - |
|
|
| 3,204 |
|
Diluted common shares |
|
| 5,197,203 |
|
|
| 5,117,606 |
|
|
| 5,177,464 |
|
|
| 5,066,913 |
|
Basic earnings per common share |
| $ | 0.50 |
|
| $ | 0.44 |
|
| $ | 1.35 |
|
| $ | 1.18 |
|
Diluted earnings per common share |
| $ | 0.49 |
|
| $ | 0.43 |
|
| $ | 1.33 |
|
| $ | 1.17 |
|
Note 4 – Investment Securities
SecuritiesThe following tables summarize the amortized cost and fair value of securities available-for-sale and securities held-to-maturity and the corresponding amounts of unrealized gains and losses recognized in accumulated other comprehensive loss at September 30, 2017March 31, 2024 and December 31, 20162023 (amounts in thousands):
|
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair Value |
| ||||
March 31, 2024: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential mortgage-backed |
| $ | 406,554 |
|
| $ | 28 |
|
| $ | (60,105 | ) |
| $ | 346,477 |
|
U.S. treasury securities |
|
| 115,822 |
|
|
| - |
|
|
| (10,003 | ) |
|
| 105,819 |
|
U.S. govt. sponsored enterprises |
|
| 61,738 |
|
|
| - |
|
|
| (5,317 | ) |
|
| 56,421 |
|
State, county, and municipal |
|
| 70,397 |
|
|
| - |
|
|
| (9,418 | ) |
|
| 60,979 |
|
Corporate debt obligations |
|
| 16,744 |
|
|
| 4 |
|
|
| (2,006 | ) |
|
| 14,742 |
|
Total available-for-sale |
| $ | 671,255 |
|
| $ | 32 |
|
| $ | (86,849 | ) |
| $ | 584,438 |
|
|
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair Value |
| ||||
March 31, 2024: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Securities held-to-maturity: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential mortgage-backed |
| $ | 62,884 |
|
| $ | - |
|
| $ | (12,819 | ) |
| $ | 50,065 |
|
State, county, and municipal |
|
| 62,827 |
|
|
| - |
|
|
| (12,354 | ) |
|
| 50,473 |
|
Total held-to-maturity |
| $ | 125,711 |
|
| $ | - |
|
| $ | (25,173 | ) |
| $ | 100,538 |
|
12
|
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair Value |
| ||||
December 31, 2023: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential mortgage-backed |
| $ | 413,179 |
|
| $ | 102 |
|
| $ | (55,981 | ) |
| $ | 357,300 |
|
U.S. treasury securities |
|
| 130,713 |
|
|
| - |
|
|
| (10,661 | ) |
|
| 120,052 |
|
U.S. govt. sponsored enterprises |
|
| 68,751 |
|
|
| - |
|
|
| (5,185 | ) |
|
| 63,566 |
|
State, county, and municipal |
|
| 73,514 |
|
|
| 4 |
|
|
| (8,857 | ) |
|
| 64,661 |
|
Corporate debt obligations |
|
| 17,758 |
|
|
| 5 |
|
|
| (2,251 | ) |
|
| 15,512 |
|
Total available-for-sale |
| $ | 703,915 |
|
| $ | 111 |
|
| $ | (82,935 | ) |
| $ | 621,091 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair Value |
| ||||
December 31, 2023: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Securities held-to-maturity: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential mortgage-backed |
| $ | 63,953 |
|
| $ | - |
|
| $ | (12,022 | ) |
| $ | 51,931 |
|
State, county, and municipal |
|
| 62,840 |
|
|
| - |
|
|
| (11,597 | ) |
|
| 51,243 |
|
Total held-to-maturity |
| $ | 126,793 |
|
| $ | - |
|
| $ | (23,619 | ) |
| $ | 103,174 |
|
The unrecognized losses on held-to-maturity investment securities presented in the table above do not include unrecognized losses on securities that were transferred from available-for-sale to held-to-maturity totaling $2.54 million at March 31, 2024 and $2.62 million at December 31, 2023. These unrecognized losses are included as follows:a separate component of stockholders' equity and are being amortized over the remaining term of the securities.
|
| Amortized Cost |
|
| Gross Unrealized Gains |
|
| Gross Unrealized Losses |
|
| Fair Value |
| ||||
September 30, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed |
| $ | 131,443 |
|
| $ | 142 |
|
| $ | (1,795 | ) |
| $ | 129,790 |
|
U.S. govt. sponsored enterprises |
|
| 15,923 |
|
|
| 68 |
|
|
| (111 | ) |
|
| 15,880 |
|
State, county, and municipal |
|
| 55,827 |
|
|
| 843 |
|
|
| (200 | ) |
|
| 56,470 |
|
Corporate debt obligations |
|
| 1,828 |
|
|
| 10 |
|
|
| (9 | ) |
|
| 1,829 |
|
Totals |
| $ | 205,021 |
|
| $ | 1,063 |
|
| $ | (2,115 | ) |
| $ | 203,969 |
|
|
| Amortized Cost |
|
| Gross Unrealized Gains |
|
| Gross Unrealized Losses |
|
| Fair Value |
| ||||
December 31, 2016: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed |
| $ | 111,611 |
|
| $ | 63 |
|
| $ | (2,999 | ) |
| $ | 108,675 |
|
U.S. govt. sponsored enterprises |
|
| 15,506 |
|
|
| 44 |
|
|
| (223 | ) |
|
| 15,327 |
|
State, county, and municipal |
|
| 57,837 |
|
|
| 562 |
|
|
| (813 | ) |
|
| 57,586 |
|
Corporate debt obligations |
|
| 1,819 |
|
|
| 4 |
|
|
| (50 | ) |
|
| 1,773 |
|
Totals |
| $ | 186,773 |
|
| $ | 673 |
|
| $ | (4,085 | ) |
| $ | 183,361 |
|
Management evaluatesThe Company has a zero loss expectation for its HTM securities portfolio, except for other-than-temporary impairmentU.S. State and Municipal securities, and therefore it is not required to estimate an allowance for credit losses related to these securities. For HTM securities that do not have a zero loss expectation, the allowance for credit losses is based on the security’s amortized cost, excluding interest receivable, and represents the portion of the amortized cost that the Company does not expect to collect over the life of the security. The allowance for credit losses is determined using average industry credit ratings and historical loss experience, and is initially recognized upon acquisition of the securities, and subsequently remeasured on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Considerationrecurring basis. The Company evaluates available for sale (AFS) debt securities that experienced a decline in fair value below amortized cost for credit impairment. In performing an assessment of whether any decline in fair value is givendue to (1)a credit loss, the length of time andCompany considers the extent to which the fair value has beenis less than the amortized cost, (2)changes in credit ratings, any adverse economic conditions, as well as all relevant information at the financial condition and near-term prospectsindividual security level, such as credit deterioration of the issuer, and (3)explicit or implicit guarantees by the federal government or collateral underlying the security. If it is determined that the decline in fair value was due to credit losses, an allowance for credit losses is recorded, limited to the amount the fair value is less than the amortized cost basis. The non-credit related decrease in the fair value, such as a decline due to changes in market interest rates, is recorded in other comprehensive income, net of tax. The Company recognizes a credit impairment if the Company has the intent and abilityto sell the security, or it is more likely than not that the Bank will be required to sell the security before recovery of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.amortized cost.
13
The following tables summarize securities with unrealized and unrecognized losses as of September 30, 2017March 31, 2024 and December 31, 2016 are as follows:
|
| Less Than 12 Months |
|
| More Than 12 Months |
|
| Total |
| |||||||||||||||
|
| Fair Value |
|
| Unrealized Losses |
|
| Fair Value |
|
| Unrealized Losses |
|
| Fair Value |
|
| Unrealized Losses |
| ||||||
September 30, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed |
| $ | 62,194 |
|
| $ | 726 |
|
| $ | 43,203 |
|
| $ | 1,069 |
|
| $ | 105,397 |
|
| $ | 1,795 |
|
U.S. govt. sponsored enterprises |
|
| 2,059 |
|
|
| 52 |
|
|
| 1,895 |
|
|
| 59 |
|
|
| 3,954 |
|
|
| 111 |
|
State, county & municipal |
|
| 7,106 |
|
|
| 69 |
|
|
| 12,787 |
|
|
| 131 |
|
|
| 19,893 |
|
|
| 200 |
|
Corporate debt obligations |
|
| 368 |
|
|
| 8 |
|
|
| 1,000 |
|
|
| 1 |
|
|
| 1,368 |
|
|
| 9 |
|
Totals |
| $ | 71,727 |
|
| $ | 855 |
|
| $ | 58,885 |
|
| $ | 1,260 |
|
| $ | 130,612 |
|
| $ | 2,115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed |
| $ | 98,033 |
|
| $ | 2,999 |
|
| $ | - |
|
| $ | - |
|
| $ | 98,033 |
|
| $ | 2,999 |
|
U.S. govt. sponsored enterprises |
|
| 10,733 |
|
|
| 149 |
|
|
| 1,376 |
|
|
| 74 |
|
|
| 12,109 |
|
|
| 223 |
|
State, county & municipal |
|
| 35,062 |
|
|
| 813 |
|
|
| - |
|
|
| - |
|
|
| 35,062 |
|
|
| 813 |
|
Corporate debt obligations |
|
| 1,319 |
|
|
| 50 |
|
|
| - |
|
|
| - |
|
|
| 1,319 |
|
|
| 50 |
|
Totals |
| $ | 145,147 |
|
| $ | 4,011 |
|
| $ | 1,376 |
|
| $ | 74 |
|
| $ | 146,523 |
|
| $ | 4,085 |
|
As of September 30, 2017, management does not consider securities with unrealized losses to be other-than-temporarily impaired. The unrealized losses in each category have occurred as a result of changes in interest rates, market spreads2023 aggregated by major security type and market conditions subsequent to purchase. River has the ability and intent to hold its securities for a periodlength of time sufficient to allow forin a recoverycontinuous unrealized or unrecognized loss position (amounts in fair value. There were no other-than-temporary impairments charged to earnings during the nine months ended September 30, 2017 or 2016. thousands):
|
| Less Than 12 Months |
|
| 12 Months or More |
|
| Total |
| |||||||||||||||
|
| Fair Value |
|
| Unrealized |
|
| Fair Value |
|
| Unrealized |
|
| Fair Value |
|
| Unrealized |
| ||||||
March 31, 2024: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Residential mortgage-backed |
| $ | 6,232 |
|
| $ | 38 |
|
| $ | 333,411 |
|
| $ | 60,067 |
|
| $ | 339,643 |
|
| $ | 60,105 |
|
U.S. treasury securities |
|
| - |
|
|
| - |
|
|
| 105,819 |
|
|
| 10,003 |
|
|
| 105,819 |
|
|
| 10,003 |
|
U.S. govt. sponsored enterprises |
|
| - |
|
|
| - |
|
|
| 56,421 |
|
|
| 5,317 |
|
|
| 56,421 |
|
|
| 5,317 |
|
State, county & municipal |
|
| 1,497 |
|
|
| 4 |
|
|
| 59,483 |
|
|
| 9,414 |
|
|
| 60,980 |
|
|
| 9,418 |
|
Corporate debt obligations |
|
| - |
|
|
| - |
|
|
| 12,329 |
|
|
| 2,006 |
|
|
| 12,329 |
|
|
| 2,006 |
|
Total available-for-sale |
| $ | 7,729 |
|
| $ | 42 |
|
| $ | 567,463 |
|
| $ | 86,807 |
|
| $ | 575,192 |
|
| $ | 86,849 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Securities held-to-maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Residential mortgage-backed |
| $ | - |
|
| $ | - |
|
| $ | 50,065 |
|
| $ | 12,819 |
|
| $ | 50,065 |
|
| $ | 12,819 |
|
State, county & municipal |
|
| - |
|
|
| - |
|
|
| 45,127 |
|
|
| 12,354 |
|
|
| 45,127 |
|
|
| 12,354 |
|
Total held-to-maturity |
| $ | - |
|
| $ | - |
|
| $ | 95,192 |
|
| $ | 25,173 |
|
| $ | 95,192 |
|
| $ | 25,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
December 31, 2023: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Residential mortgage-backed |
| $ | 2,028 |
|
| $ | 2 |
|
| $ | 352,807 |
|
| $ | 55,979 |
|
| $ | 354,835 |
|
| $ | 55,981 |
|
U.S. treasury securities |
|
| - |
|
|
| - |
|
|
| 120,053 |
|
|
| 10,661 |
|
|
| 120,053 |
|
|
| 10,661 |
|
U.S. govt. sponsored enterprises |
|
| 1,689 |
|
|
| 7 |
|
|
| 61,877 |
|
|
| 5,178 |
|
|
| 63,566 |
|
|
| 5,185 |
|
State, county & municipal |
|
| - |
|
|
| - |
|
|
| 63,657 |
|
|
| 8,857 |
|
|
| 63,657 |
|
|
| 8,857 |
|
Corporate debt obligations |
|
| 926 |
|
|
| 29 |
|
|
| 13,131 |
|
|
| 2,222 |
|
|
| 14,057 |
|
|
| 2,251 |
|
Total available-for-sale |
| $ | 4,643 |
|
| $ | 38 |
|
| $ | 611,525 |
|
| $ | 82,897 |
|
| $ | 616,168 |
|
| $ | 82,935 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Securities held-to-maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Residential mortgage-backed |
| $ | - |
|
| $ | - |
|
| $ | 51,931 |
|
| $ | 12,022 |
|
| $ | 51,931 |
|
| $ | 12,022 |
|
State, county & municipal |
|
| - |
|
|
| - |
|
|
| 45,898 |
|
|
| 11,597 |
|
|
| 45,898 |
|
|
| 11,597 |
|
Total held-to-maturity |
| $ | - |
|
| $ | - |
|
| $ | 97,829 |
|
| $ | 23,619 |
|
| $ | 97,829 |
|
| $ | 23,619 |
|
The Company owned a total of 108318 securities with unrealized losses of $2,115$112.0 million at September 30, 2017. March 31, 2024. The unrealized losses were primarily attributable to changes in interest rates, rather than deterioration in credit quality. The individual securities are each investment grade securities. The Company considers factors such as the financial condition of the issuer including credit ratings and specific events affecting the operations of the issuer, volatility of the security, underlying assets that collateralize the debt security, and other industry and macroeconomic conditions. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell these securities before recovery of the amortized cost. The issuers of these securities continue to make timely principal and interest payments under the contractual terms of the securities. As such, there is no allowance for credit losses on available for sale or held to maturity securities recognized as of March 31, 2024. Accrued interest receivable is not included in available-for-sale security balances and is presented in accrued interest receivable on the consolidated statement of financial condition. Interest receivable on securities was approximately $2.1 million as of March 31, 2024, and was excluded from the estimate of credit losses.
As of September 30, 2017March 31, 2024 and December 31, 2016,2023, securities with a carrying value of approximately $29,894$366.2 million and $29,873,$268.2 million, respectively, were pledged to secure public deposits as required by law. At September 30, 2017March 31, 2024 and December 31, 2016,2023, the carrying value of securities pledged to secure repurchase agreements was approximately $21,139$21.4 million and $18,392,$26.9 million, respectively.
During the ninethree months ended September 30, 2017, RiverMarch 31, 2024, the Company sold investment securities for proceeds of $13,246$33.7 million and realized losses of $1.4 million. The net loss consisted of gross gains of $3.$44 thousand and gross losses of $1.5 million. During the ninethree months ended September 30, 2016, River soldMarch 31, 2023, the Company did not sell any investment securities for proceeds of $10,115 and realized gains of $14. securities.
14
The amortized cost and estimated fair value of debt securities available-for-sale at September 30, 2017,March 31, 2024 and December 31, 2023, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities for residential mortgage backed securities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties. These securities are therefore not presented by maturity classification.
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||||||||||
|
| Amortized Cost |
|
| Fair Value |
|
| Amortized Cost |
|
| Fair Value |
| ||||
|
| (In Thousands) |
|
| (In Thousands) |
| ||||||||||
Securities available-for-sale |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Less than 1 year |
| $ | - |
|
| $ | - |
|
| $ | 2,500 |
|
| $ | 2,424 |
|
1 to 5 years |
|
| 150,066 |
|
|
| 137,022 |
|
|
| 163,927 |
|
|
| 150,501 |
|
5 to 10 years |
|
| 48,236 |
|
|
| 42,909 |
|
|
| 51,970 |
|
|
| 46,415 |
|
After 10 years |
|
| 66,399 |
|
|
| 58,030 |
|
|
| 72,339 |
|
|
| 64,451 |
|
|
|
| 264,701 |
|
|
| 237,961 |
|
|
| 290,736 |
|
|
| 263,791 |
|
Residential mortgage-backed securities |
|
| 406,554 |
|
|
| 346,477 |
|
|
| 413,179 |
|
|
| 357,300 |
|
Total available-for-sale |
| $ | 671,255 |
|
| $ | 584,438 |
|
| $ | 703,915 |
|
| $ | 621,091 |
|
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||||||||||
|
| Amortized Cost |
|
| Fair Value |
|
| Amortized Cost |
|
| Fair Value |
| ||||
|
| (In Thousands) |
|
| (In Thousands) |
| ||||||||||
Securities held-to-maturity |
|
|
|
|
|
|
|
|
|
|
|
| ||||
5 to 10 years |
| $ | 21,717 |
|
| $ | 17,626 |
|
| $ | 19,706 |
|
| $ | 16,192 |
|
After 10 years |
|
| 41,110 |
|
|
| 32,847 |
|
|
| 43,134 |
|
|
| 35,051 |
|
|
|
| 62,827 |
|
|
| 50,473 |
|
|
| 62,840 |
|
|
| 51,243 |
|
Residential mortgage-backed securities |
|
| 62,884 |
|
|
| 50,065 |
|
|
| 63,953 |
|
|
| 51,931 |
|
Total held-to-maturity |
| $ | 125,711 |
|
| $ | 100,538 |
|
| $ | 126,793 |
|
| $ | 103,174 |
|
|
| Amortized Cost |
|
| Fair Value |
| ||
|
| (In Thousands) |
| |||||
Securities available-for-sale |
|
|
|
|
|
|
|
|
Less than 1 year |
| $ | 5,404 |
|
| $ | 5,405 |
|
1 to 5 years |
|
| 19,193 |
|
|
| 19,241 |
|
5 to 10 years |
|
| 13,564 |
|
|
| 13,623 |
|
After 10 years |
|
| 35,417 |
|
|
| 35,910 |
|
|
|
| 73,578 |
|
|
| 74,179 |
|
Residential mortgage-backed securities |
|
| 131,443 |
|
|
| 129,790 |
|
Totals |
| $ | 205,021 |
|
| $ | 203,969 |
|
15
Note 5 – Loans, Allowance for LoanCredit Losses and Credit Quality
Major classifications of loans at September 30, 2017March 31, 2024 and December 31, 20162023 are summarized as follows:follows (amounts in thousands):
|
| September 30, 2017 |
|
| December 31, 2016 |
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||||||||||||||||||||
|
| Amount |
|
| % of Total |
|
| Amount |
|
| % of Total |
|
| Amount |
|
| % of Total |
|
| Amount |
|
| % of Total |
| ||||||||
Residential real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Closed-end 1-4 family - first lien |
| $ | 112,014 |
|
|
| 21.6 | % |
| $ | 113,807 |
|
|
| 22.2 | % |
| $ | 791,345 |
|
|
| 35.3 | % |
| $ | 771,144 |
|
|
| 34.9 | % |
Closed-end 1-4 family - junior lien |
|
| 4,494 |
|
|
| 0.9 | % |
|
| 4,791 |
|
|
| 0.9 | % |
|
| 12,383 |
|
|
| 0.6 | % |
|
| 11,814 |
|
|
| 0.5 | % |
Multi-family |
|
| 17,452 |
|
|
| 3.4 | % |
|
| 17,043 |
|
|
| 3.3 | % |
|
| 19,402 |
|
|
| 0.9 | % |
|
| 26,739 |
|
|
| 1.2 | % |
Total residential real estate |
|
| 133,960 |
|
|
| 25.9 | % |
|
| 135,641 |
|
|
| 26.4 | % |
|
| 823,130 |
|
|
| 36.8 | % |
|
| 809,697 |
|
|
| 36.6 | % |
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Nonfarm nonresidential |
|
| 162,485 |
|
|
| 31.4 | % |
|
| 161,198 |
|
|
| 31.5 | % |
|
| 594,096 |
|
|
| 26.5 | % |
|
| 557,202 |
|
|
| 25.2 | % |
Farmland |
|
| 7,522 |
|
|
| 1.5 | % |
|
| 13,344 |
|
|
| 2.6 | % |
|
| 68,105 |
|
|
| 3.0 | % |
|
| 58,532 |
|
|
| 2.6 | % |
Total commercial real estate |
|
| 170,007 |
|
|
| 32.9 | % |
|
| 174,542 |
|
|
| 34.1 | % |
|
| 662,201 |
|
|
| 29.5 | % |
|
| 615,734 |
|
|
| 27.8 | % |
Construction and land development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Residential |
|
| 24,040 |
|
|
| 4.6 | % |
|
| 27,228 |
|
|
| 5.3 | % |
|
| 99,056 |
|
|
| 4.4 | % |
|
| 100,974 |
|
|
| 4.6 | % |
Other |
|
| 41,880 |
|
|
| 8.1 | % |
|
| 37,221 |
|
|
| 7.3 | % |
|
| 165,460 |
|
|
| 7.4 | % |
|
| 195,724 |
|
|
| 8.9 | % |
Total construction and land development |
|
| 65,920 |
|
|
| 12.7 | % |
|
| 64,449 |
|
|
| 12.6 | % |
|
| 264,516 |
|
|
| 11.8 | % |
|
| 296,698 |
|
|
| 13.5 | % |
Home equity lines of credit |
|
| 35,087 |
|
|
| 6.8 | % |
|
| 35,761 |
|
|
| 7.0 | % |
|
| 103,643 |
|
|
| 4.6 | % |
|
| 95,544 |
|
|
| 4.3 | % |
Commercial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Other commercial loans |
|
| 89,736 |
|
|
| 17.3 | % |
|
| 81,198 |
|
|
| 15.8 | % |
|
| 271,725 |
|
|
| 12.1 | % |
|
| 273,639 |
|
|
| 12.4 | % |
Agricultural |
|
| 1,543 |
|
|
| 0.3 | % |
|
| 887 |
|
|
| 0.2 | % |
|
| 61,664 |
|
|
| 2.8 | % |
|
| 66,510 |
|
|
| 3.0 | % |
State, county, and municipal loans |
|
| 8,144 |
|
|
| 1.6 | % |
|
| 8,719 |
|
|
| 1.7 | % |
|
| 35,116 |
|
|
| 1.6 | % |
|
| 34,819 |
|
|
| 1.6 | % |
Total commercial loans |
|
| 99,423 |
|
|
| 19.2 | % |
|
| 90,804 |
|
|
| 17.7 | % |
|
| 368,505 |
|
|
| 16.5 | % |
|
| 374,968 |
|
|
| 17.0 | % |
Consumer loans |
|
| 22,558 |
|
|
| 4.4 | % |
|
| 20,858 |
|
|
| 4.1 | % |
|
| 55,909 |
|
|
| 2.5 | % |
|
| 55,587 |
|
|
| 2.5 | % |
Total gross loans |
|
| 526,955 |
|
|
| 101.9 | % |
|
| 522,055 |
|
|
| 101.9 | % |
|
| 2,277,904 |
|
|
| 101.7 | % |
|
| 2,248,228 |
|
|
| 101.7 | % |
Allowance for loan losses |
|
| (5,004 | ) |
|
| -1.0 | % |
|
| (4,007 | ) |
|
| -0.8 | % | ||||||||||||||||
Net deferred loan fees and discounts |
|
| (3,666 | ) |
|
| -0.7 | % |
|
| (5,614 | ) |
|
| -1.1 | % | ||||||||||||||||
Allowance for credit losses |
|
| (29,856 | ) |
|
| -1.3 | % |
|
| (28,991 | ) |
|
| -1.3 | % | ||||||||||||||||
Net discounts |
|
| (21 | ) |
|
| 0.0 | % |
|
| (129 | ) |
|
| 0.0 | % | ||||||||||||||||
Net deferred loan fees |
|
| (8,038 | ) |
|
| -0.4 | % |
|
| (8,093 | ) |
|
| -0.4 | % | ||||||||||||||||
Net loans |
| $ | 518,285 |
|
|
| 100.2 | % |
| $ | 512,434 |
|
|
| 100.0 | % |
| $ | 2,239,989 |
|
|
| 100.0 | % |
| $ | 2,211,015 |
|
|
| 100.0 | % |
The Bank grants loans and extensions of credit to individuals and a variety of businesses and corporations located in its general trade area. Although the Bank has a diversified loan portfolio, a substantial portion of the loan portfolio is collateralized by improved and unimproved real estate and is dependent upon the real estate market. Relevant risk characteristics for these portfolio segments generally include debt service coverage, loan-to-value ratios and financial performance on non-consumer loans and credit scores, debt-to-income, collateral type and loan-to-value ratios for consumer loans.
The loan portfolio has been disaggregated into segments and then further disaggregated into classes for certain disclosures. A portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. There are three primary loan portfolio segments that include real estate, commercial, and consumer. A class is generally determined based on the initial measurement attribute, risk characteristic of the loan, and the Company’s method for monitoring and assessing credit risk. Classes within the real estate portfolio segment include residential real estate, commercial real estate, construction and land development and home equity lines of credit. The portfolio segments of non-real estate commercial loans and consumer loans have not been further segregated by class.
The following table presentsdescribe risk characteristics relevant to each of the portfolio segments:
Real estate - As discussed below, the Company offers various types of real estate loan products. All loans within this portfolio segment are particularly sensitive to the valuation of real estate:
Residential real estate and home equity lines of credit are repaid by various means such as through a borrower’s income, sale of the property, or rental income derived from the property.
16
Commercial real estate loans include both owner-occupied commercial real estate loans and other commercial real estate loans secured by income producing properties. Owner-occupied commercial real estate loans to operating businesses are long-term financing of land and buildings. These loans are repaid by cash flow generated from the business operation. Real estate loans for income-producing properties such as office and industrial buildings and retail shopping centers are repaid from rent income derived from the properties. Loans secured by farmland are repaid by various means such as through a borrower’s income, sale of the property, or rental income derived from the property.
Construction and land development loans are repaid through cash flow related to the operations, sale or refinance of the underlying property. This portfolio class includes extensions of credit to real estate developers or investors where repayment is dependent on the sale of the real estate or income generated from the real estate collateral.
Commercial loans - The commercial loan portfolio segment includes commercial and industrial loans, agricultural loans and loans to states and municipalities. These loans include those loans to commercial customers for use in normal business operations to finance working capital needs, equipment purchases, or expansion projects. Loans are repaid by business cash flows or tax revenues. Collection risk in this portfolio is driven by the creditworthiness of the underlying borrower, particularly by cash flows from the customers’ business operations.
Consumer loans - The consumer loan portfolio segment includes direct consumer installment loans, overdrafts and other revolving credit loans. Loans in this portfolio are sensitive to unemployment and other key consumer economic measures.
Under the current expected credit losses (CECL) methodology, the allowance for credit losses is measured on a collective basis for pools of loans with similar risk characteristics. For loans that do not share similar risk characteristics with the collectively evaluated pools, evaluations are performed on an individual basis. For all loan segments collectively evaluated, losses are predicted over a period of time determined to be reasonable and supportable, and at the end of the reasonable and supportable forecast period losses are reverted to long-term historical averages. The estimated loan losses for all loan segments are adjusted for changes in qualitative factors not inherently considered in the quantitative analyses.
The following tables present the balance in the allowance for loancredit losses by portfolio segment. It also includes the balance in the allowance for credit losses and the recorded investment in loans by portfolio segment and based on impairmentevaluation method for the periods indicated:indicated below (amounts in thousands).
|
| Real Estate Mortgage Loans |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
|
|
|
|
|
|
|
| Construction |
|
| Home equity |
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
| and land |
|
| lines |
|
|
|
|
|
|
|
|
|
| |||||||
Allowance for Credit Losses |
| Residential |
|
| Commercial |
|
| development |
|
| of credit |
|
| Commercial |
|
| Consumer |
|
| Total |
| |||||||
Balance - December 31, 2023 |
| $ | 7,233 |
|
| $ | 10,530 |
|
| $ | 4,646 |
|
| $ | 1,078 |
|
| $ | 4,906 |
|
| $ | 598 |
|
| $ | 28,991 |
|
Provision for credit losses |
|
| 264 |
|
|
| 1,211 |
|
|
| (738 | ) |
|
| 143 |
|
|
| 367 |
|
|
| 62 |
|
|
| 1,309 |
|
Loan charge-offs |
|
| - |
|
|
| (249 | ) |
|
| (19 | ) |
|
| (50 | ) |
|
| (88 | ) |
|
| (61 | ) |
|
| (467 | ) |
Loan recoveries |
|
| - |
|
|
| 2 |
|
|
| - |
|
|
| - |
|
|
| 16 |
|
|
| 5 |
|
|
| 23 |
|
Balance - March 31, 2024 |
| $ | 7,497 |
|
| $ | 11,494 |
|
| $ | 3,889 |
|
| $ | 1,171 |
|
| $ | 5,201 |
|
| $ | 604 |
|
| $ | 29,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Individually evaluated |
| $ | 11 |
|
| $ | 278 |
|
| $ | - |
|
| $ | - |
|
| $ | 302 |
|
| $ | 34 |
|
| $ | 625 |
|
Collectively evaluated |
|
| 7,486 |
|
|
| 11,216 |
|
|
| 3,889 |
|
|
| 1,171 |
|
|
| 4,899 |
|
|
| 570 |
|
|
| 29,231 |
|
Total |
| $ | 7,497 |
|
| $ | 11,494 |
|
| $ | 3,889 |
|
| $ | 1,171 |
|
| $ | 5,201 |
|
| $ | 604 |
|
| $ | 29,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Individually evaluated |
| $ | 2,396 |
|
| $ | 1,956 |
|
| $ | 5 |
|
| $ | 202 |
|
| $ | 337 |
|
| $ | 34 |
|
| $ | 4,930 |
|
Collectively evaluated |
|
| 820,734 |
|
|
| 660,245 |
|
|
| 264,511 |
|
|
| 103,441 |
|
|
| 368,168 |
|
|
| 55,875 |
|
|
| 2,272,974 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Real Estate Mortgage Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
| Construction |
|
| Home Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| and Land |
|
| Lines |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Allowance for Loan Losses |
| Residential |
|
| Commercial |
|
| Development |
|
| Of Credit |
|
| Commercial |
|
| Consumer |
|
| Total |
| |||||||
Balance - December 31, 2016 |
| $ | 563 |
|
| $ | 1,506 |
|
| $ | 723 |
|
| $ | 187 |
|
| $ | 829 |
|
| $ | 199 |
|
| $ | 4,007 |
|
Provision for loan losses |
|
| 497 |
|
|
| 342 |
|
|
| (154 | ) |
|
| 223 |
|
|
| 352 |
|
|
| 120 |
|
|
| 1,380 |
|
Loan charge-offs |
|
| - |
|
|
| (136 | ) |
|
| (7 | ) |
|
| (100 | ) |
|
| (192 | ) |
|
| (94 | ) |
|
| (529 | ) |
Loan recoveries |
|
| 24 |
|
|
| 11 |
|
|
| 10 |
|
|
| 2 |
|
|
| 85 |
|
|
| 14 |
|
|
| 146 |
|
Balance - September 30, 2017 |
| $ | 1,084 |
|
| $ | 1,723 |
|
| $ | 572 |
|
| $ | 312 |
|
| $ | 1,074 |
|
| $ | 239 |
|
| $ | 5,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment |
| $ | 527 |
|
| $ | 367 |
|
| $ | 22 |
|
| $ | - |
|
| $ | 407 |
|
| $ | 22 |
|
| $ | 1,345 |
|
Collectively evaluated for impairment |
|
| 557 |
|
|
| 1,356 |
|
|
| 550 |
|
|
| 312 |
|
|
| 667 |
|
|
| 217 |
|
|
| 3,659 |
|
Total |
| $ | 1,084 |
|
| $ | 1,723 |
|
| $ | 572 |
|
| $ | 312 |
|
| $ | 1,074 |
|
| $ | 239 |
|
| $ | 5,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment |
| $ | 2,448 |
|
| $ | 2,496 |
|
| $ | 171 |
|
| $ | 100 |
|
| $ | 533 |
|
| $ | 98 |
|
| $ | 5,846 |
|
Collectively evaluated for impairment |
|
| 131,512 |
|
|
| 167,511 |
|
|
| 65,749 |
|
|
| 34,987 |
|
|
| 98,890 |
|
|
| 22,460 |
|
|
| 521,109 |
|
Total |
| $ | 133,960 |
|
| $ | 170,007 |
|
| $ | 65,920 |
|
| $ | 35,087 |
|
| $ | 99,423 |
|
| $ | 22,558 |
|
| $ | 526,955 |
|
17
|
| Real Estate Mortgage Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
| Construction |
|
| Home Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| and Land |
|
| Lines |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Allowance for Loan Losses |
| Residential |
|
| Commercial |
|
| Development |
|
| Of Credit |
|
| Commercial |
|
| Consumer |
|
| Total |
| |||||||
Balance - December 31, 2015 |
| $ | 368 |
|
| $ | 1,302 |
|
| $ | 569 |
|
| $ | 150 |
|
| $ | 1,250 |
|
| $ | 188 |
|
| $ | 3,827 |
|
Provision for loan losses |
|
| 206 |
|
|
| (21 | ) |
|
| 233 |
|
|
| 23 |
|
|
| 154 |
|
|
| 67 |
|
|
| 662 |
|
Loan charge-offs |
|
| - |
|
|
| (15 | ) |
|
| - |
|
|
| (10 | ) |
|
| (241 | ) |
|
| (36 | ) |
|
| (302 | ) |
Loan recoveries |
|
| 5 |
|
|
| - |
|
|
| 10 |
|
|
| 16 |
|
|
| 52 |
|
|
| 19 |
|
|
| 102 |
|
Balance - September 30, 2016 |
| $ | 579 |
|
| $ | 1,266 |
|
| $ | 812 |
|
| $ | 179 |
|
| $ | 1,215 |
|
| $ | 238 |
|
| $ | 4,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment |
| $ | 54 |
|
| $ | 403 |
|
| $ | - |
|
| $ | - |
|
| $ | 732 |
|
| $ | - |
|
| $ | 1,189 |
|
Collectively evaluated for impairment |
|
| 525 |
|
|
| 863 |
|
|
| 812 |
|
|
| 179 |
|
|
| 483 |
|
|
| 238 |
|
|
| 3,100 |
|
Total |
| $ | 579 |
|
| $ | 1,266 |
|
| $ | 812 |
|
| $ | 179 |
|
| $ | 1,215 |
|
| $ | 238 |
|
| $ | 4,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment |
| $ | 1,030 |
|
| $ | 4,093 |
|
| $ | 50 |
|
| $ | 100 |
|
| $ | 816 |
|
| $ | - |
|
| $ | 6,089 |
|
Collectively evaluated for impairment |
|
| 130,381 |
|
|
| 164,760 |
|
|
| 61,287 |
|
|
| 32,400 |
|
|
| 90,162 |
|
|
| 20,972 |
|
|
| 499,962 |
|
Total |
| $ | 131,411 |
|
| $ | 168,853 |
|
| $ | 61,337 |
|
| $ | 32,500 |
|
| $ | 90,978 |
|
| $ | 20,972 |
|
| $ | 506,051 |
|
|
| Real Estate Mortgage Loans |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
|
|
|
|
|
|
|
| Construction |
|
| Home equity |
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
| and land |
|
| lines |
|
|
|
|
|
|
|
|
|
| |||||||
Allowance for Credit Losses |
| Residential |
|
| Commercial |
|
| development |
|
| of credit |
|
| Commercial |
|
| Consumer |
|
| Total |
| |||||||
Balance - December 31, 2022 prior to adoption of ASC 326 |
| $ | 5,088 |
|
| $ | 10,057 |
|
| $ | 3,377 |
|
| $ | 562 |
|
| $ | 4,778 |
|
| $ | 448 |
|
| $ | 24,310 |
|
Impact of adopting ASC 326 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 73 |
|
|
| 7 |
|
|
| 80 |
|
Provision for credit losses |
|
| 253 |
|
|
| 892 |
|
|
| 138 |
|
|
| 156 |
|
|
| (208 | ) |
|
| 80 |
|
|
| 1,311 |
|
Loan charge-offs |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (67 | ) |
|
| (34 | ) |
|
| (101 | ) |
Loan recoveries |
|
| - |
|
|
| 77 |
|
|
| - |
|
|
| - |
|
|
| 33 |
|
|
| 4 |
|
|
| 114 |
|
Balance - March 31, 2023 |
| $ | 5,341 |
|
| $ | 11,026 |
|
| $ | 3,515 |
|
| $ | 718 |
|
| $ | 4,609 |
|
| $ | 505 |
|
| $ | 25,714 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Individually evaluated |
| $ | - |
|
| $ | 693 |
|
| $ | - |
|
| $ | - |
|
| $ | 312 |
|
| $ | 42 |
|
| $ | 1,047 |
|
Collectively evaluated |
|
| 5,341 |
|
|
| 10,333 |
|
|
| 3,515 |
|
|
| 718 |
|
|
| 4,297 |
|
|
| 463 |
|
|
| 24,667 |
|
Total |
| $ | 5,341 |
|
| $ | 11,026 |
|
| $ | 3,515 |
|
| $ | 718 |
|
| $ | 4,609 |
|
| $ | 505 |
|
| $ | 25,714 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Individually evaluated |
| $ | 1,818 |
|
| $ | 6,729 |
|
| $ | 177 |
|
| $ | - |
|
| $ | 591 |
|
| $ | 42 |
|
| $ | 9,357 |
|
Collectively evaluated |
|
| 637,041 |
|
|
| 579,290 |
|
|
| 271,223 |
|
|
| 69,227 |
|
|
| 299,764 |
|
|
| 51,115 |
|
|
| 1,907,660 |
|
Total |
| $ | 638,859 |
|
| $ | 586,019 |
|
| $ | 271,400 |
|
| $ | 69,227 |
|
| $ | 300,355 |
|
| $ | 51,157 |
|
| $ | 1,917,017 |
|
Among other loans,The Company's unfunded lending commitments are unconditionally cancellable and therefore no allowance for credit losses has been recorded. In the Bank individually evaluates for impairment all nonaccrual loans and troubled debt restructured loans. A loan is considered impaired when, based on current events and circumstances it is probableevent that all amounts due accordingcollection of principal becomes uncertain, the Company has policies in place to reverse accrued interest in a timely manner. Therefore, the contractual terms ofCompany has made a policy election to exclude accrued interest from the loan will not be collected. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, at the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. Management may also elect to apply an additional collective reserve to groups of impaired loans based on current economic or market factors. Interest payments received on impaired loans are generally applied as a reduction of the outstanding principal balance.
All other loans are deemed to be unimpaired and are grouped into various homogeneous risk pools utilizing regulatory reporting classifications. The Bank’s historical loss factors are calculated for each of these risk pools based on the net losses experienced as a percentage of the average loans outstanding. The time periods utilized in these historical loss factor calculations are subjective and vary according to management’s estimate of the impact of current economic cycles. As every loan has a risk of loss, minimum loss factors are estimated based on long term trends for the Bank, the banking industry, and the economy. The greater of the calculated historical loss factors or the minimum loss factors are applied to the unimpaired loan amounts currently outstanding for the risk pool and included in the analysismeasurement of the allowance for loancredit losses. In addition, certain qualitative adjustments may beAccrued interest on loans of $11.4 million and $11.3 million at March 31, 2024 and December 31, 2023, respectively, was included by management as additional loss factors applied toin accrued interest receivable and was excluded from the unimpaired loan risk pools. These adjustments may include, among other things, changes in loan policy, loan administration, loan, geographic, or industry concentrations, loan growth rates, and experience levelsestimate of our lending officers. The loss allocations for specifically impaired loans, smaller impaired loans not specifically measured for impairment, and unimpaired loans are totaled to determine the total required allowance for loancredit losses. This total is compared to the current allowance on the Bank’s books and adjustments made accordingly by a charge or credit to the provision for loan losses.
18
The following table presents impairedcollateral dependent loans by class of loans as of September 30, 2017.
March 31, 2024 (amounts in thousands). Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. The Company reviews individually evaluated loans for designation as collateral dependent loans, as well as other loans that management of the Company designates as having higher risk. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses. The Company considers all individually evaluated loans to be collateral dependent.
Nonaccruing Impaired Loans |
| Total Impaired Loans |
|
| Impaired Loans With No Allowance |
|
| Impaired Loans With Allowance |
|
| Allowance for Loan Losses |
| ||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
| $ | 1,506 |
|
| $ | 88 |
|
| $ | 1,418 |
|
| $ | 527 |
|
Commercial real estate |
|
| 255 |
|
|
| 255 |
|
|
| - |
|
|
| - |
|
Construction and land development |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total mortgage loans on real estate |
|
| 1,761 |
|
|
| 343 |
|
|
| 1,418 |
|
|
| 527 |
|
Home equity lines of credit |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Commercial loans |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Consumer loans |
|
| 54 |
|
|
| 54 |
|
|
| - |
|
|
| - |
|
Total Loans |
| $ | 1,815 |
|
| $ | 397 |
|
| $ | 1,418 |
|
| $ | 527 |
|
Nonaccruing Collateral Dependent Loans |
| Unpaid Principal Balance |
|
| Recorded Investment |
|
| Loans With No Allowance |
|
| Loans With Allowance |
|
| Allowance for Credit Losses |
| |||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Residential real estate |
| $ | 1,306 |
|
| $ | 1,306 |
|
| $ | 1,306 |
|
| $ | - |
|
| $ | - |
|
Commercial real estate |
|
| 1,652 |
|
|
| 1,652 |
|
|
| 328 |
|
|
| 1,324 |
|
|
| 278 |
|
Construction and land development |
|
| 5 |
|
|
| 5 |
|
|
| 5 |
|
|
| - |
|
|
| - |
|
Total mortgage loans on real estate |
|
| 2,963 |
|
|
| 2,963 |
|
|
| 1,639 |
|
|
| 1,324 |
|
|
| 278 |
|
Home equity lines of credit |
|
| 202 |
|
|
| 202 |
|
|
| 202 |
|
|
| - |
|
|
| - |
|
Commercial loans |
|
| 277 |
|
|
| 277 |
|
|
| - |
|
|
| 277 |
|
|
| 277 |
|
Consumer loans |
|
| 4 |
|
|
| 4 |
|
|
| - |
|
|
| 4 |
|
|
| 4 |
|
Total Loans |
| $ | 3,446 |
|
| $ | 3,446 |
|
| $ | 1,841 |
|
| $ | 1,605 |
|
| $ | 559 |
|
Accruing Collateral Dependent Loans |
| Unpaid Principal Balance |
|
| Recorded Investment |
|
| Loans With No Allowance |
|
| Loans With Allowance |
|
| Allowance for Credit Losses |
| |||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Residential real estate |
| $ | 1,090 |
|
| $ | 1,090 |
|
| $ | 926 |
|
| $ | 164 |
|
| $ | 11 |
|
Commercial real estate |
|
| 304 |
|
|
| 304 |
|
|
| 304 |
|
|
| - |
|
|
| - |
|
Construction and land development |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total mortgage loans on real estate |
|
| 1,394 |
|
|
| 1,394 |
|
|
| 1,230 |
|
|
| 164 |
|
|
| 11 |
|
Home equity lines of credit |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Commercial loans |
|
| 60 |
|
|
| 60 |
|
|
| 34 |
|
|
| 26 |
|
|
| 25 |
|
Consumer loans |
|
| 30 |
|
|
| 30 |
|
|
| - |
|
|
| 30 |
|
|
| 30 |
|
Total Loans |
| $ | 1,484 |
|
| $ | 1,484 |
|
| $ | 1,264 |
|
| $ | 220 |
|
| $ | 66 |
|
Total Collateral Dependent Loans |
| Unpaid Principal Balance |
|
| Recorded Investment |
|
| Loans With No Allowance |
|
| Loans With Allowance |
|
| Allowance for Credit Losses |
| |||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Residential real estate |
| $ | 2,396 |
|
| $ | 2,396 |
|
| $ | 2,232 |
|
| $ | 164 |
|
| $ | 11 |
|
Commercial real estate |
|
| 1,956 |
|
|
| 1,956 |
|
|
| 632 |
|
|
| 1,324 |
|
|
| 278 |
|
Construction and land development |
|
| 5 |
|
|
| 5 |
|
|
| 5 |
|
|
| - |
|
|
| - |
|
Total mortgage loans on real estate |
|
| 4,357 |
|
|
| 4,357 |
|
|
| 2,869 |
|
|
| 1,488 |
|
|
| 289 |
|
Home equity lines of credit |
|
| 202 |
|
|
| 202 |
|
|
| 202 |
|
|
| - |
|
|
| - |
|
Commercial loans |
|
| 337 |
|
|
| 337 |
|
|
| 34 |
|
|
| 303 |
|
|
| 302 |
|
Consumer loans |
|
| 34 |
|
|
| 34 |
|
|
| - |
|
|
| 34 |
|
|
| 34 |
|
Total Loans |
| $ | 4,930 |
|
| $ | 4,930 |
|
| $ | 3,105 |
|
| $ | 1,825 |
|
| $ | 625 |
|
Accruing Impaired Loans |
| Total Impaired Loans |
|
| Impaired Loans With No Allowance |
|
| Impaired Loans With Allowance |
|
| Allowance for Loan Losses |
| ||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
| $ | 942 |
|
| $ | 942 |
|
| $ | - |
|
| $ | - |
|
Commercial real estate |
|
| 2,241 |
|
|
| 549 |
|
|
| 1,692 |
|
|
| 367 |
|
Construction and land development |
|
| 171 |
|
|
| - |
|
|
| 171 |
|
|
| 22 |
|
Total mortgage loans on real estate |
|
| 3,354 |
|
|
| 1,491 |
|
|
| 1,863 |
|
|
| 389 |
|
Home equity lines of credit |
|
| 100 |
|
|
| 100 |
|
|
| - |
|
|
| - |
|
Commercial loans |
|
| 533 |
|
|
| 128 |
|
|
| 405 |
|
|
| 407 |
|
Consumer loans |
|
| 44 |
|
|
| - |
|
|
| 44 |
|
|
| 22 |
|
Total Loans |
| $ | 4,031 |
|
| $ | 1,719 |
|
| $ | 2,312 |
|
| $ | 818 |
|
19
Total Impaired Loans |
| Total Impaired Loans |
|
| Impaired Loans With No Allowance |
|
| Impaired Loans With Allowance |
|
| Allowance for Loan Losses |
| ||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
| $ | 2,448 |
|
| $ | 1,030 |
|
| $ | 1,418 |
|
| $ | 527 |
|
Commercial real estate |
|
| 2,496 |
|
|
| 804 |
|
|
| 1,692 |
|
|
| 367 |
|
Construction and land development |
|
| 171 |
|
|
| - |
|
|
| 171 |
|
|
| 22 |
|
Total mortgage loans on real estate |
|
| 5,115 |
|
|
| 1,834 |
|
|
| 3,281 |
|
|
| 916 |
|
Home equity lines of credit |
|
| 100 |
|
|
| 100 |
|
|
| - |
|
|
| - |
|
Commercial loans |
|
| 533 |
|
|
| 128 |
|
|
| 405 |
|
|
| 407 |
|
Consumer loans |
|
| 98 |
|
|
| 54 |
|
|
| 44 |
|
|
| 22 |
|
Total Loans |
| $ | 5,846 |
|
| $ | 2,116 |
|
| $ | 3,730 |
|
| $ | 1,345 |
|
The following table presents impairedcollateral dependent loans by class of loans as of December 31, 2016.2023 (amounts in thousands).
Nonaccruing Collateral Dependent Loans |
| Unpaid Principal Balance |
|
| Recorded Investment |
|
| Loans With No Allowance |
|
| Loans With Allowance |
|
| Allowance for Credit Losses |
| |||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Residential real estate |
| $ | 1,229 |
|
| $ | 1,229 |
|
| $ | 1,229 |
|
| $ | - |
|
| $ | - |
|
Commercial real estate |
|
| 2,769 |
|
|
| 2,769 |
|
|
| 1,423 |
|
|
| 1,346 |
|
|
| 300 |
|
Construction and land development |
|
| 364 |
|
|
| 364 |
|
|
| 364 |
|
|
| - |
|
|
| - |
|
Total mortgage loans on real estate |
|
| 4,362 |
|
|
| 4,362 |
|
|
| 3,016 |
|
|
| 1,346 |
|
|
| 300 |
|
Home equity lines of credit |
|
| 202 |
|
|
| 202 |
|
|
| 202 |
|
|
| - |
|
|
| - |
|
Commercial loans |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Consumer loans |
|
| 5 |
|
|
| 5 |
|
|
| - |
|
|
| 5 |
|
|
| 5 |
|
Total Loans |
| $ | 4,569 |
|
| $ | 4,569 |
|
| $ | 3,218 |
|
| $ | 1,351 |
|
| $ | 305 |
|
Accruing Collateral Dependent Loans |
| Unpaid Principal Balance |
|
| Recorded Investment |
|
| Loans With No Allowance |
|
| Loans With Allowance |
|
| Allowance for Credit Losses |
| |||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Residential real estate |
| $ | 1,099 |
|
| $ | 1,099 |
|
| $ | 934 |
|
| $ | 165 |
|
| $ | 12 |
|
Commercial real estate |
|
| 9 |
|
|
| 9 |
|
|
| 9 |
|
|
| - |
|
|
| - |
|
Construction and land development |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total mortgage loans on real estate |
|
| 1,108 |
|
|
| 1,108 |
|
|
| 943 |
|
|
| 165 |
|
|
| 12 |
|
Home equity lines of credit |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Commercial loans |
|
| 26 |
|
|
| 26 |
|
|
| - |
|
|
| 26 |
|
|
| 26 |
|
Consumer loans |
|
| 35 |
|
|
| 35 |
|
|
| - |
|
|
| 35 |
|
|
| 35 |
|
Total Loans |
| $ | 1,169 |
|
| $ | 1,169 |
|
| $ | 943 |
|
| $ | 226 |
|
| $ | 73 |
|
Total Collateral Dependent Loans |
| Unpaid Principal Balance |
|
| Recorded Investment |
|
| Loans With No Allowance |
|
| Loans With Allowance |
|
| Allowance for Credit Losses |
| |||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Residential real estate |
| $ | 2,328 |
|
| $ | 2,328 |
|
| $ | 2,163 |
|
| $ | 165 |
|
| $ | 12 |
|
Commercial real estate |
|
| 2,778 |
|
|
| 2,778 |
|
|
| 1,432 |
|
|
| 1,346 |
|
|
| 300 |
|
Construction and land development |
|
| 364 |
|
|
| 364 |
|
|
| 364 |
|
|
| - |
|
|
| - |
|
Total mortgage loans on real estate |
|
| 5,470 |
|
|
| 5,470 |
|
|
| 3,959 |
|
|
| 1,511 |
|
|
| 312 |
|
Home equity lines of credit |
|
| 202 |
|
|
| 202 |
|
|
| 202 |
|
|
| - |
|
|
| - |
|
Commercial loans |
|
| 26 |
|
|
| 26 |
|
|
| - |
|
|
| 26 |
|
|
| 26 |
|
Consumer loans |
|
| 40 |
|
|
| 40 |
|
|
| - |
|
|
| 40 |
|
|
| 40 |
|
Total Loans |
| $ | 5,738 |
|
| $ | 5,738 |
|
| $ | 4,161 |
|
| $ | 1,577 |
|
| $ | 378 |
|
Nonaccruing Impaired Loans |
| Total Impaired Loans |
|
| Impaired Loans With No Allowance |
|
| Impaired Loans With Allowance |
|
| Allowance for Loan Losses |
| ||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
| $ | 223 |
|
| $ | 96 |
|
| $ | 127 |
|
| $ | 53 |
|
Commercial real estate |
|
| 3,470 |
|
|
| 1,010 |
|
|
| 2,460 |
|
|
| 430 |
|
Construction and land development |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total mortgage loans on real estate |
|
| 3,693 |
|
|
| 1,106 |
|
|
| 2,587 |
|
|
| 483 |
|
Home equity lines of credit |
|
| 100 |
|
|
| 100 |
|
|
| - |
|
|
| - |
|
Commercial loans |
|
| 93 |
|
|
| 93 |
|
|
| - |
|
|
| - |
|
Consumer loans |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total Loans |
| $ | 3,886 |
|
| $ | 1,299 |
|
| $ | 2,587 |
|
| $ | 483 |
|
20
Accruing Impaired Loans |
| Total Impaired Loans |
|
| Impaired Loans With No Allowance |
|
| Impaired Loans With Allowance |
|
| Allowance for Loan Losses |
| ||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
| $ | 978 |
|
| $ | 978 |
|
| $ | - |
|
| $ | - |
|
Commercial real estate |
|
| 1,905 |
|
|
| 589 |
|
|
| 1,316 |
|
|
| 317 |
|
Construction and land development |
|
| 31 |
|
|
| 31 |
|
|
| - |
|
|
| - |
|
Total mortgage loans on real estate |
|
| 2,914 |
|
|
| 1,598 |
|
|
| 1,316 |
|
|
| 317 |
|
Home equity lines of credit |
|
| 100 |
|
|
| 100 |
|
|
| - |
|
|
| - |
|
Commercial loans |
|
| 592 |
|
|
| 136 |
|
|
| 456 |
|
|
| 456 |
|
Consumer loans |
|
| 39 |
|
|
| - |
|
|
| 39 |
|
|
| 19 |
|
Total Loans |
| $ | 3,645 |
|
| $ | 1,834 |
|
| $ | 1,811 |
|
| $ | 792 |
|
Total Impaired Loans |
| Total Impaired Loans |
|
| Impaired Loans With No Allowance |
|
| Impaired Loans With Allowance |
|
| Allowance for Loan Losses |
| ||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
| $ | 1,201 |
|
| $ | 1,074 |
|
| $ | 127 |
|
| $ | 53 |
|
Commercial real estate |
|
| 5,375 |
|
|
| 1,599 |
|
|
| 3,776 |
|
|
| 747 |
|
Construction and land development |
|
| 31 |
|
|
| 31 |
|
|
| - |
|
|
| - |
|
Total mortgage loans on real estate |
|
| 6,607 |
|
|
| 2,704 |
|
|
| 3,903 |
|
|
| 800 |
|
Home equity lines of credit |
|
| 200 |
|
|
| 200 |
|
|
| - |
|
|
| - |
|
Commercial loans |
|
| 685 |
|
|
| 229 |
|
|
| 456 |
|
|
| 456 |
|
Consumer loans |
|
| 39 |
|
|
| - |
|
|
| 39 |
|
|
| 19 |
|
Total Loans |
| $ | 7,531 |
|
| $ | 3,133 |
|
| $ | 4,398 |
|
| $ | 1,275 |
|
The following table presentstables present the average recorded investmentperformance status of loans as of March 31, 2024 and December 31, 2023, by class of loans (amounts in impaired loans and the interest income recognized on impaired loans in the nine months ended September 30, 2017 and 2016 by loan category.thousands).
As of March 31, 2024 |
| Performing |
|
| Nonperforming |
|
| Total |
| |||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
| |||
Residential real estate |
| $ | 821,413 |
|
| $ | 1,717 |
|
| $ | 823,130 |
|
Commercial real estate |
|
| 660,549 |
|
|
| 1,652 |
|
|
| 662,201 |
|
Construction and land development |
|
| 264,223 |
|
|
| 293 |
|
|
| 264,516 |
|
Total mortgage loans on real estate |
|
| 1,746,185 |
|
|
| 3,662 |
|
|
| 1,749,847 |
|
Home equity lines of credit |
|
| 103,265 |
|
|
| 378 |
|
|
| 103,643 |
|
Commercial loans |
|
| 368,228 |
|
|
| 277 |
|
|
| 368,505 |
|
Consumer loans |
|
| 55,801 |
|
|
| 108 |
|
|
| 55,909 |
|
Total Loans |
| $ | 2,273,479 |
|
| $ | 4,425 |
|
| $ | 2,277,904 |
|
As of December 31, 2023 |
| Performing |
|
| Nonperforming |
|
| Total |
| |||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
| |||
Residential real estate |
| $ | 807,682 |
|
| $ | 2,015 |
|
| $ | 809,697 |
|
Commercial real estate |
|
| 612,965 |
|
|
| 2,769 |
|
|
| 615,734 |
|
Construction and land development |
|
| 296,187 |
|
|
| 511 |
|
|
| 296,698 |
|
Total mortgage loans on real estate |
|
| 1,716,834 |
|
|
| 5,295 |
|
|
| 1,722,129 |
|
Home equity lines of credit |
|
| 95,115 |
|
|
| 429 |
|
|
| 95,544 |
|
Commercial loans |
|
| 374,968 |
|
|
| - |
|
|
| 374,968 |
|
Consumer loans |
|
| 55,444 |
|
|
| 143 |
|
|
| 55,587 |
|
Total Loans |
| $ | 2,242,361 |
|
| $ | 5,867 |
|
| $ | 2,248,228 |
|
|
| Nine Months Ended |
|
| Nine Months Ended |
| ||||||||||||||||||
|
| September 30, 2017 |
|
| September 30, 2016 |
| ||||||||||||||||||
|
| Average |
|
| Ending |
|
|
|
|
|
| Average |
|
| Ending |
|
|
|
|
| ||||
|
| Recorded |
|
| Recorded |
|
| Interest |
|
| Recorded |
|
| Recorded |
|
| Interest |
| ||||||
|
| Investment |
|
| Investment |
|
| Income |
|
| Investment |
|
| Investment |
|
| Income |
| ||||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate |
| $ | 2,087 |
|
| $ | 2,448 |
|
| $ | 53 |
|
| $ | 1,173 |
|
| $ | 1,030 |
|
| $ | 61 |
|
Commercial real estate |
|
| 3,123 |
|
|
| 2,496 |
|
|
| 74 |
|
|
| 4,049 |
|
|
| 4,093 |
|
|
| 106 |
|
Construction and land development |
|
| 8 |
|
|
| 171 |
|
|
| - |
|
|
| 75 |
|
|
| 50 |
|
|
| 4 |
|
Total mortgage loans on real estate |
|
| 5,218 |
|
|
| 5,115 |
|
|
| 127 |
|
|
| 5,297 |
|
|
| 5,173 |
|
|
| 171 |
|
Home equity lines of credit |
|
| 75 |
|
|
| 100 |
|
|
| 4 |
|
|
| 100 |
|
|
| 100 |
|
|
| 4 |
|
Commercial loans |
|
| 589 |
|
|
| 533 |
|
|
| 19 |
|
|
| 1,057 |
|
|
| 816 |
|
|
| 18 |
|
Consumer loans |
|
| 27 |
|
|
| 98 |
|
|
| 1 |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total Loans |
| $ | 5,909 |
|
| $ | 5,846 |
|
| $ | 151 |
|
| $ | 6,454 |
|
| $ | 6,089 |
|
| $ | 193 |
|
21
The following tables present the aging of loans and non-accrual loan balancesloans as of September 30, 2017March 31, 2024 and December 31, 2016,2023, by class of loans.loans (amounts in thousands).
|
| Accruing Loans |
|
|
|
|
|
|
|
|
|
| ||||||||||||
As of March 31, 2024 |
| Current |
|
| 30-89 Days |
|
| 90+ Days |
|
| Nonaccrual |
|
| Total Loans |
|
| Nonaccrual |
| ||||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Residential real estate |
| $ | 818,821 |
|
| $ | 2,592 |
|
| $ | - |
|
| $ | 1,717 |
|
| $ | 823,130 |
|
| $ | 1,717 |
|
Commercial real estate |
|
| 657,692 |
|
|
| 2,857 |
|
|
| - |
|
|
| 1,652 |
|
|
| 662,201 |
|
|
| 328 |
|
Construction and land development |
|
| 264,170 |
|
|
| 53 |
|
|
| 68 |
|
|
| 225 |
|
|
| 264,516 |
|
|
| 225 |
|
Total mortgage loans on real estate |
|
| 1,740,683 |
|
|
| 5,502 |
|
|
| 68 |
|
|
| 3,594 |
|
|
| 1,749,847 |
|
|
| 2,270 |
|
Home equity lines of credit |
|
| 102,892 |
|
|
| 373 |
|
|
| - |
|
|
| 378 |
|
|
| 103,643 |
|
|
| 378 |
|
Commercial loans |
|
| 367,730 |
|
|
| 498 |
|
|
| - |
|
|
| 277 |
|
|
| 368,505 |
|
|
| - |
|
Consumer loans |
|
| 55,400 |
|
|
| 401 |
|
|
| - |
|
|
| 108 |
|
|
| 55,909 |
|
|
| 104 |
|
Total Loans |
| $ | 2,266,705 |
|
| $ | 6,774 |
|
| $ | 68 |
|
| $ | 4,357 |
|
| $ | 2,277,904 |
|
| $ | 2,752 |
|
|
| Accruing Loans |
|
|
|
|
|
|
|
|
|
| ||||||||||||
As of December 31, 2023 |
| Current |
|
| 30-89 Days |
|
| 90+ Days |
|
| Nonaccrual |
|
| Total Loans |
|
| Nonaccrual |
| ||||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Residential real estate |
| $ | 805,262 |
|
| $ | 2,420 |
|
| $ | 288 |
|
| $ | 1,727 |
|
| $ | 809,697 |
|
| $ | 1,727 |
|
Commercial real estate |
|
| 612,901 |
|
|
| 64 |
|
|
| - |
|
|
| 2,769 |
|
|
| 615,734 |
|
|
| 1,423 |
|
Construction and land development |
|
| 296,030 |
|
|
| 157 |
|
|
| - |
|
|
| 511 |
|
|
| 296,698 |
|
|
| 511 |
|
Total mortgage loans on real estate |
|
| 1,714,193 |
|
|
| 2,641 |
|
|
| 288 |
|
|
| 5,007 |
|
|
| 1,722,129 |
|
|
| 3,661 |
|
Home equity lines of credit |
|
| 95,003 |
|
|
| 112 |
|
|
| - |
|
|
| 429 |
|
|
| 95,544 |
|
|
| 429 |
|
Commercial loans |
|
| 374,699 |
|
|
| 269 |
|
|
| - |
|
|
| - |
|
|
| 374,968 |
|
|
| - |
|
Consumer loans |
|
| 55,061 |
|
|
| 383 |
|
|
| - |
|
|
| 143 |
|
|
| 55,587 |
|
|
| 137 |
|
Total Loans |
| $ | 2,238,956 |
|
| $ | 3,405 |
|
| $ | 288 |
|
| $ | 5,579 |
|
| $ | 2,248,228 |
|
| $ | 4,227 |
|
|
| Accruing Loans |
|
|
|
|
|
|
|
|
| |||||||||
As of September 30, 2017 |
| Current |
|
| 30-89 Days Past Due |
|
| 90+ Days Past Due |
|
| Nonaccrual Loans |
|
| Total Loans |
| |||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
| $ | 129,996 |
|
| $ | 1,528 |
|
| $ | 626 |
|
| $ | 1,810 |
|
| $ | 133,960 |
|
Commercial real estate |
|
| 168,746 |
|
|
| 681 |
|
|
| 252 |
|
|
| 328 |
|
|
| 170,007 |
|
Construction and land development |
|
| 65,764 |
|
|
| 69 |
|
|
| - |
|
|
| 87 |
|
|
| 65,920 |
|
Total mortgage loans on real estate |
|
| 364,506 |
|
|
| 2,278 |
|
|
| 878 |
|
|
| 2,225 |
|
|
| 369,887 |
|
Home equity lines of credit |
|
| 34,806 |
|
|
| 201 |
|
|
| - |
|
|
| 80 |
|
|
| 35,087 |
|
Commercial loans |
|
| 98,999 |
|
|
| 342 |
|
|
| 76 |
|
|
| 6 |
|
|
| 99,423 |
|
Consumer loans |
|
| 22,226 |
|
|
| 186 |
|
|
| 8 |
|
|
| 138 |
|
|
| 22,558 |
|
Total Loans |
| $ | 520,537 |
|
| $ | 3,007 |
|
| $ | 962 |
|
| $ | 2,449 |
|
| $ | 526,955 |
|
22
|
| Accruing Loans |
|
|
|
|
|
|
|
|
| |||||||||
As of December 31, 2016 |
| Current |
|
| 30-89 Days Past Due |
|
| 90+ Days Past Due |
|
| Nonaccrual Loans |
|
| Total Loans |
| |||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
| $ | 132,603 |
|
| $ | 2,585 |
|
| $ | - |
|
| $ | 453 |
|
| $ | 135,641 |
|
Commercial real estate |
|
| 170,363 |
|
|
| 708 |
|
|
| - |
|
|
| 3,471 |
|
|
| 174,542 |
|
Construction and land development |
|
| 64,111 |
|
|
| 312 |
|
|
| - |
|
|
| 26 |
|
|
| 64,449 |
|
Total mortgage loans on real estate |
|
| 367,077 |
|
|
| 3,605 |
|
|
| - |
|
|
| 3,950 |
|
|
| 374,632 |
|
Home equity lines of credit |
|
| 35,257 |
|
|
| 320 |
|
|
| - |
|
|
| 184 |
|
|
| 35,761 |
|
Commercial loans |
|
| 90,579 |
|
|
| 76 |
|
|
| 19 |
|
|
| 130 |
|
|
| 90,804 |
|
Consumer loans |
|
| 20,431 |
|
|
| 285 |
|
|
| 20 |
|
|
| 122 |
|
|
| 20,858 |
|
Total Loans |
| $ | 513,344 |
|
| $ | 4,286 |
|
| $ | 39 |
|
| $ | 4,386 |
|
| $ | 522,055 |
|
The Bank categorizes loans in risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Bank analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a continuous basis. The Bank uses the following definitions for its risk ratings:
Special Mention - Weakness exists that could cause future impairment, including the deterioration of financial ratios, past due status and questionable management capabilities. Collateral values generally afford adequate coverage but may not be immediately marketable.
Substandard - Specific and well-defined weaknesses exist that may include poor liquidity and deterioration of financial ratios. The loan may be past due and related deposit accounts experiencing overdrafts. Immediate corrective action is necessary.
Doubtful - Specific weaknesses characterized as Substandard that are severe enough to make collection in full unlikely. There is no reliable secondary source of full repayment. Loans classified as doubtful will be placed on non-accrual, analyzed and fully or partially charged-off based on review of collateral and other relevant factors.
23
Loans not meeting the criteria above that are analyzedevaluated individually as part of the above described process are considered to be Pass rated loans. As of September 30, 2017 and December 31, 2016,
The following table presents loan balances classified by credit quality indicator, loan type and based on the most recent analysis performedyear of origination as of those dates, the risk categoryMarch 31, 2024 (amounts in thousands).
|
| 2024 |
|
| 2023 |
|
| 2022 |
|
| 2021 |
|
| 2020 |
|
| Prior |
|
| Revolving Loans |
|
| Total |
| ||||||||
Residential real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
| $ | 24,786 |
|
| $ | 214,582 |
|
| $ | 348,365 |
|
| $ | 117,437 |
|
| $ | 66,311 |
|
| $ | 40,678 |
|
| $ | 2,799 |
|
| $ | 814,958 |
|
Special Mention |
|
| 232 |
|
|
| 1,700 |
|
|
| 2,227 |
|
|
| 580 |
|
|
| 156 |
|
|
| 205 |
|
|
| - |
|
|
| 5,100 |
|
Substandard |
|
| 74 |
|
|
| 35 |
|
|
| 1,533 |
|
|
| 82 |
|
|
| 258 |
|
|
| 1,090 |
|
|
| - |
|
|
| 3,072 |
|
Doubtful |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total residential real estate |
| $ | 25,092 |
|
| $ | 216,317 |
|
| $ | 352,125 |
|
| $ | 118,099 |
|
| $ | 66,725 |
|
| $ | 41,973 |
|
| $ | 2,799 |
|
| $ | 823,130 |
|
Commercial real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
| $ | 9,780 |
|
| $ | 103,686 |
|
| $ | 210,951 |
|
| $ | 98,190 |
|
| $ | 94,837 |
|
| $ | 112,271 |
|
| $ | 17,332 |
|
| $ | 647,047 |
|
Special Mention |
|
| - |
|
|
| 542 |
|
|
| 975 |
|
|
| 4,218 |
|
|
| 1,495 |
|
|
| 5,054 |
|
|
| 772 |
|
|
| 13,056 |
|
Substandard |
|
| - |
|
|
| 48 |
|
|
| - |
|
|
| - |
|
|
| 45 |
|
|
| 1,995 |
|
|
| 10 |
|
|
| 2,098 |
|
Doubtful |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total commercial real estate |
| $ | 9,780 |
|
| $ | 104,276 |
|
| $ | 211,926 |
|
| $ | 102,408 |
|
| $ | 96,377 |
|
| $ | 119,320 |
|
| $ | 18,114 |
|
| $ | 662,201 |
|
Current-period gross charge-offs |
| $ | - |
|
| $ | - |
|
|
|
|
| $ | - |
|
| $ | - |
|
| $ | 249 |
|
| $ | - |
|
| $ | 249 |
| |
Construction and land development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
| $ | 14,407 |
|
| $ | 148,289 |
|
| $ | 71,009 |
|
| $ | 13,707 |
|
| $ | 3,633 |
|
| $ | 4,141 |
|
| $ | 8,412 |
|
| $ | 263,598 |
|
Special Mention |
|
| - |
|
|
| 211 |
|
|
| 450 |
|
|
| - |
|
|
| - |
|
|
| 32 |
|
|
| - |
|
|
| 693 |
|
Substandard |
|
| - |
|
|
| - |
|
|
| 46 |
|
|
| 82 |
|
|
| 5 |
|
|
| 92 |
|
|
| - |
|
|
| 225 |
|
Doubtful |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total construction and land development |
| $ | 14,407 |
|
| $ | 148,500 |
|
| $ | 71,505 |
|
| $ | 13,789 |
|
| $ | 3,638 |
|
| $ | 4,265 |
|
| $ | 8,412 |
|
| $ | 264,516 |
|
Current-period gross charge-offs |
| $ | - |
|
| $ | - |
|
| $ | 19 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 19 |
|
Home equity lines of credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
| $ | 73 |
|
| $ | 749 |
|
| $ | 450 |
|
| $ | - |
|
| $ | 582 |
|
| $ | - |
|
| $ | 101,174 |
|
| $ | 103,028 |
|
Special Mention |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 197 |
|
|
| 197 |
|
Substandard |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 20 |
|
|
| 398 |
|
|
| 418 |
|
Doubtful |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total home equity lines of credit |
| $ | 73 |
|
| $ | 749 |
|
| $ | 450 |
|
| $ | - |
|
| $ | 582 |
|
| $ | 20 |
|
| $ | 101,769 |
|
| $ | 103,643 |
|
Current-period gross charge-offs |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 50 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 50 |
|
Commercial loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
| $ | 16,103 |
|
| $ | 88,943 |
|
| $ | 71,182 |
|
| $ | 29,083 |
|
| $ | 14,844 |
|
| $ | 13,205 |
|
| $ | 126,285 |
|
| $ | 359,645 |
|
Special Mention |
|
| - |
|
|
| 165 |
|
|
| 134 |
|
|
| 141 |
|
|
| 220 |
|
|
| 4,035 |
|
|
| 3,828 |
|
|
| 8,523 |
|
Substandard |
|
| - |
|
|
| - |
|
|
| 159 |
|
|
| - |
|
|
| 41 |
|
|
| - |
|
|
| 137 |
|
|
| 337 |
|
Doubtful |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total commercial loans |
| $ | 16,103 |
|
| $ | 89,108 |
|
| $ | 71,475 |
|
| $ | 29,224 |
|
| $ | 15,105 |
|
| $ | 17,240 |
|
| $ | 130,250 |
|
| $ | 368,505 |
|
Current-period gross charge-offs |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 88 |
|
| $ | - |
|
| $ | 88 |
|
Consumer loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
| $ | 4,942 |
|
| $ | 18,739 |
|
| $ | 13,005 |
|
| $ | 7,403 |
|
| $ | 3,632 |
|
| $ | 3,639 |
|
| $ | 4,054 |
|
| $ | 55,414 |
|
Special Mention |
|
| 29 |
|
|
| 55 |
|
|
| 102 |
|
|
| 78 |
|
|
| 16 |
|
|
| 2 |
|
|
| 23 |
|
|
| 305 |
|
Substandard |
|
| - |
|
|
| 28 |
|
|
| 39 |
|
|
| 26 |
|
|
| 54 |
|
|
| 33 |
|
|
| 10 |
|
|
| 190 |
|
Doubtful |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total consumer loans |
| $ | 4,971 |
|
| $ | 18,822 |
|
| $ | 13,146 |
|
| $ | 7,507 |
|
| $ | 3,702 |
|
| $ | 3,674 |
|
| $ | 4,087 |
|
| $ | 55,909 |
|
Current-period gross charge-offs |
| $ | - |
|
| $ | 45 |
|
| $ | 16 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 61 |
|
Total Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
| $ | 70,091 |
|
| $ | 574,988 |
|
| $ | 714,962 |
|
| $ | 265,820 |
|
| $ | 183,839 |
|
| $ | 173,934 |
|
| $ | 260,056 |
|
| $ | 2,243,690 |
|
Special Mention |
|
| 261 |
|
|
| 2,673 |
|
|
| 3,888 |
|
|
| 5,017 |
|
|
| 1,887 |
|
|
| 9,328 |
|
|
| 4,820 |
|
|
| 27,874 |
|
Substandard |
|
| 74 |
|
|
| 111 |
|
|
| 1,777 |
|
|
| 190 |
|
|
| 403 |
|
|
| 3,230 |
|
|
| 555 |
|
|
| 6,340 |
|
Doubtful |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total loans |
| $ | 70,426 |
|
| $ | 577,772 |
|
| $ | 720,627 |
|
| $ | 271,027 |
|
| $ | 186,129 |
|
| $ | 186,492 |
|
| $ | 265,431 |
|
| $ | 2,277,904 |
|
Current-period gross charge-offs |
| $ | - |
|
| $ | 45 |
|
| $ | 35 |
|
| $ | 50 |
|
| $ | - |
|
| $ | 337 |
|
| $ | - |
|
| $ | 467 |
|
24
The following table presents loan balances classified by credit quality indicator, loan type and based on year of loans by classorigination as of loans is as follows:December 31, 2023 (amounts in thousands).
|
| 2023 |
|
| 2022 |
|
| 2021 |
|
| 2020 |
|
| 2019 |
|
| Prior |
|
| Revolving Loans |
|
| Total |
| ||||||||
Residential real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
| $ | 209,016 |
|
| $ | 354,153 |
|
| $ | 120,802 |
|
| $ | 68,229 |
|
| $ | 16,903 |
|
| $ | 25,380 |
|
| $ | 7,420 |
|
| $ | 801,903 |
|
Special Mention |
|
| 1,742 |
|
|
| 2,013 |
|
|
| 590 |
|
|
| 157 |
|
|
| 27 |
|
|
| 176 |
|
|
| - |
|
|
| 4,705 |
|
Substandard |
|
| 36 |
|
|
| 1,240 |
|
|
| 151 |
|
|
| 258 |
|
|
| 719 |
|
|
| 685 |
|
|
| - |
|
|
| 3,089 |
|
Doubtful |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total residential real estate |
| $ | 210,794 |
|
| $ | 357,406 |
|
| $ | 121,543 |
|
| $ | 68,644 |
|
| $ | 17,649 |
|
| $ | 26,241 |
|
| $ | 7,420 |
|
| $ | 809,697 |
|
Commercial real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
| $ | 81,239 |
|
| $ | 196,437 |
|
| $ | 99,072 |
|
| $ | 96,775 |
|
| $ | 51,677 |
|
| $ | 64,851 |
|
| $ | 14,977 |
|
| $ | 605,028 |
|
Special Mention |
|
| 419 |
|
|
| 978 |
|
|
| 383 |
|
|
| 881 |
|
|
| - |
|
|
| 5,122 |
|
|
| - |
|
|
| 7,783 |
|
Substandard |
|
| 49 |
|
|
| - |
|
|
| - |
|
|
| 46 |
|
|
| 50 |
|
|
| 2,769 |
|
|
| 9 |
|
|
| 2,923 |
|
Doubtful |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total commercial real estate |
| $ | 81,707 |
|
| $ | 197,415 |
|
| $ | 99,455 |
|
| $ | 97,702 |
|
| $ | 51,727 |
|
| $ | 72,742 |
|
| $ | 14,986 |
|
| $ | 615,734 |
|
Construction and land development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
| $ | 148,804 |
|
| $ | 93,987 |
|
| $ | 20,752 |
|
| $ | 4,678 |
|
| $ | 2,421 |
|
| $ | 4,591 |
|
| $ | 20,139 |
|
| $ | 295,372 |
|
Special Mention |
|
| 211 |
|
|
| 472 |
|
|
| 14 |
|
|
| - |
|
|
| 22 |
|
|
| 12 |
|
|
| - |
|
|
| 731 |
|
Substandard |
|
| - |
|
|
| 411 |
|
|
| 84 |
|
|
| - |
|
|
| - |
|
|
| 100 |
|
|
| - |
|
|
| 595 |
|
Doubtful |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total construction and land development |
| $ | 149,015 |
|
| $ | 94,870 |
|
| $ | 20,850 |
|
| $ | 4,678 |
|
| $ | 2,443 |
|
| $ | 4,703 |
|
| $ | 20,139 |
|
| $ | 296,698 |
|
Current-period gross charge-offs |
| $ | - |
|
| $ | - |
|
| $ | 196 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 196 |
|
Home equity lines of credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
| $ | 750 |
|
| $ | 450 |
|
| $ | - |
|
| $ | 852 |
|
| $ | - |
|
| $ | - |
|
| $ | 92,823 |
|
| $ | 94,875 |
|
Special Mention |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 200 |
|
|
| 200 |
|
Substandard |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 20 |
|
|
| 449 |
|
|
| 469 |
|
Doubtful |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total home equity lines of credit |
| $ | 750 |
|
| $ | 450 |
|
| $ | - |
|
| $ | 852 |
|
| $ | - |
|
| $ | 20 |
|
| $ | 93,472 |
|
| $ | 95,544 |
|
Commercial loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
| $ | 94,966 |
|
| $ | 73,381 |
|
| $ | 30,912 |
|
| $ | 16,257 |
|
| $ | 6,505 |
|
| $ | 10,700 |
|
| $ | 134,488 |
|
| $ | 367,209 |
|
Special Mention |
|
| 175 |
|
|
| 142 |
|
|
| 49 |
|
|
| 294 |
|
|
| 26 |
|
|
| 4,057 |
|
|
| 2,990 |
|
|
| 7,733 |
|
Substandard |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 26 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 26 |
|
Doubtful |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total commercial loans |
| $ | 95,141 |
|
| $ | 73,523 |
|
| $ | 30,961 |
|
| $ | 16,577 |
|
| $ | 6,531 |
|
| $ | 14,757 |
|
| $ | 137,478 |
|
| $ | 374,968 |
|
Current-period gross charge-offs |
| $ | 288 |
|
| $ | 46 |
|
| $ | 1 |
|
| $ | - |
|
| $ | 23 |
|
| $ | 338 |
|
| $ | - |
|
| $ | 696 |
|
Consumer loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
| $ | 21,479 |
|
| $ | 14,017 |
|
| $ | 8,188 |
|
| $ | 3,949 |
|
| $ | 1,950 |
|
| $ | 2,567 |
|
| $ | 2,933 |
|
| $ | 55,083 |
|
Special Mention |
|
| 77 |
|
|
| 107 |
|
|
| 36 |
|
|
| 16 |
|
|
| 3 |
|
|
| - |
|
|
| 27 |
|
|
| 266 |
|
Substandard |
|
| 65 |
|
|
| 46 |
|
|
| 26 |
|
|
| 56 |
|
|
| - |
|
|
| 34 |
|
|
| 11 |
|
|
| 238 |
|
Doubtful |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total consumer loans |
| $ | 21,621 |
|
| $ | 14,170 |
|
| $ | 8,250 |
|
| $ | 4,021 |
|
| $ | 1,953 |
|
| $ | 2,601 |
|
| $ | 2,971 |
|
| $ | 55,587 |
|
Current-period gross charge-offs |
| $ | - |
|
| $ | 120 |
|
| $ | - |
|
| $ | 15 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 135 |
|
Total Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Pass |
| $ | 556,254 |
|
| $ | 732,425 |
|
| $ | 279,726 |
|
| $ | 190,740 |
|
| $ | 79,456 |
|
| $ | 108,089 |
|
| $ | 272,780 |
|
| $ | 2,219,470 |
|
Special Mention |
|
| 2,624 |
|
|
| 3,712 |
|
|
| 1,072 |
|
|
| 1,348 |
|
|
| 78 |
|
|
| 9,367 |
|
|
| 3,217 |
|
|
| 21,418 |
|
Substandard |
|
| 150 |
|
|
| 1,697 |
|
|
| 261 |
|
|
| 386 |
|
|
| 769 |
|
|
| 3,608 |
|
|
| 469 |
|
|
| 7,340 |
|
Doubtful |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total loans |
| $ | 559,028 |
|
| $ | 737,834 |
|
| $ | 281,059 |
|
| $ | 192,474 |
|
| $ | 80,303 |
|
| $ | 121,064 |
|
| $ | 276,466 |
|
| $ | 2,248,228 |
|
Current-period gross charge-offs |
| $ | 288 |
|
| $ | 166 |
|
| $ | 197 |
|
| $ | 15 |
|
| $ | 23 |
|
| $ | 338 |
|
| $ | - |
|
| $ | 1,027 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
As of September 30, 2017 |
| Pass |
|
| Special Mention |
|
| Substandard |
|
| Doubtful |
|
| Total |
| |||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
| $ | 128,108 |
|
| $ | 2,414 |
|
| $ | 3,438 |
|
| $ | - |
|
| $ | 133,960 |
|
Commercial real estate |
|
| 162,245 |
|
|
| 5,592 |
|
|
| 2,170 |
|
|
| - |
|
|
| 170,007 |
|
Construction and land development |
|
| 64,826 |
|
|
| 917 |
|
|
| 177 |
|
|
| - |
|
|
| 65,920 |
|
Total mortgage loans on real estate |
|
| 355,179 |
|
|
| 8,923 |
|
|
| 5,785 |
|
|
| - |
|
|
| 369,887 |
|
Home equity lines of credit |
|
| 34,708 |
|
|
| 175 |
|
|
| 204 |
|
|
| - |
|
|
| 35,087 |
|
Commercial loans |
|
| 96,728 |
|
|
| 2,071 |
|
|
| 624 |
|
|
| - |
|
|
| 99,423 |
|
Consumer loans |
|
| 22,157 |
|
|
| 118 |
|
|
| 283 |
|
|
| - |
|
|
| 22,558 |
|
Total Loans |
| $ | 508,772 |
|
| $ | 11,287 |
|
| $ | 6,896 |
|
| $ | - |
|
| $ | 526,955 |
|
25
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
As of December 31, 2016 |
| Pass |
|
| Special Mention |
|
| Substandard |
|
| Doubtful |
|
| Total |
| |||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
| $ | 125,983 |
|
| $ | 6,272 |
|
| $ | 3,386 |
|
| $ | - |
|
| $ | 135,641 |
|
Commercial real estate |
|
| 165,381 |
|
|
| 3,837 |
|
|
| 5,324 |
|
|
| - |
|
|
| 174,542 |
|
Construction and land development |
|
| 63,151 |
|
|
| 605 |
|
|
| 451 |
|
|
| 242 |
|
|
| 64,449 |
|
Total mortgage loans on real estate |
|
| 354,515 |
|
|
| 10,714 |
|
|
| 9,161 |
|
|
| 242 |
|
|
| 374,632 |
|
Home equity lines of credit |
|
| 35,344 |
|
|
| 109 |
|
|
| 308 |
|
|
| - |
|
|
| 35,761 |
|
Commercial loans |
|
| 87,684 |
|
|
| 2,357 |
|
|
| 649 |
|
|
| 114 |
|
|
| 90,804 |
|
Consumer loans |
|
| 20,433 |
|
|
| 211 |
|
|
| 214 |
|
|
| - |
|
|
| 20,858 |
|
Total Loans |
| $ | 497,976 |
|
| $ | 13,391 |
|
| $ | 10,332 |
|
| $ | 356 |
|
| $ | 522,055 |
|
Note 6 – Fair Value Measurements and Disclosures
RiverThe Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities available-for-sale are recorded at fair value on a recurring basis. Additionally, from time to time, Riverthe Company may be required to record at fair value other assets on a nonrecurring basis, such as impairedindividually evaluated loans, foreclosed assets, and foreclosedrepossessed assets. These nonrecurring fair value adjustments typically involve application of the lower of cost or market accounting or write-downs of individual assets.
Fair Value Hierarchy
RiverThe Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:
Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets.
Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.
FollowingThe following is a description of valuation methodologies used for assets and liabilities recorded or disclosed at fair value.value:
Cash and cash equivalents – For disclosure purposes, for cash, due from banks, interest-bearing deposits and federal funds sold, the carrying amount is a reasonable estimate of fair value.
Certificates of deposit in banks – For disclosure purposes, the carrying amount of certificates of deposit is a reasonable estimate of fair value.
Investment Securities available-for-sale – Securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, repaymentprepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange and U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter market funds. Level 2 securities includedinclude mortgage-backed securities issued by government sponsored enterprises and municipal bonds. Securities classified as Level 3 include asset-backed securities in less liquid markets.
Restricted equity securities - ItMortgage loans held for sale – Loans held for sale are carried at the lower of cost or fair value, which is not practical to determine theevaluated on a loan-level basis. The fair value of restricted equity securities due to restrictions placed on transferability.loans held for sale is determined using quoted prices for similar assets, adjusted for specific attributes of that loan or other observable market data, such as outstanding commitments from third party investors.
Loans – River Financial Corporation does not record loans atThe fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowanceestimation process for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreementportfolio uses an exit price concept and reflects discounts the Company believes are considered impaired. When a loan is identified as individually impaired, management measures impairment using oneconsistent with discounts in the marketplace. Fair values are estimated for portfolios of three methods, including collateral value, market value ofloans with similar debt, and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which thecharacteristics. The fair value of the expected repayments or collateral exceed the recorded investments in such loans. As of September 30, 2017 and December 31, 2016, impaired loans were evaluated based on the fair value of the collateral. Impaired loans for which an allowance is established based on the fair value of collateral, or loans that were charged down according to the fair value of collateral, require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price, River Financial Corporation records the impaired loan as nonrecurring Level 2. When the fair value is based on an appraised value, River Financial Corporation records the impaired loan as nonrecurring Level 3.
For disclosure purposes, the fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings.ratings and for similar maturities. The fair value analysis also includes other assumptions to estimate fair value, intended to approximate those a market participant would use in an orderly transaction, with adjustments for discount rates, interest rates, liquidity, and credit spreads, as appropriate.
Accrued interest receivable – For variable ratedisclosure purposes, the fair value of the accrued interest on investments and loans is the carrying amount is a reasonable estimate of fair value.
Cash value of bankBank owned life insurance – For disclosure purposes, the fair value of the cash surrender value of bank owned life insurance policies is equivalent to the carrying value.
Deposit liabilities
26
Foreclosed assets – Other real estate properties and miscellaneous repossessed assets are adjusted to fair value upon transfer of the loans to foreclosed assets. Subsequently, foreclosed assets are carried at the lower of carrying value or fair value less selling costs. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price, the Company records the foreclosed asset as nonrecurring Level 2. When the fair value is based on an appraised value or management’s estimate of value, the Company records the foreclosed asset as nonrecurring Level 3.
Restricted equity securities – It is not practical to determine the fair value of restricted equity securities due to restrictions placed on transferability.
Deposits – For disclosure purposes, the fair value for demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered for deposits of similar remaining maturities.
Securities sold under agreements to repurchase – For disclosure purposes, the carrying amounts of securities sold under agreements to repurchase approximate their fair values.
Federal Home Loan Bank advances – For disclosure purposes, the fair value of Federal Home Loan Bank advances is estimated using discounted cash flow analyses using interest rates offered for borrowings with similar maturities.
Note PayableSubordinated debentures – For disclosure purposes, the carrying amountfair value is estimated using a discounted cash flow calculation that applies interest rates currently being offered for similar subordinated debenture offerings.
Accrued interest payable – For disclosure purposes, the fair value of the floating rate noteaccrued interest payable approximateson deposits is the carrying value.
Commitments to extend credit and standby letters of credit – Because commitments to extend credit and standby letters of credit are generally short-term and made using variable rates, the carrying value and estimated fair value.value associated with these instruments are immaterial.
27
Assets and liabilities measured at fair value on a recurring basis - – The only assets and liabilities measured at fair value on a recurring basis are our securities available-for-sale. Information related to River’sthe Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2017March 31, 2024 and December 31, 20162023 is as follows: (amounts in thousands)
|
| Fair Value Measurements At Reporting Date Using: |
| |||||||||||||
March 31, 2024 |
| Fair Value |
|
| Quoted Prices In |
|
| Significant Other |
|
| Significant |
| ||||
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential mortgage -backed |
| $ | 346,477 |
|
| $ | - |
|
| $ | 346,477 |
|
| $ | - |
|
U.S. treasury securities |
|
| 105,819 |
|
|
| - |
|
|
| 105,819 |
|
|
| - |
|
U.S. government sponsored enterprises |
|
| 56,421 |
|
|
| - |
|
|
| 56,421 |
|
|
| - |
|
State, county, and municipal |
|
| 60,979 |
|
|
| - |
|
|
| 60,979 |
|
|
| - |
|
Corporate debt obligations |
|
| 14,742 |
|
|
| - |
|
|
| 14,742 |
|
|
| - |
|
Totals |
| $ | 584,438 |
|
| $ | - |
|
| $ | 584,438 |
|
| $ | - |
|
|
| Fair Value Measurements At Reporting Date Using: |
| |||||||||||||
December 31, 2023 |
| Fair Value |
|
| Quoted Prices In |
|
| Significant Other |
|
| Significant |
| ||||
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential mortgage -backed |
| $ | 357,300 |
|
| $ | - |
|
| $ | 357,300 |
|
| $ | - |
|
U.S. treasury securities |
|
| 120,052 |
|
|
| - |
|
|
| 120,052 |
|
|
| - |
|
U.S. government sponsored enterprises |
|
| 63,566 |
|
|
| - |
|
|
| 63,566 |
|
|
| - |
|
State, county, and municipal |
|
| 64,661 |
|
|
| - |
|
|
| 64,661 |
|
|
| - |
|
Corporate debt obligations |
|
| 15,512 |
|
|
| - |
|
|
| 15,512 |
|
|
| - |
|
Totals |
| $ | 621,091 |
|
| $ | - |
|
| $ | 621,091 |
|
| $ | - |
|
The Company's policy is to recognize transfers in and transfers out of levels 1, 2, and 3 as of the end of a reporting period. There were no transfers between levels from December 31, 2023 to March 31, 2024 (amounts in thousands):
|
| Significant Unobservable Inputs (Level 3) |
| |||||
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||
Fair value, beginning of period |
| $ | - |
|
| $ | 5,621 |
|
Transfers into Level 3 |
|
| - |
|
|
| - |
|
Transfers out of Level 3 |
|
| - |
|
|
| (5,621 | ) |
Changes in unrealized gains/losses included in other comprehensive income for assets and liabilities still held at period-end |
|
| - |
|
|
| - |
|
Fair value, end of period |
| $ | - |
|
| $ | - |
|
|
| Fair Value Measurements At Reporting Date Using: |
| |||||||||||||
September 30, 2017 |
| Fair Value |
|
| Quoted Prices In Active Markets For Identical Assets (Level 1) |
|
| Significant Other Observable Inputs (Level 2) |
|
| Significant Unobservable Inputs (Level 3) |
| ||||
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage -backed |
| $ | 129,790 |
|
| $ | - |
|
| $ | 129,790 |
|
| $ | - |
|
U.S. government sponsored enterprises |
|
| 15,880 |
|
|
| - |
|
|
| 15,880 |
|
|
| - |
|
State, county, and municipal |
|
| 56,470 |
|
|
| - |
|
|
| 56,470 |
|
|
| - |
|
Corporate debt obligations |
|
| 1,829 |
|
|
| - |
|
|
| 1,829 |
|
|
| - |
|
Totals |
| $ | 203,969 |
|
| $ | - |
|
| $ | 203,969 |
|
| $ | - |
|
28
|
| Fair Value Measurements At Reporting Date Using: |
| |||||||||||||
December 31, 2016 |
| Fair Value |
|
| Quoted Prices In Active Markets For Identical Assets (Level 1) |
|
| Significant Other Observable Inputs (Level 2) |
|
| Significant Unobservable Inputs (Level 3) |
| ||||
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage -backed |
| $ | 108,675 |
|
| $ | - |
|
| $ | 108,675 |
|
| $ | - |
|
U.S. government sponsored enterprises |
|
| 15,327 |
|
|
| - |
|
|
| 15,327 |
|
|
| - |
|
State, county, and municipal |
|
| 57,586 |
|
|
| - |
|
|
| 57,586 |
|
|
| - |
|
Corporate debt obligations |
|
| 1,773 |
|
|
| - |
|
|
| 1,773 |
|
|
| - |
|
Totals |
| $ | 183,361 |
|
| $ | - |
|
| $ | 183,361 |
|
| $ | - |
|
Assets measured at fair value on a nonrecurring basis - River has – The Company may be required, from time to time, to measure certain assets that, under certain conditions, are subject to measurement at fair value on a non-recurring basis. The following table presentsnonrecurring basis in accordance with U.S. GAAP. These include assets that are measured at the financial instruments carriedlower of cost or market that were recognized at fair value below cost at the end of the period. Assets measured at fair value on the statement of financial position by caption and by levela nonrecurring basis are included in the fair value hierarchy, for which a non-recurring change in fair value has been recordedtable below as of September 30, 2017March 31, 2024 and December 31, 2016:2023 (amounts in thousands):
|
| Fair Value Measurements At Reporting Date Using: |
| |||||||||||||
March 31, 2024 |
| Fair Value |
|
| Quoted Prices In |
|
| Significant Other |
|
| Significant |
| ||||
Individually evaluated loans |
| $ | 4,305 |
|
| $ | - |
|
| $ | - |
|
| $ | 4,305 |
|
Foreclosed assets |
|
| 924 |
|
|
| - |
|
|
| - |
|
|
| 924 |
|
Totals |
| $ | 5,229 |
|
| $ | - |
|
| $ | - |
|
| $ | 5,229 |
|
December 31, 2023 |
| Fair Value |
|
| Quoted Prices In |
|
| Significant Other |
|
| Significant |
| ||||
Individually evaluated loans |
| $ | 5,360 |
|
| $ | - |
|
| $ | - |
|
| $ | 5,360 |
|
Foreclosed assets |
|
| 92 |
|
|
| - |
|
|
| - |
|
|
| 92 |
|
Totals |
| $ | 5,452 |
|
| $ | - |
|
| $ | - |
|
| $ | 5,452 |
|
|
| Fair Value Measurements At Reporting Date Using: |
| |||||||||||||
September 30, 2017 |
| Fair Value |
|
| Quoted Prices In Active Markets For Identical Assets (Level 1) |
|
| Significant Other Observable Inputs (Level 2) |
|
| Significant Unobservable Inputs (Level 3) |
| ||||
Impaired loans |
| $ | 4,501 |
|
| $ | - |
|
| $ | - |
|
| $ | 4,501 |
|
Foreclosed assets |
|
| 1,485 |
|
|
| - |
|
|
| - |
|
|
| 1,485 |
|
Totals |
| $ | 5,986 |
|
| $ | - |
|
| $ | - |
|
| $ | 5,986 |
|
December 31, 2016 |
| Fair Value |
|
| Quoted Prices In Active Markets For Identical Assets (Level 1) |
|
| Significant Other Observable Inputs (Level 2) |
|
| Significant Unobservable Inputs (Level 3) |
| ||||
Impaired loans |
| $ | 6,256 |
|
| $ | - |
|
| $ | - |
|
| $ | 6,256 |
|
Foreclosed assets |
|
| 1,151 |
|
|
| - |
|
|
| - |
|
|
| 1,151 |
|
Totals |
| $ | 7,407 |
|
| $ | - |
|
| $ | - |
|
| $ | 7,407 |
|
RiverThe Company has estimated the fair values of these assets using Level 3 inputs, specifically the appraised value of the collateral. ImpairedIndividually evaluated loan balances represent those collateral dependent impaired loans where management has estimated the credit loss by comparing the loan’s carrying value against the expected realizable fair value of the impairedcollateral dependent loan for the amount of the credit loss. For Level 3 assets measured at fair value on a non-recurring basis as of March 31, 2024 and December 31, 2023 for the valuation technique, we used appraisals. For the significant unobservable input, we used appraisal discounts, and weighted average input of 15-20% was used for the period ended March 31, 2024 and December 31, 2023.
29
The estimated fair values, and related carrying or notional amounts, of River’sthe Company’s financial instruments as of September 30, 2017March 31, 2024 and December 31, 20162023 are as follows:follows (amounts in thousands):
|
|
|
|
|
| Estimated Fair Value |
| |||||||||||||||||||||||||
September 30, 2017 |
| Carrying Amount |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||||||||||||||||||
|
|
|
| Estimated Fair Value |
| |||||||||||||||||||||||||||
March 31, 2024 |
| Carrying Amount |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||||||||||||||||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Cash and cash equivalents |
| $ | 17,920 |
|
| $ | 17,920 |
|
| $ | - |
|
| $ | - |
|
| $ | 213,931 |
|
| $ | 213,931 |
|
| $ | - |
|
| $ | - |
|
Certificates of deposit in banks |
|
| 5,214 |
|
|
| - |
|
|
| 5,214 |
|
|
| - |
|
|
| 4,218 |
|
|
| - |
|
|
| 4,218 |
|
|
| - |
|
Securities held-to-maturity |
|
| 125,711 |
|
|
| - |
|
|
| 100,538 |
|
|
| - |
| ||||||||||||||||
Securities available-for-sale |
|
| 203,969 |
|
|
| - |
|
|
| 203,969 |
|
|
| - |
|
|
| 584,438 |
|
|
| - |
|
|
| 584,438 |
|
|
| - |
|
Loans held-for-sale |
|
| 4,278 |
|
|
| - |
|
|
| 4,278 |
|
|
| - |
|
|
| 4,554 |
|
|
| - |
|
|
| 4,554 |
|
|
| - |
|
Loans receivable, net |
|
| 2,239,989 |
|
|
| - |
|
|
| 2,189,409 |
|
|
| 4,305 |
| ||||||||||||||||
Accrued interest receivable |
|
| 14,090 |
|
|
| - |
|
|
| 14,090 |
|
|
| - |
| ||||||||||||||||
Bank owned life insurance |
|
| 47,342 |
|
|
| - |
|
|
| 47,342 |
|
|
| - |
| ||||||||||||||||
Restricted equity securities |
|
| 1,472 |
|
|
| - |
|
|
| - |
|
|
| 1,472 |
|
|
| 12,526 |
|
|
| - |
|
|
| - |
|
|
| 12,526 |
|
Loans receivable |
|
| 518,285 |
|
|
| - |
|
|
| 515,265 |
|
|
| 4,501 |
| ||||||||||||||||
Bank owned life insurance |
|
| 15,067 |
|
|
| - |
|
|
| 15,067 |
|
|
| - |
| ||||||||||||||||
Accrued interest receivable |
|
| 2,322 |
|
|
| - |
|
|
| 2,322 |
|
|
| - |
| ||||||||||||||||
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Deposits |
|
| 682,673 |
|
|
| - |
|
|
| 681,673 |
|
|
| - |
|
|
| 2,893,762 |
|
|
| - |
|
|
| 2,654,851 |
|
|
| - |
|
Accrued interest payable |
|
| 119 |
|
|
| - |
|
|
| 119 |
|
|
| - |
| ||||||||||||||||
Securities sold under agreements to repurchase |
|
| 12,608 |
|
|
| - |
|
|
| 12,608 |
|
|
| - |
|
|
| 14,588 |
|
|
| - |
|
|
| 14,588 |
|
|
| - |
|
Federal Home Loan Bank advances |
|
| 15,000 |
|
|
| - |
|
|
| 14,996 |
|
|
| - |
|
|
| 205,000 |
|
|
| - |
|
|
| 204,090 |
|
|
| - |
|
Note payable |
|
| 5,625 |
|
|
| - |
|
|
| 5,625 |
|
|
| - |
| ||||||||||||||||
Subordinated debentures |
|
| 39,510 |
|
|
| - |
|
|
| 30,301 |
|
|
| - |
| ||||||||||||||||
Accrued interest payable |
|
| 2,022 |
|
|
| - |
|
|
| 2,022 |
|
|
| - |
|
|
|
|
|
| Estimated Fair Value |
| ||||||||||
December 31, 2023 |
| Carrying Amount |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents |
| $ | 72,547 |
|
| $ | 72,547 |
|
| $ | - |
|
| $ | - |
|
Certificates of deposit in banks |
|
| 4,218 |
|
|
| - |
|
|
| 4,218 |
|
|
| - |
|
Securities held-to-maturity |
|
| 126,793 |
|
|
| - |
|
|
| 103,174 |
|
|
| - |
|
Securities available-for-sale |
|
| 621,091 |
|
|
| - |
|
|
| 621,091 |
|
|
| - |
|
Loans held-for-sale |
|
| 4,595 |
|
|
| - |
|
|
| 4,595 |
|
|
| - |
|
Loans receivable, net |
|
| 2,211,015 |
|
|
| - |
|
|
| 2,180,082 |
|
|
| 5,360 |
|
Accrued interest receivable |
|
| 14,091 |
|
|
| - |
|
|
| 14,091 |
|
|
| - |
|
Bank owned life insurance |
|
| 47,001 |
|
|
| - |
|
|
| 47,001 |
|
|
| - |
|
Restricted equity securities |
|
| 13,433 |
|
|
| - |
|
|
| - |
|
|
| 13,433 |
|
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Deposits |
|
| 2,730,655 |
|
|
| - |
|
|
| 2,574,801 |
|
|
| - |
|
Securities sold under agreements to repurchase |
|
| 16,731 |
|
|
| - |
|
|
| 16,731 |
|
|
| - |
|
Federal Home Loan Bank advances |
|
| 230,000 |
|
|
| - |
|
|
| 229,430 |
|
|
| - |
|
Subordinated debentures |
|
| 39,492 |
|
|
| - |
|
|
| 30,944 |
|
|
| - |
|
Accrued interest payable |
|
| 2,178 |
|
|
| - |
|
|
| 2,178 |
|
|
| - |
|
|
|
|
|
|
| Estimated Fair Value |
| |||||||||
December 31, 2016 |
| Carrying Amount |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 42,499 |
|
| $ | 42,499 |
|
| $ | - |
|
| $ | - |
|
Certificates of deposit in banks |
|
| 5,463 |
|
|
| - |
|
|
| 5,463 |
|
|
| - |
|
Securities available-for-sale |
|
| 183,361 |
|
|
| - |
|
|
| 183,361 |
|
|
| - |
|
Loans held-for-sale |
|
| 7,734 |
|
|
| - |
|
|
| 7,734 |
|
|
| - |
|
Restricted equity securities |
|
| 751 |
|
|
| - |
|
|
| - |
|
|
| 751 |
|
Loans receivable |
|
| 512,434 |
|
|
| - |
|
|
| 506,178 |
|
|
| 6,256 |
|
Bank owned life insurance |
|
| 15,161 |
|
|
| - |
|
|
| 15,161 |
|
|
| - |
|
Accrued interest receivable |
|
| 2,376 |
|
|
| - |
|
|
| 2,376 |
|
|
| - |
|
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
| 704,913 |
|
|
| - |
|
|
| 688,591 |
|
|
| - |
|
Accrued interest payable |
|
| 130 |
|
|
| - |
|
|
| 130 |
|
|
| - |
|
Securities sold under agreements to repurchase |
|
| 13,034 |
|
|
| - |
|
|
| 13,034 |
|
|
| - |
|
Note payable |
|
| 6,428 |
|
|
| - |
|
|
| 6,428 |
|
|
| - |
|
The estimated fair values of the standby letters of credit and loan commitments on which the committed interest rate is less than the current market rate are insignificant at September 30, 2017as of March 31, 2024 and December 31, 2016.2023.
RiverThe Company assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations. As a result, the fair values of River’sthe Company’s financial instruments will change when interest rate levels change and that change may be either favorable or unfavorable to River.the Company. Management attempts to match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk. However, borrowers with fixed-rate obligations are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment. Conversely, depositors who are receiving fixed-rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling-rate environment. Management monitors rates and maturities of assets and liabilities, and attempts to minimize interest rate risk by adjusting terms of new loans and deposits and by investing in securities with terms that mitigate the Company’s overall interest rate risk.
30
Note 7 – Acquisition
On December 31, 2015, Keystone Bancshares, Inc. (“Keystone”) was merged with and into River. Concurrent with the merger of River and Keystone, Keystone Bank was merged with and into River Bank & Trust. Under the terms of the merger agreement, shareholders of Keystone immediately prior to the effective time of the merger received one share of River common stock in exchange for each outstanding share of Keystone common stock held and $4.00 in cash. In addition, persons holding options or warrants to acquire Keystone common stock received options or warrants to acquire 1.25 shares of River common stock for each option or warrant at a purchase price equal to the original exercise price divided by 1.25. River issued 1,818,492 shares of River common stock to Keystone shareholders and made cash payments to Keystone shareholders of approximately $7,274.
Note 8 – Recently IssuedAdopted Accounting Pronouncements
In March 2016,2022, the FASBFinancial Accounting Standards Board (FASB) issued ASU 2016-09, Compensation – Stock CompensationAccounting Standards Update (ASU) 2022-02, Financial Instruments—Credit Losses (Topic 718). ASU 2016-09 amended existing guidance to simplify326): Troubled Debt Restructurings and Vintage Disclosures. The amendments eliminate the accounting guidance for share-based payment award transactions, including: a) income tax consequences; b) classification of awards as either equity or liabilities; c) classification on the statement of cash flows; and d) policy election to estimate the number of awardsTDR recognition in Subtopic 310-40, Receivables – Trouble Debt Restructurings by Creditors by entities that are expected to vest (current GAAP) or account for forfeitures when they occur. For public business entities, the amendments of this ASU are effective fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The adoption of this standard did not have a material effect on the Company’s operating results or financial condition.
��
In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606)—Deferral of the Effective Date. ASU 2015-14 defers the effective date of ASU 2014-09, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, by one year. ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. Under ASU 2015-14, ASU 2014-09 is now effective for annual periods beginning after December 15, 2017 and interim periods within those years. The Company is currently evaluating the effects of ASU 2014-09 on its financial statements and disclosures, if any.
In January 2016, the FASB issued ASU 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This will enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The ASU addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Some of the amendments include the following: 1) Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; 2)Simplify the impairment assessment of equity investment’s without readily determinable fair values by requiring a qualitative assessment to identify impairment; 3) Require public business entities to use exit price notion when measuring fair value of financial instruments for disclosure purposes; 4)Require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting in a change in the fair value of a liability resulting in a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value; among others. For public business entities, the amendments of this ASU are effective fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This will require lessees to recognize assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right of use asset representing its right to use the underlying asset for lease term. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The amendment should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.
In June 2016, the FASB issuedadopted ASU 2016-13, Financial Instruments - CreditInstruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. For public business entities, the amendments require disclosure of current-period gross write-offs by year of origination for financing receivables and net investment in leases within the scope of Subtopic 326-20. Gross write-off information must be included in the vintage disclosures required for public business entities in accordance with paragraph 326-20-50-6, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination. The new guidanceCompany adopted ASU 2022-02 effective January 1, 2023 on a prospective basis. Adoption of ASU 2022-02 did not have a material impact on the Company’s consolidated financial statements.
On January 1, 2023, the Company adopted ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, as amended, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance and net investments in leases recognized by a lessor in accordance with Topic 842 on leases. In addition, ASC 326 made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities management does not intend to sell or believes that it is more likely than not they will applybe required to mostsell.
The Company adopted ASU 2016-13 and all subsequent amendments thereto effective January 1, 2023, using the modified retrospective method for all financial assets measured at amortized cost and certain other instruments including loans, debt securities held to maturity, net investments in leases and off-balance-sheetoff balance sheet credit exposures. The guidance will replaceAmounts for periods beginning on or after January 1, 2023, are presented under ASU 2016-13 and all prior period information is presented in accordance with previously applicable GAAP. At January 1, 2023, the current incurred loss accounting model that delays recognitionCompany recognized a cumulative adjustment to retained earnings of a loss until it is probable a loss has been incurred with$24 thousand, net of tax, attributable to an expected loss model that reflects expectedincrease in the allowance for credit losses based upon a broader range of estimates including consideration$80 thousand and an increase in deferred tax assets of past events, current conditions and supportable forecasts. The guidance also eliminates$8 thousand. Included in the current accounting model$80 thousand increase in the allowance for credit losses is $48 thousand that was recognized on purchased with credit deterioration (PCD) loans previously classified as purchased credit impaired loans and debt securities. For securities available for sale, credit losses are(PCI) with a corresponding adjustment to be recognized as allowances rather than reductions in the amortized costgross carrying amount of the securities,loans. The Company adopted ASU 2016-13 using the prospective transition approach for PCD loans, which did not require re-evaluation of whether loans previously classified as PCI loans met the criteria of PCD assets at the date of adoption. The remaining noncredit discount will require re-measurementbe accreted into interest income over the life of the individual loans beginning January 1, 2023.
On January 1, 2024, the Company adopted ASU 2023-02, Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. These amendments allowed entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related allowance at each reporting period.income tax credits. The guidance includes enhanced disclosure requirements intendedASU responded to help financial statement usersstakeholder feedback that the proportional amortization method provided investors and other allocators of capital with a better understand estimatesunderstanding of the returns from investments that were made primarily for the purpose of receiving income tax credits and judgments used in estimating credit losses. The guidance isother income tax benefits. ASU 2023-02 was effective for public entities for fiscal years beginning after December 15, 2019,2023, including interim periods within those fiscal years. However,Adoption of ASU 2023-02 did not have a material impact on the Company’s consolidated financial statements.
31
Note 8 – Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 expands disclosure requirements for significant segment expenses under Topic 280. The amendments require public entities can apply theseto disclose significant expense categories for each reportable segment, other segment items, the title and position of the chief operating decision-maker, and interim disclosures of certain segment-related information previously required only on an annual basis. The amendments as early asclarify that entities reporting single segments must disclose both the new and existing segment disclosures under Topic 280, and a public entity is permitted to disclose multiple measures of segment profit or loss if certain criteria are met. The amendments in this update are effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2018. The Company31, 2024. ASU 2023-07 must be applied on a retrospective basis. Early adoption is evaluatingpermitted. This standard is not expected to have a material impact on the impact to itsCompany’s consolidated results of operations or financial statements upon adoption. position.
In January 2017,December 2023, the FASB issued ASU 2017-04, Intangibles – Goodwill2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 expands income tax disclosure requirements. The amendments require annual disclosure of certain information relating to the rate reconciliation, income taxes paid by jurisdiction, income (loss) from continuing operations before income tax expense (benefit) disaggregated between domestic and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 was issuedforeign, income tax expense (benefit) from continuing operations disaggregated by federal (national), state, and foreign. The amendments also eliminate certain requirements relating to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity hadunrecognized tax benefits and certain deferred tax disclosure relating to perform procedures to determine the fair value at the impairment testing date of its assetssubsidiaries and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.corporate joint ventures. The amendments in this Update modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Because these amendments eliminate Step 2 from the goodwill impairment test, they should reduce the cost and complexity of evaluating goodwillupdate are effective for impairment. An entity should apply the amendments in this Update on a prospective basis. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition. That disclosure should be provided in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments in this Update. A public business entity that is a U.S. Securities and Exchange Commission (SEC) filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.2024. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Companypermitted. This standard is currently evaluating the effects of this update on its financial statements and disclosures, if any.
In March 2017, the FASB issued ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. ASU 2017-08 will shorten the amortization period for certain callable debt securities held atnot expected to have a premium. Specifically, the amendments require the premium to be amortized to the earliest call date whereas under current GAAP, the amortization is to the maturity. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The amendments in this Update more closely align the amortization period of premiums and discounts to expectations incorporated in market pricingmaterial impact on the underlying securities. Market participants generally price securities to the call date that produces the worst yield when the coupon is above current market rates (that is, the security is trading at a premium) and price securities to maturity when the coupon is below market rates (that is, the security is trading at a discount) in anticipation that the borrower will act in its economic best interest. As a result, the amendments more closely align interest income recorded on bonds held at a premiumCompany’s consolidated results of operations or a discount with the economics of the underlying instrument. An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently evaluating the effects of this update on its financial statements and disclosures, if any.position.
Note 9 – Defined Contribution Plan
The Company provides a 401(k) employee stock ownership plan (KSOP)(ESOP), which covers substantially all of the Company’s employees who are eligible, as to age and length of service. A participant may elect to make contributions up to $18,000$23.0 thousand and $22.5 thousand of the participant’s annual compensation in 20172024 and 2016. 2023, respectively. The Company makes contributions up to 3%3% of each participant’s annual compensation and the Company matches 50%50% of the next 2%2% contributed by the employee. Contributions to the plan by the Company were approximately $239$211 thousand and $215$198 thousand for the ninethree months ended September 30, 2017March 31, 2024 and 2016,2023, respectively. Outstanding shares of the Company’s common stock allocated to participants at September 30, 2017March 31, 2024 and December 31, 20162023 totaled 43,477 and 38,933, respectively,166,664 shares, and there were no unallocated shares. These shares are treated as outstanding for purposes of calculating earnings per share and dividends on these shares are included in the Consolidated Statements of Stockholders’ Equity.
The Company’s KSOPESOP includes a put option for shares of the Company’s common stock distributed from the KSOP.ESOP. Shares are distributed from the KSOPESOP primarily to separatedseparate vested participants and certain eligible participants who elect to diversify their account balances. Since the Company’s common stock is not currently traded on an established securities market, if the owners of distributed shares desire to sell their shares, the Company is required to purchase the shares at fair value during two put option periods following the distribution of the shares from the KSOP.ESOP. The first put option period is within sixty days following the distribution of the shares from the KSOP.ESOP. The second put option period begins on the first day of the fifth month of the plan year for a sixty day period. The fair value of distributed shares subject to the put option totaled $0$0 as of September 30, 2017March 31, 2024 and December 31, 2016.2023. The cost of the KSOPESOP shares totaled $734 thousand$4.48 million and $623 thousand$4.48 million as of September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively. Due to the Company’s obligation under the put option, the distributed shares and KSOPESOP shares are classified as temporary equity in the mezzanine section of the consolidated statements of financial condition and totaled $734 thousand$4.48 million and $623 thousand$4.48 million as of September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively. The fair value of the KSOPESOP shares totaled $989 thousand$6.17 million and $672 thousand$6.17 million as of September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively.
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Note 10 – Loans Held for Sale
The Company has entered into agreements with secondary market investors to deliver loans on a “best efforts delivery” basis. When a rate is committed to a borrower, it is based on the best price that day and locked with the investor for the customer for a thirty day period. In the event the loan is not delivered to the investor, the Company has no risk or exposure with the investor. The fair values of the Company’s agreements with investors and rate lock commitments to customers as of March 31, 2024 and December 31, 2023, respectively, were not material.
Note 11 – Leases
Operating lease assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental borrowing rate at the lease commencement date. Operating lease cost, which is comprised of amortization of the operating lease asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in occupancy expenses in the consolidated statements of income.The Company leases certain full-service branch offices, land, and equipment. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Most leases include one or more options to renew and the exercise of the lease renewal options are at the Company’s sole discretion. The Company includes lease extension and termination options in the lease term if, after considering relevant economic factors, it is reasonably certain the Company will exercise the option.
The following table represents the consolidated statements of condition classification of the Company’s ROU assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the consolidated statements of financial condition.
Lease Right-of-Use Assets |
| Classification on Consolidated Statement of Condition |
| March 31, 2024 |
|
| December 31, 2023 |
| ||
Operating lease right-of-use assets |
| Other Assets |
| $ | 3,104 |
|
| $ | 3,243 |
|
|
|
|
|
|
|
|
|
| ||
Lease Liabilities |
| Classification on Consolidated Statement of Condition |
| March 31, 2024 |
|
| December 31, 2023 |
| ||
Operating lease liabilities |
| Accrued interest payable and other liabilities |
| $ | 3,264 |
|
| $ | 3,407 |
|
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|
|
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||
Weighted-average remaining lease term for operating leases |
| 8.45 Years |
|
| 8.50 Years |
| ||||
Weighted-average discount rate for operating leases |
|
| 6.00 | % |
|
| 6.00 | % |
Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2024 are as follows:
|
|
|
| Operating Leases |
| |
April 1, 2024 - March 31, 2025 |
|
|
| $ | 770 |
|
April 1, 2025 - March 31, 2026 |
|
|
|
| 648 |
|
April 1, 2026 - March 31, 2027 |
|
|
|
| 449 |
|
April 1, 2027 - March 31, 2028 |
|
|
|
| 401 |
|
April 1, 2028 - March 31, 2029 |
|
|
|
| 333 |
|
Afterward |
|
|
|
| 1,667 |
|
Total future minimum lease payments |
|
| 4,268 |
| ||
Amounts representing interest |
|
| (1,004 | ) | ||
Present value of net future minimum lease payments |
| $ | 3,264 |
| ||
|
|
|
|
|
|
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes thereto for the year ended December 31, 2016,2023, which are contained in the Annual Report on Form 10-K for the year ended December 31, 2016. This2023. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Ourassumptions that could cause actual results couldto differ materially from those contained in forward-looking statements as a result of many factors, including thoseour expectations. Factors that could cause such differences are discussed in our 20162023 Annual Report on Form 10-K under “Part I, Item 1A - Risk Factors,Factors.” as well as other unknown risksWe assume no obligation to update any of these forward-looking statements.
The following discussion pertains to our historical results on a consolidated basis. However, because we conduct all of our material business operations through our subsidiaries, the discussion and uncertainties.analysis relates to activities primarily conducted at the subsidiary level.
All dollar amounts in the tables in this section are in in thousands of dollars, except per share data, yields, percentages and rates or when specifically identified. As used in this Item, the words “we,” “us,” “our,” the “Company,” “RFC,” “River” and similar terms refer to River Financial Corporation and its consolidated affiliate, unless the context indicates otherwise.
Our Business
River isWe are a bank holding company headquartered in Prattville, Alabama. We engage in the business of banking through our wholly-owned banking subsidiary, River Bank & Trust, which we may refer to as the “Bank,”“Bank” or “River Bank.” Through the Bank, we provide a broad array of financial services to businesses, business owners, professionals, and consumers. As of September 30, 2017,March 31, 2024, we operated tentwenty-three full-service banking offices in Alabama in the cities of Montgomery, Prattville, Millbrook, Wetumpka, Auburn, Opelika, Gadsden, Alexander City, Daphne, Clanton, Dothan, Enterprise, Mobile, Decatur, Huntsville, Saraland, and Alexander City.Birmingham, Alabama. We also have one loan production office in Florence, Alabama.
Segments
While our chief decision makers monitor the revenue streams of the various banking products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment. Because the overall banking operations comprise substantially all of the consolidated operations, no separate segment disclosures are presented in the accompanying consolidated financial statements.
Overview of ThirdFirst Quarter 20172024 Results
Net income was $2,563$5.8 million in the quarter ended September 30, 2017,March 31, 2024, compared with $2,216$5.1 million in the quarter ended September 30, 2016.March 31, 2023. Several significant measures from the 2017 third2024 first quarter include:
Net interest margin (taxable equivalent) of 4.17%2.76%, compared with 4.29%2.78% for the thirdfirst quarter of 2016.
Net interest income increase of $283$2.5 million for the quarter ended September 30, 2017,March 31, 2024, representing a 3.93%13.38% rate of increase over the quarter ended September 30, 2016.
Annualized return on average earning assets for the quarter ended September 30, 2017March 31, 2024 of 1.28%0.73% compared with 1.17%0.73% for the quarter ended September 30, 2016.
Annualized return on average equity for the quarter ended September 30, 2017March 31, 2024 of 11.61% compared with 10.72 %14.51% for the quarter ended September 30, 2016.
Loan increase of $5,339$29.8 million during the quarter ended March 31, 2024, representing a 1.37%5.33% annualized growth rate.
DepositSecurities decrease of $5,593$37.7 million during the quarter ended March 31, 2024, representing a -1.08%20.18% annualized decrease for the quarter.
Stockholders’ equity growthdecrease of $2,086$612.0 thousand during the quarter ended March 31, 2024, representing a 3.20%1.23% annualized growth rate.
Book value per share of $17.59$26.38 at September 30, 2017,March 31, 2024, compared with $16.23$26.49 per share at December 31, 2016.
Tangible book value per share of $15.28$22.58 at September 30, 2017,March 31, 2024, compared with $13.83$22.67 at December 31, 2016.2023.
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Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared based on the application of certain accounting policies, the most significant of which are described in the notes to the financial statements for the year ended December 31, 2016,2023, which are contained in our Annual Report filed on Form 10-K. Certain of these policies require numerous estimates and strategic or economic assumptions that may prove inaccurate or subject to variation and may significantly affect our reported results and financial position for the current period or future periods. The use of estimates, assumptions, and judgment is necessary when financial assets and liabilities are required to be recorded at or adjusted to reflect fair value. Assets carried at fair value inherently result in more financial statement volatility. Fair values and information used to record valuation adjustments for certain assets and liabilities are based on quoted market prices or are provided by other independent third-party sources, when available. When such information is not available, management estimates valuation adjustments. Changes in underlying factors, assumptions or estimates in any of these areas could have a material impact on our future financial condition and results of operations.
The following briefly describes the more complex policies involving a significant amount of judgments about valuation and the application of complex accounting standards and interpretations.
Allowance for LoanCredit Losses
We record estimated probable inherentThe allowance for credit losses has been determined in accordance with GAAP. The Company is responsible for the timely and periodic determination of the amount of the allowance for credit losses. Management believes that the allowance for credit losses is adequate to cover expected credit losses over the life of the loan portfolio. Although management evaluates available information to determine the adequacy of the allowance for credit losses, the level of allowance is an estimate which is subject to significant judgment and short-term change. Because of uncertainties associated with local and national economic forecasts, the operating and regulatory environment, collateral values and future cash flows from the loan portfolio, it is possible that a material change could occur in the allowance for credit losses in the near term. The evaluation of the adequacy of loan portfoliocollateral is often based upon estimates and appraisals. Because of changing economic conditions, the valuations determined from such estimates and appraisals may also change.
Accordingly, the Company may ultimately incur losses that vary from management’s current estimates. Adjustments to the allowance for credit losses will be reported in the period in which such adjustments become known and can be reasonably estimated. All loan losses are charged to the allowance for credit losses when the loss actually occurs or when the collectability of the principal is unlikely. Recoveries are credited to the allowance at the time of recovery. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for credit losses. As a result of such examinations, the Company may need to recognize additions to the allowance for credit losses based on the regulators’ judgments.
In estimating the allowance for credit losses, the Company relies on models and economic forecasts developed by external parties as the primary driver of the allowance for credit losses. These models and forecasts are based on nationwide sets of data. Economic forecasts can change significantly over an economic cycle and have a significant level of uncertainty associated with them. The performance of the models is dependent on the variables used in the models being reasonable proxies for the loan losses. The methodologiesportfolio’s performance. However, these variables may not capture all sources of risk within the portfolio. As a result, the Company reviews the results and assumptionsmakes qualitative adjustments to the models to capture limitations of the models as necessary. Such qualitative factors may include adjustments to better capture the imprecision associated with the economic forecasts, and the ability of the models to capture emerging risks within the portfolio that may not be represented in the data. These judgments are evaluated through the Company’s review process and revised on a quarterly basis to account for determiningchanges in facts and circumstances. It is difficult to estimate how potential changes in any one of the adequacy ofquantitative inputs or qualitative factors might affect the overall allowance for loan losses involve significant judgments to be made by management. Some of the more critical judgments supporting our allowance for loan losses include judgments about: creditworthiness of borrowers, estimated value of underlying collateral, assumptions about cash flow, determination of loss factors for estimating credit losses, and the Company’s current assessments may not reflect the potential future impact of current events, conditionschanges to those inputs or factors.
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Investment Securities Impairment
Effective January 1, 2023, the Company estimates and other factors impacting the level of inherent losses. Under different conditions or using different assumptions, the actual or estimatedrecognizes an allowance for credit losses for held-to-maturity (HTM) debt securities pursuant to ASU No. 2016-13. The Company has a zero loss expectation for its HTM securities portfolio, except for U.S. State and Municipal securities, and therefore it is not required to estimate an allowance for credit losses related to these securities. For HTM securities that we may ultimately realize may be different than our estimates. In determiningdo not have a zero loss expectation, the allowance we estimatefor credit losses is based on the security’s amortized cost, excluding interest receivable, and represents the portion of the amortized cost that the Company does not expect to collect over the life of the security. The allowance for credit losses is determined using average industry credit ratings and historical loss experience, and is initially recognized upon acquisition of the securities, and subsequently remeasured on a recurring basis. The Company evaluates available for sale (AFS) debt securities that experienced a decline in fair value below amortized cost for credit impairment. In performing an assessment of whether any decline in fair value is due to a credit loss, the Company considers the extent to which the fair value is less than the amortized cost, changes in credit ratings, any adverse economic conditions, as well as all relevant information at the individual impaired loans,security level, such as credit deterioration of the issuer, explicit or groupsimplicit guarantees by the federal government or collateral underlying the security. If it is determined that the decline in fair value was due to credit losses, an allowance for credit losses is recorded, limited to the amount the fair value is less than the amortized cost basis. The non-credit related decrease in the fair value, such as a decline due to changes in market interest rates, is recorded in other comprehensive income, net of loanstax. The Company recognizes a credit impairment if the Company has the intent to sell the security, or it is more likely than not that are not impaired, where the probable loss canBank will be identifiedrequired to sell the security before recovery of its amortized cost. Prior to the adoption of ASU No. 2016-13 Management evaluated AFS and reasonably estimated. OnHTM debt securities for other-than-temporary-impairment on at least a quarterly basis, we assess the risk inherent in our loan portfolio based on qualitative and quantitative trends in the portfolio, including the internal risk classification of loans, historical loss rates, changes in the nature and volume of the loan portfolio, industrymore frequently when economic or borrower concentrations, delinquency trends, detailed reviews of significant loans with identified weaknesses and the impact of local, regional and national economic factors on the quality of the loan portfolio. Based on this analysis, we may record a provision for loan losses in order to maintain the allowance at appropriate levels. For a more complete discussion of the methodology employed to calculate the allowance for loan losses, see note 1 to our consolidated financial statements for the year ended December 31, 2016, which are contained in our Annual Report on Form 10-K.market conditions warrant such an evaluation.
Investment Securities Impairment
We assess, on a quarterly basis, whether there have been any events or economic circumstances to indicate that a security on which there is an unrealized loss is impaired on an other-than-temporary basis. In such instance, we would consider many factors, including the severity and duration of the impairment, our intent and ability to hold the security for a period of time sufficient for a recovery in value, recent events specific to the issuer or industry, and for debt securities, external credit ratings and recent downgrades. Securities on which there is an unrealized loss that is deemed to be other-than-temporary are written down to fair value through current earnings.
Income Taxes
Deferred income tax assets and liabilities are computed using the asset and liability method, which recognizes a liability or asset representing the tax effects, based on current tax law, of future deductible or taxable amounts attributable to events recognized in the financial statements. A valuation allowance may be established to the extent necessary to reduce the deferred tax asset to a level at which it is “more likely than not” that the tax assets or benefits will be realized. Realization of tax benefits depends on having sufficient taxable income, available tax loss carrybacks or credits, the reversing of taxable temporary differences and/or tax planning strategies within the reversal period, and thatwhether current tax law allows for the realization of recorded tax benefits.
Business Combinations
Assets purchased and liabilities assumed in a business combination are recorded at their fair value. The fair value of a loan portfolio acquired in a business combination requires greater levels of management estimates and judgment than the remainder of purchased assets or assumed liabilities. On the date of acquisition, when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition that we will not collect all contractually required principal and interest payments, the difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as non-accretable difference. We must estimate cash flows at each reporting date. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increase in cash flows result in a reversal of the provision for loan losses to the extent of prior charges and adjusted accretable yield, which will have a positive impact on interest income. In addition, purchased loans with evidence of credit deterioration are also handled under this method.
Comparison of the Results of Operations for the three and nine months ended September 30, 2017March 31, 2024 and 20162023
The following is a narrative discussion and analysis of significant changes in our results of operations for the three and nine months ended September 30, 2017March 31, 2024 compared to the three and nine months ended September 30, 2016.March 31, 2023.
Net Income
During the three months ended September 30, 2017,March 31, 2024, our net income was $2,563,$5.8 million, compared to $2,216$5.1 million for the three months ended September 30, 2016,March 31, 2023, an increase of $347,$703.0 thousand, or 15.66%13.77%.
The primary reason for the increase in net income for the thirdfirst quarter of 20172024 as compared to the thirdfirst quarter of 20162023 was an increase in net interest income and an increase in noninterest income. During the three months ended September 30, 2017,March 31, 2024, net interest income was $7,482$21.6 million compared to $7,199$19.0 million for the three months ended September 30, 2016, anMarch 31, 2023, a increase of $283,$2.5 million, or 3.93%13.38%. This increase is a result of higher levels of loan volumeyields on new and other earning assets from organic growth. Total noninterestrepricing loans. Overall income for the third quarter of 2017 was $2,169 compared to $1,339 for the quarter ended September 30, 2016. This increase was primarily the result of an increase of $660 in bank owned life insurance income as a result of death benefits received during the quarter. The increase in total noninterest income for the quarter was also the result of an increase of $79 and $113 in revenue from mortgage operations and service charges and fees, respectively. These increases wereslightly offset by a decrease in investment brokerage revenue of $30. Total noninterest expense in the third quarter of 2017 increased $455, or 8.93%, from the third quarter of 2016. This increase was due to an increase of $247 and $142 in salaries and employee benefits and foreclosed assets expense, respectively. These increases were partially offset by decreases across several expense categories mainly related to expense savings resulting from the Keystone merger.
During the nine months ended September 30, 2017, our net income was $6,900, compared to $5,920 for the nine months ended September 30, 2016, an increase of $980, or 16.55%.
The primary reason for the increase in net income for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 was an increase in net interest income and an increase in noninterest income. During this period in 2017, net interest income was $22,152 compared to $20,730 for the same period in 2016, an increase of $1,422, or 6.86%. This increase is a result of higher levels of loan volume and other earning assets from organic growth. Total noninterest income for the first nine months of 2017 was $4,848 compared to $3,584 in the first nine months of 2016. This increase was primarily the result of an increase of $653 in bank owned life insurance income as a result of death benefits received during the quarter. The increase in total noninterest income for the first nine months of 2017 was also the result of an increase of $428 and $333 in revenue from mortgage operations and service charges and fees, respectively. These increases were offset by a decrease in investment brokerage revenue of $133. Total noninterest expense in the first nine monthsquarter of 20172024 which increased $679,$950.0 thousand, or 4.50%6.63%, from the first nine monthsquarter of 2016. This2023. The most significant increase was due to an increase of $702 and $264$623.0 thousand in salaries and employee benefits and advertising and business development, respectively. These increases were partially offset by decreases across several expense categories mainly related to expense savings resulting from the Keystone merger, including a $242 savings in legal and other professional services.benefits.
37
Net Interest Income and Net Interest Margin Analysis
The largest component of our net income is net interest income – the difference between the income earned on interest earning assets and the interest paid on deposits and borrowed funds used to support assets. Net interest income divided by average interest earning assets represents RFC’sour net interest margin. The major factors that affect net interest income and net interest margin are changes in volumes, the yield on interest earning assets and the cost of interest bearing liabilities. Our net interest margin can also be affected by economic conditions, the competitive environment, loan demand, and deposit flow. Management’s ability to respond to changes in these factors by using effective asset-liability management techniques is critical to maintaining the stability of the net interest margin and the primary source of earnings. This is discussed in greater detail under the heading “Interest Sensitivity and Market Risk”.
Comparison of net interest income for the three months ended September 30, 2017March 31, 2024 and 20162023
The following table shows, for the three months ended September 30, 2017March 31, 2024 and 2016,2023, the average balances of each principal category of our earning assets and interest bearing liabilities and the average taxable equivalent yields on assets and average costs of liabilities. These yields and costs are calculated by dividing the income or expense by the average daily balance of the associated assets or liabilities.liabilities (amounts in thousands).
|
| Three Months Ended March 31, 2024 |
|
| Three Months Ended March 31, 2023 |
| |||||||||||||||||
|
|
|
| Interest |
|
|
|
|
|
|
|
| Interest |
|
|
|
| ||||||
|
| Average |
| Income/ |
|
| Average |
|
| Average |
|
| Income/ |
|
| Average |
| ||||||
|
| Balance |
| Expense |
|
| Yield/Rate |
|
| Balance |
|
| Expense |
|
| Yield/Rate |
| ||||||
Interest earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Loans |
| $ | 2,253,010 |
| $ | 33,998 |
|
|
| 6.07 | % |
| $ | 1,850,442 |
|
| $ | 23,786 |
|
|
| 5.21 | % |
Mortgage loans held for sale |
|
| 4,422 |
|
| 58 |
|
|
| 5.29 | % |
|
| 6,967 |
|
|
| 59 |
|
|
| 3.45 | % |
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Taxable securities |
|
| 743,201 |
|
| 3,390 |
|
|
| 1.83 | % |
|
| 809,799 |
|
|
| 3,657 |
|
|
| 1.83 | % |
Tax-exempt securities |
|
| 65,266 |
|
| 459 |
|
|
| 2.83 | % |
|
| 81,627 |
|
|
| 614 |
|
|
| 3.05 | % |
Interest bearing balances in other banks |
|
| 68,460 |
|
| 932 |
|
|
| 5.46 | % |
|
| 55,153 |
|
|
| 617 |
|
|
| 4.54 | % |
Federal funds sold |
|
| 30,559 |
|
| 419 |
|
|
| 5.51 | % |
|
| 12,721 |
|
|
| 153 |
|
|
| 4.87 | % |
Total interest earning assets |
| $ | 3,164,918 |
| $ | 39,256 |
|
|
| 4.99 | % |
| $ | 2,816,709 |
|
| $ | 28,886 |
|
|
| 4.16 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest bearing transaction accounts |
| $ | 682,062 |
| $ | 2,852 |
|
|
| 1.68 | % |
| $ | 629,888 |
|
| $ | 1,520 |
|
|
| 0.98 | % |
Savings and money market accounts |
|
| 906,427 |
|
| 6,111 |
|
|
| 2.71 | % |
|
| 823,622 |
|
|
| 3,094 |
|
|
| 1.52 | % |
Time deposits |
|
| 561,902 |
|
| 5,681 |
|
|
| 4.07 | % |
|
| 471,683 |
|
|
| 3,206 |
|
|
| 2.76 | % |
Short-term borrowings |
|
| 14,986 |
|
| 132 |
|
|
| 3.53 | % |
|
| 14,460 |
|
|
| 99 |
|
|
| 3.04 | % |
Federal Home Loan Bank advances |
|
| 212,692 |
|
| 2,257 |
|
|
| 4.27 | % |
|
| 95,256 |
|
|
| 1,187 |
|
|
| 5.02 | % |
Subordinated debentures |
|
| 40,000 |
|
| 418 |
|
|
| 4.20 | % |
|
| 40,000 |
|
|
| 415 |
|
|
| 4.20 | % |
Line of credit |
|
| - |
|
| - |
|
|
| 0.00 | % |
|
| 4,511 |
|
|
| 87 |
|
|
| 7.85 | % |
Total interest bearing liabilities |
| $ | 2,418,069 |
| $ | 17,451 |
|
|
| 2.89 | % |
| $ | 2,079,420 |
|
| $ | 9,608 |
|
|
| 1.87 | % |
Noninterest-bearing funding of earning assets |
|
| 746,849 |
|
| - |
|
|
| 0.00 | % |
|
| 737,289 |
|
|
| - |
|
|
| 0.00 | % |
Total cost of funding earning assets |
| $ | 3,164,918 |
| $ | 17,451 |
|
|
| 2.21 | % |
| $ | 2,816,709 |
|
| $ | 9,608 |
|
|
| 1.38 | % |
Net interest rate spread |
|
|
|
|
|
|
| 2.09 | % |
|
|
|
|
|
|
|
| 2.29 | % | ||||
Net interest income/margin (taxable equivalent) |
|
|
| $ | 21,805 |
|
|
| 2.76 | % |
|
|
|
| $ | 19,278 |
|
|
| 2.78 | % | ||
Tax equivalent adjustment |
|
|
|
| (221 | ) |
|
|
|
|
|
|
|
| (241 | ) |
|
|
| ||||
Net interest income/margin |
|
|
| $ | 21,584 |
|
|
| 2.74 | % |
|
|
|
| $ | 19,037 |
|
|
| 2.74 | % |
|
| Three Months Ended September 30, 2017 |
|
| Three Months Ended September 30, 2016 |
| ||||||||||||||||
|
|
|
|
| Interest |
|
|
|
|
|
|
|
|
| Interest |
|
|
|
|
| ||
|
| Average |
| Income/ |
|
| Average |
|
| Average |
| Income/ |
|
| Average |
| ||||||
|
| Balance |
| Expense |
|
| Yield/Rate |
|
| Balance |
| Expense |
|
| Yield/Rate |
| ||||||
Interest earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
| $ | 517,421 |
| $ | 7,099 |
|
|
| 5.44 | % |
| $ | 497,869 |
| $ | 7,015 |
|
|
| 5.59 | % |
Mortgage loans held for sale |
|
| 3,325 |
|
| 24 |
|
|
| 2.86 | % |
|
| 4,949 |
|
| 29 |
|
|
| 2.29 | % |
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable securities |
|
| 152,662 |
|
| 756 |
|
|
| 1.96 | % |
|
| 93,843 |
|
| 432 |
|
|
| 1.83 | % |
Tax-exempt securities |
|
| 52,618 |
|
| 408 |
|
|
| 3.08 | % |
|
| 56,175 |
|
| 429 |
|
|
| 3.03 | % |
Interest bearing balances in other banks |
|
| 11,301 |
|
| 46 |
|
|
| 1.58 | % |
|
| 28,128 |
|
| 49 |
|
|
| 0.69 | % |
Federal funds sold |
|
| - |
|
| - |
|
|
| 0.00 | % |
|
| 10,104 |
|
| 15 |
|
|
| 0.57 | % |
Total interest earning assets |
| $ | 737,327 |
| $ | 8,333 |
|
|
| 4.48 | % |
| $ | 691,068 |
| $ | 7,969 |
|
|
| 4.57 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing transaction accounts |
| $ | 186,640 |
| $ | 111 |
|
|
| 0.24 | % |
| $ | 180,757 |
| $ | 118 |
|
|
| 0.26 | % |
Savings and money market accounts |
|
| 187,827 |
|
| 168 |
|
|
| 0.36 | % |
|
| 182,533 |
|
| 163 |
|
|
| 0.36 | % |
Time deposits |
|
| 137,951 |
|
| 308 |
|
|
| 0.90 | % |
|
| 138,544 |
|
| 240 |
|
|
| 0.70 | % |
Short-term debt |
|
| 14,605 |
|
| 12 |
|
|
| 0.33 | % |
|
| 9,178 |
|
| 4 |
|
|
| 0.16 | % |
Federal Home Loan Bank advances |
|
| 10,761 |
|
| 32 |
|
|
| 1.18 | % |
|
| 2,000 |
|
| 5 |
|
|
| 0.93 | % |
Note payable |
|
| 5,890 |
|
| 64 |
|
|
| 4.30 | % |
|
| 6,830 |
|
| 62 |
|
|
| 3.60 | % |
Total interest bearing liabilities |
| $ | 543,674 |
| $ | 695 |
|
|
| 0.51 | % |
| $ | 519,842 |
| $ | 592 |
|
|
| 0.46 | % |
Noninterest-bearing funding of earning assets |
|
| 193,655 |
|
| - |
|
|
| 0.00 | % |
|
| 171,226 |
|
| - |
|
|
| 0.00 | % |
Total cost of funding earning assets |
| $ | 737,329 |
| $ | 695 |
|
|
| 0.38 | % |
| $ | 691,068 |
| $ | 592 |
|
|
| 0.34 | % |
Net interest rate spread |
|
|
|
|
|
|
|
|
| 3.97 | % |
|
|
|
|
|
|
|
|
| 4.12 | % |
Net interest income/margin (taxable equivalent) |
|
|
|
| $ | 7,638 |
|
|
| 4.17 | % |
|
|
|
| $ | 7,377 |
|
|
| 4.29 | % |
Tax equivalent adjustment |
|
|
|
|
| (156 | ) |
|
|
|
|
|
|
|
|
| (178 | ) |
|
|
|
|
Net interest income/margin |
|
|
|
| $ | 7,482 |
|
|
| 4.08 | % |
|
|
|
| $ | 7,199 |
|
|
| 4.19 | % |
38
The following table reflects, for the three months ended September 30, 2017March 31, 2024 and 2016,2023, the changes in our net interest income due to variances in the volume of interest earning assets and interest bearing liabilities and variances in the associated rates earned or paid on these assets and liabilities.liabilities (amounts in thousands).
|
| Three Months Ended September 30, 2017 vs. |
|
| Three Months Ended March 31, 2024 vs. |
| ||||||||||||||||
|
| Three Months Ended September 30, 2016 |
|
| Three Months Ended March 31, 2023 |
| ||||||||||||||||
|
|
|
|
| Variance |
|
|
|
|
|
|
|
| Variance |
|
|
| |||||
|
|
|
|
| due to |
|
|
|
|
|
|
|
| due to |
|
|
| |||||
|
| Volume |
| Yield/Rate |
|
| Total |
|
| Volume |
| Yield/Rate |
|
| Total |
| ||||||
Interest earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Loans |
| $ | 274 |
| $ | (190 | ) |
| $ | 84 |
|
| $ | 5,314 |
| $ | 4,898 |
|
| $ | 10,212 |
|
Mortgage loans held for sale |
|
| (10 | ) |
| 5 |
|
|
| (5 | ) |
|
| (22 | ) |
| 21 |
|
|
| (1 | ) |
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Taxable securities |
|
| 273 |
| 51 |
|
|
| 324 |
|
|
| (267 | ) |
| - |
|
|
| (267 | ) | |
Tax-exempt securities |
|
| (28 | ) |
| 7 |
|
|
| (21 | ) |
|
| (119 | ) |
| (36 | ) |
|
| (155 | ) |
Interest bearing balances in other banks |
|
| (29 | ) |
| 26 |
|
|
| (3 | ) |
|
| 156 |
| 159 |
|
|
| 315 |
| |
Federal funds sold |
|
| (15 | ) |
| - |
|
|
| (15 | ) |
|
| 212 |
|
| 54 |
|
|
| 266 |
|
Total interest earning assets |
| $ | 465 |
| $ | (101 | ) |
| $ | 364 |
|
| $ | 5,274 |
| $ | 5,096 |
|
| $ | 10,370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Interest bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Interest bearing transaction accounts |
| $ | 3 |
| $ | (10 | ) |
| $ | (7 | ) |
| $ | 127 |
| $ | 1,205 |
|
| $ | 1,332 |
|
Savings and money market accounts |
|
| 6 |
| (1 | ) |
|
| 5 |
|
|
| 313 |
| 2,704 |
|
|
| 3,017 |
| ||
Time deposits |
|
| - |
| 68 |
|
|
| 68 |
|
|
| 618 |
| 1,857 |
|
|
| 2,475 |
| ||
Short-term debt |
|
| 2 |
| 6 |
|
|
| 8 |
| ||||||||||||
Short-term borrowings |
|
| 14 |
| 19 |
|
|
| 33 |
| ||||||||||||
Federal Home Loan Bank advances |
|
| 20 |
| 7 |
|
|
| 27 |
|
|
| 1,440 |
| (370 | ) |
|
| 1,070 |
| ||
Note payable |
|
| (8 | ) |
| 10 |
|
|
| 2 |
| |||||||||||
Subordinated debentures |
|
| (1 | ) |
| 4 |
|
|
| 3 |
| |||||||||||
Line of credit |
|
| (87 | ) |
| - |
|
|
| (87 | ) | |||||||||||
Total interest bearing liabilities |
| $ | 23 |
| $ | 80 |
|
| $ | 103 |
|
| $ | 2,424 |
| $ | 5,419 |
|
| $ | 7,843 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net interest income (taxable equivalent) |
| $ | 442 |
| $ | (181 | ) |
| $ | 261 |
|
| $ | 2,850 |
| $ | (323 | ) |
| $ | 2,527 |
|
Taxable equivalent adjustment |
|
| 22 |
|
| - |
|
|
| 22 |
|
|
| 38 |
|
| (18 | ) |
|
| 20 |
|
Net interest income |
| $ | 464 |
| $ | (181 | ) |
| $ | 283 |
|
| $ | 2,888 |
| $ | (341 | ) |
| $ | 2,547 |
|
Total interest income for the three months ended September 30, 2017March 31, 2024 was $8,177$39.0 million and total interest expense was $695,$17.5 million, resulting in net interest income of $7,482$21.6 million for the period. For the same period of 2016,2023, total interest income was $7,791$28.6 million and total interest expense was $592,$9.6 million, resulting in net interest income of $7,199$19.0 million for the period. This represents a 3.93%13.38% increase in net interest income when comparing the same period from 20172024 and 2016.2023. When comparing the variances related to interest income for the three months ended September 30, 2017March 31, 2024 and 2016,2023, the increase was primarily attributed to increases in average volumes in loans and taxable securities.loans. The volume related increase in interest income for the three months ended September 30, 2017March 31, 2024 was offsetaccompanied by a decreasean increase in the yield on loans.loans and investment securities. When comparing variances related to interest expense for the three months ended September 30, 2017March 31, 2024 and 2016,2023, the increase primarily resulted primarily from an increase in deposit and borrowing rates in 2023.
39
Provision for Credit Losses
On January 1, 2023, we adopted ASC 326, which introduces the effective rates paid on time deposit accounts.
Comparison of net interest income forcurrent expected credit losses (CECL) methodology and requires us to estimate all expected credit losses over the nine months ended September 30, 2017 and 2016
The following table shows, for the nine months ended September 30, 2017 and 2016, the average balances of each principal categoryremaining life of our earning assets and interest bearing liabilities andloans. Accordingly, the average taxable equivalent yields on assets and average costs of liabilities. These yields and costs are calculated by dividing the income or expense by the average daily balance of the associated assets or liabilities.
|
| Nine Months Ended September 30, 2017 |
|
| Nine Months Ended September 30, 2016 |
| ||||||||||||||||
|
|
|
|
| Interest |
|
|
|
|
|
|
|
|
| Interest |
|
|
|
|
| ||
|
| Average |
| Income/ |
|
| Average |
|
| Average |
| Income/ |
|
| Average |
| ||||||
|
| Balance |
| Expense |
|
| Yield/Rate |
|
| Balance |
| Expense |
|
| Yield/Rate |
| ||||||
Interest earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
| $ | 513,478 |
| $ | 20,883 |
|
|
| 5.45 | % |
| $ | 490,008 |
| $ | 20,260 |
|
|
| 5.52 | % |
Mortgage loans held for sale |
|
| 4,221 |
|
| 57 |
|
|
| 1.81 | % |
|
| 3,598 |
|
| 106 |
|
|
| 3.94 | % |
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable securities |
|
| 148,697 |
|
| 2,226 |
|
|
| 2.01 | % |
|
| 87,518 |
|
| 1,222 |
|
|
| 1.87 | % |
Tax-exempt securities |
|
| 53,543 |
|
| 1,238 |
|
|
| 3.10 | % |
|
| 53,238 |
|
| 1,304 |
|
|
| 3.27 | % |
Interest bearing balances in other banks |
|
| 16,609 |
|
| 157 |
|
|
| 1.27 | % |
|
| 22,025 |
|
| 147 |
|
|
| 0.89 | % |
Federal funds sold |
|
| - |
|
| - |
|
|
| 0.00 | % |
|
| 7,061 |
|
| 29 |
|
|
| 0.55 | % |
Total interest earning assets |
| $ | 736,548 |
| $ | 24,561 |
|
|
| 4.47 | % |
| $ | 663,448 |
| $ | 23,068 |
|
|
| 4.64 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing transaction accounts |
| $ | 189,878 |
| $ | 340 |
|
|
| 0.24 | % |
| $ | 175,709 |
| $ | 333 |
|
|
| 0.25 | % |
Savings and money market accounts |
|
| 190,387 |
|
| 510 |
|
|
| 0.36 | % |
|
| 178,770 |
|
| 489 |
|
|
| 0.37 | % |
Time deposits |
|
| 138,458 |
|
| 803 |
|
|
| 0.78 | % |
|
| 138,347 |
|
| 715 |
|
|
| 0.69 | % |
Securities sold under repurchase agreements |
|
| 14,505 |
|
| 34 |
|
|
| 0.31 | % |
|
| 9,743 |
|
| 11 |
|
|
| 0.15 | % |
Federal Home Loan Bank advances |
|
| 6,978 |
|
| 57 |
|
|
| 1.10 | % |
|
| 6,310 |
|
| 35 |
|
|
| 0.74 | % |
Note payable |
|
| 6,156 |
|
| 188 |
|
|
| 4.09 | % |
|
| 7,232 |
|
| 190 |
|
|
| 3.51 | % |
Total interest bearing liabilities |
| $ | 546,362 |
| $ | 1,932 |
|
|
| 0.47 | % |
| $ | 516,111 |
| $ | 1,773 |
|
|
| 0.46 | % |
Noninterest-bearing funding of earning assets |
|
| 190,186 |
|
| - |
|
|
| 0.00 | % |
|
| 147,337 |
|
| - |
|
|
| 0.00 | % |
Total cost of funding earning assets |
| $ | 736,548 |
| $ | 1,932 |
|
|
| 0.35 | % |
| $ | 663,448 |
| $ | 1,773 |
|
|
| 0.36 | % |
Net interest rate spread |
|
|
|
|
|
|
|
|
| 4.00 | % |
|
|
|
|
|
|
|
|
| 4.18 | % |
Net interest income/margin (taxable equivalent) |
|
|
|
| $ | 22,629 |
|
|
| 4.12 | % |
|
|
|
| $ | 21,295 |
|
|
| 4.29 | % |
Tax equivalent adjustment |
|
|
|
|
| (477 | ) |
|
|
|
|
|
|
|
|
| (565 | ) |
|
|
|
|
Net interest income/margin |
|
|
|
| $ | 22,152 |
|
|
| 4.03 | % |
|
|
|
| $ | 20,730 |
|
|
| 4.17 | % |
The following table reflects, for the nine months ended September 30, 2017 and 2016, the changes in our net interest income due to variances in the volume of interest earning assets and interest bearing liabilities and variances in the associated rates earned or paid on these assets and liabilities.
|
| Nine Months Ended September 30, 2017 vs. |
| ||||||||
|
| Nine Months Ended September 30, 2016 |
| ||||||||
|
|
|
|
| Variance |
|
|
|
|
| |
|
|
|
|
| due to |
|
|
|
|
| |
|
| Volume |
| Yield/Rate |
|
| Total |
| |||
Interest earning assets |
|
|
|
|
|
|
|
|
|
|
|
Loans |
| $ | 929 |
| $ | (306 | ) |
| $ | 623 |
|
Mortgage loans held for sale |
|
| 19 |
|
| (68 | ) |
|
| (49 | ) |
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
Taxable securities |
|
| 858 |
|
| 146 |
|
|
| 1,004 |
|
Tax-exempt securities |
|
| 7 |
|
| (73 | ) |
|
| (66 | ) |
Interest bearing balances in other banks |
|
| (36 | ) |
| 46 |
|
|
| 10 |
|
Federal funds sold |
|
| (29 | ) |
| - |
|
|
| (29 | ) |
Total interest earning assets |
| $ | 1,748 |
| $ | (255 | ) |
| $ | 1,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
Interest bearing transaction accounts |
| $ | 25 |
| $ | (18 | ) |
| $ | 7 |
|
Savings and money market accounts |
|
| 44 |
|
| (23 | ) |
|
| 21 |
|
Time deposits |
|
| (3 | ) |
| 91 |
|
|
| 88 |
|
Short-term debt |
|
| 5 |
|
| 18 |
|
|
| 23 |
|
Federal Home Loan Bank advances |
|
| 4 |
|
| 18 |
|
|
| 22 |
|
Note payable |
|
| (28 | ) |
| 26 |
|
|
| (2 | ) |
Total interest bearing liabilities |
| $ | 47 |
| $ | 112 |
|
| $ | 159 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
|
|
|
|
|
|
|
|
|
Net interest income (taxable equivalent) |
| $ | 1,701 |
| $ | (367 | ) |
| $ | 1,334 |
|
Taxable equivalent adjustment |
|
| (2 | ) |
| 90 |
|
|
| 88 |
|
Net interest income |
| $ | 1,699 |
| $ | (277 | ) |
| $ | 1,422 |
|
Total interest income for the nine months ended September 30, 2017 was $24,084 and total interest expense was $1,932, resulting in net interest income of $22,152 for the period. For the same period of 2016, total interest income was $22,503 and total interest expense was $1,773, resulting in net interest income of $20,730 for the period. This represents an 6.86% increase in net interest income when comparing the same period from 2017 and 2016. When comparing the variances related to interest income for the nine months ended September 30, 2017 and 2016, the increase was primarily attributed to increases in average volumes in loans and taxable securities. When comparing variances related to interest expense for the nine months ended September 30, 2017 and 2016, the increase resulted primarily from an increase in the effective rates paid on time deposit accounts.
The provision for loancredit losses represents a charge to earnings necessary to establish an allowance for loancredit losses that, in management’smanagement's evaluation, is adequate to provide coverage for estimated losses on outstanding loans and to provide for uncertainties in the economy.all expected credit losses. As a result of evaluating the allowance for loancredit losses at September 30, 2017,March 31, 2024, management recorded a provision for credit losses of $660$1.31 million in the thirdfirst quarter of 20172024 compared to a provision of $215$1.31 million in the thirdfirst quarter of 2016.2023. The increase in theminimally decreased provision for credit losses allocated was primarily relateddue to an increasecontinued improvement in the recorded allowance related to impaired loans as well as the increase in loans, excluding the loans acquired in the Keystone merger, from September 30, 2016 to September 30, 2017.
Theeconomic conditions. In management’s evaluation, our allowance for loancredit losses is increased by a provision for loanreflects an amount we believe appropriate, based on our allowance assessment methodology, to adequately cover all expected future losses which is a charge to earnings, and it is decreased by loan charge-offs and increased by recoveries on loans previously charged off. In determining the adequacyas of the allowance for loan losses, we consider our historical loan loss experience,date the general economic environment, our overall portfolio composition and other relevant information. As these factors change, the level of loan loss provision changes. When individual loans are evaluated for impairment and impairment is deemed necessary, a specific allowance is required for the impaired portion of the loan amount. Subsequent changes in the impairment amount will generally cause corresponding changes in the allowance related to the impaired loan and corresponding changes to the loan loss provision. As of September 30, 2017, the recorded allowance related to impaired loans was $1,345. As of September 30, 2016, the recorded allowance related to impaired loans was $1,189.determined.
Noninterest Income
In addition to net interest income, we generate various types of noninterest income from our operations. Our banking operations generate revenue from service charges and fees mainly on depositsdeposit accounts. Our mortgage division generates revenue from originating and selling mortgage loans. Our investment brokerage division generates revenue through a revenue-sharing relationship with a registered broker-dealer. We also own life insurance policies on several key employees and record income on the increase in the cash surrender value of these policies.
The following table sets forth the principal components of noninterest income for the periods indicated.indicated (amounts in thousands).
|
| For the Three Months |
|
| For the Nine Months |
|
| For the Three Months |
| |||||||||||||||
|
| Ended September 30, |
|
| Ended September 30, |
|
| Ended March 31, |
| |||||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2024 |
|
| 2023 |
| ||||||
Service charges and fees |
| $ | 746 |
|
| $ | 633 |
|
| $ | 2,159 |
|
| $ | 1,826 |
|
| $ | 1,985 |
|
| $ | 1,738 |
|
Investment brokerage revenue |
|
| 18 |
|
|
| 48 |
|
|
| 49 |
|
|
| 182 |
|
|
| 191 |
|
|
| 163 |
|
Mortgage operations |
|
| 516 |
|
|
| 437 |
|
|
| 1,410 |
|
|
| 982 |
|
|
| 953 |
|
|
| 650 |
|
Bank owned life insurance income |
|
| 769 |
|
|
| 109 |
|
|
| 976 |
|
|
| 323 |
|
|
| 341 |
|
|
| 310 |
|
Net gain on sale of investment securities |
|
| - |
|
|
| - |
|
|
| 3 |
|
|
| 14 |
| ||||||||
Net loss on sales of investment securities |
|
| (1,432 | ) |
|
| - |
| ||||||||||||||||
Other noninterest income |
|
| 120 |
|
|
| 112 |
|
|
| 251 |
|
|
| 257 |
|
|
| 524 |
|
|
| 219 |
|
Total noninterest income |
| $ | 2,169 |
|
| $ | 1,339 |
|
| $ | 4,848 |
|
| $ | 3,584 |
|
| $ | 2,562 |
|
| $ | 3,080 |
|
Noninterest income for the three months ended September 30, 2017March 31, 2024 was $2,169$2.6 million compared to $1,339$3.1 million for the same period in 2016.2023. The increase of $660most significant decrease in bank owned life insurancenoninterest income is a result of death benefits received during the quarter. The increase of $113 in service charges and fees was primarily relateddue to an increase in the numberloss on sales of deposit accounts and activity withininvestment securities while the deposit accounts. Themost significant increase was a $303 thousand increase in mortgage operations revenue of $79 resulted from an increase in the volume of mortgage loans originated for sale in the quarter ended September 30, 2017 as compared to the third quarter of 2016. These increases were offset by a $30 decrease in investment brokerage revenue as a result of a decrease in investment brokerage activity.revenue.
Noninterest income for the nine months ended September 30, 2017 was $4,848 compared to $3,584 for the same period of 2016. This increase of $653 in bank owned life insurance income is a result of death benefits received during the quarter. The increase of $333 in service charges and fees was primarily related to an increase in the number of deposit accounts and activity within the deposit accounts. The increase in mortgage operations revenue of $428 resulted from an increase in the volume of mortgage loans originated for sale in 2017 as compared to the same period in 2016. These increases were offset by a $133 decrease in investment brokerage revenue as a result of a decrease in investment brokerage activity.
40
Noninterest expenses consist primarily of salaries and employee benefits, building occupancy and equipment expenses, advertising and promotion expenses, data processing expenses, legal and professional services expense and miscellaneous other operating expenses.
The following table sets forth the principal components of noninterest expense for the periods indicated.indicated (amounts in thousands).
|
| For the Three Months |
|
| For the Nine Months |
|
| For the Three Months |
| |||||||||||||||
|
| Ended September 30, |
|
| Ended September 30, |
|
| Ended March 31, |
| |||||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2024 |
|
| 2023 |
| ||||||
Salaries and employee benefits |
| $ | 3,123 |
|
| $ | 2,876 |
|
| $ | 8,791 |
|
| $ | 8,089 |
|
| $ | 9,191 |
|
| $ | 8,568 |
|
Occupancy expenses |
|
| 367 |
|
|
| 387 |
|
|
| 1,051 |
|
|
| 1,134 |
|
|
| 981 |
|
|
| 908 |
|
Equipment rentals, depreciation, and maintenance |
|
| 233 |
|
|
| 111 |
|
|
| 630 |
|
|
| 580 |
|
|
| 524 |
|
|
| 472 |
|
Telephone and communications |
|
| 63 |
|
|
| - |
|
|
| 202 |
|
|
| - |
|
|
| 126 |
|
|
| 141 |
|
Advertising and business development |
|
| 179 |
|
|
| 70 |
|
|
| 538 |
|
|
| 274 |
|
|
| 249 |
|
|
| 295 |
|
Data processing |
|
| 416 |
|
|
| 410 |
|
|
| 1,289 |
|
|
| 1,325 |
|
|
| 1,026 |
|
|
| 1,020 |
|
Foreclosed assets, net |
|
| 66 |
|
|
| (76 | ) |
|
| 137 |
|
|
| 23 |
|
|
| 35 |
|
|
| 10 |
|
Federal deposit insurance and other regulatory assessments |
|
| 76 |
|
|
| 113 |
|
|
| 251 |
|
|
| 335 |
|
|
| 724 |
|
|
| 571 |
|
Legal and other professional services |
|
| 122 |
|
|
| 196 |
|
|
| 382 |
|
|
| 624 |
|
|
| 352 |
|
|
| 365 |
|
Other operating expense |
|
| 903 |
|
|
| 1,006 |
|
|
| 2,510 |
|
|
| 2,718 |
|
|
| 2,074 |
|
|
| 1,982 |
|
Total noninterest expense |
| $ | 5,548 |
|
| $ | 5,093 |
|
| $ | 15,781 |
|
| $ | 15,102 |
|
| $ | 15,282 |
|
| $ | 14,332 |
|
Noninterest expense for the three months ended September 30, 2017March 31, 2024 totaled $5,548$15.3 million compared with $5,093$14.3 million for the same period of 2016.2023. The overall increase was primarily a result of increases in salaries and employee benefits expense and foreclosed assets expenses, but these increases were offset by continued expense reductions realized from the Keystone merger as systems and operations were consolidated.benefits. Salaries and employee benefits increased $247,$623.0 thousand, or 8.59%7.27%, to $3,123$9.2 million in the thirdfirst quarter of 20172024 from $2,876$8.6 million in the thirdfirst quarter of 2016.2023. The number of full-time equivalent employees increased from approximately 128328 at September 30, 2016March 31, 2023 to approximately 142331 at September 30, 2017March 31, 2024 for an increase of approximately 10.94%0.91%. Equipment rentals, depreciation, and maintenance increased $122, or approximately 110%, in the third quarter of 2017 as compared to the third quarter of 2016 as a result of additional branches. Advertising and business development expenses increased 156% from $70 in the third quarter of 2016 to $179 in the third quarter of 2017. Foreclosed asset expense increased $142, or approximately 187%, in the third quarter of 2017 compared to the third quarter of 2016 as a result of a decrease in gains on sale of foreclosed assets. Legal and other professional services expense decreased $74 in the third quarter of 2017 as compared to the third quarter of 2016 as legal fees associated with the Keystone merger recognized in the third quarter of 2016 were not recognized in the third quarter of 2017.
Noninterest expense for the nine months ended September 30, 2017 totaled $15,781 compared with $15,102 for the same period of 2016. The increase was primarily a result of increases in salaries and employee benefits expense and advertising and business development expenses, but these increases were offset by continued expense reductions realized from the Keystone merger as systems and operations were consolidated. Salaries and employee benefits increased $702, or 8.68%, to $8,791 in the first nine months of 2017 from $8,089 in the first nine months of 2016. Equipment rentals, depreciation, and maintenance increased $50, or approximately 8.62%, in the first nine months of 2017 as compared to the first nine months of 2016. Advertising and business development expenses increased 96.35% from $264 in the first nine months of 2016 to $538 in the first nine months of 2017. Data processing expenses totaled $1,289 in the first nine months of 2017 compared to $1,325 in the first nine months of 2016 for a decrease of $36, or 2.72%, as a result of savings realized from the conversion to a new core processing system. Foreclosed asset expense increased $114, or 495.65%, in the first nine months of 2017 compared to the first nine months of 2016 as a result of a decrease in gains on sale of foreclosed assets. Legal and other professional services expense decreased $242 in the first nine months of 2017 as compared to the first nine months of 2016 as legal fees associated with the Keystone merger recognized in the first nine months of 2016 were not recognized in the first nine months of 2017.
We recognized income tax expense of $880$1.7 million for the three months ended September 30, 2017,March 31, 2024, compared to $1,014$1.4 million for the three months ended September 30, 2016.March 31, 2023. The effective tax rate for the three months ended September 30, 2017March 31, 2024 was 25.6%23.1% compared to 31.4%21.1% for the same period in 2016.2023. The effective tax rate is affected by levels of items of income that are not subject to federal and/or state taxation and by levels of items of expense that are not deductible for federal and/or state income tax purposes. The primary reason for the decrease in the effective tax rate is the $660 increase in bank owned life insurance income as a result of nontaxable death benefits received during the quarter.
We recognized income tax expense of $2,939 for the nine months ended September 30, 2017, compared to $2,630 for the nine months ended September 30, 2016. The increase of $309, or 11.75%, resulted from the increase in net income before taxes of $1,289 in the first nine months of 2017 as compared to the first nine months of 2016. The effective tax rate for the nine months ended September 30, 2017 was 29.9% compared to 30.8% for the same period in 2016. The effective tax rate is affected by levels of items of income that are not subject to federal and/or state taxation and by levels of items of expense that are not deductible for federal and/or state income tax purposes. The primary reason for the decrease in the effective tax rate is the $653 increase in bank owned life insurance income as a result of nontaxable death benefits received during the current year.
41
Comparison of Financial Condition at September 30, 2017,March 31, 2024 and December 31, 20162023
Overview
Our total assets decreased $1,247,increased $133.3 million, or 0.15%4.12%, from December 31, 20162023 to September 30, 2017.March 31, 2024. Loans, net of deferred fees and discounts, increased $6,848,$29.8 million, or 1.33%, from December 31, 20162023 to September 30, 2017.March 31, 2024. Securities available-for-sale increaseddecreased by $20,608,$36.7 million, or 11.24%5.90%, and securities held-to-maturity decreased by $1.1 million, or 0.85%, from December 31, 20162023 to September 30, 2017.March 31, 2024, respectively. Cash and cash equivalents decreased $24,579,increased $141.4 million, or 57.83%194.89% from December 31, 20162023 to September 30, 2017 as funds were used to purchase investment securities and fund loan growth.March 31, 2024. Total deposits decreased $22,240,increased $163.1 million, or 3.15%5.97%, from December 31, 20162023 to September 30, 2017 mainly because seasonal depositsMarch 31, 2024 which funded a majority of our loan growth. Total stockholders’ equity decreased $612.0 thousand, or 0.31% from December 31, 2016 were withdrawn. Federal Home Loan Bank advances increased from zero at December2023 to March 31, 2016 to $15,000 at September 30, 2017. Total stockholders’ equity increased $7,102, or 8.68%.2024.
Investment Securities
We use our securities portfolio primarily to enhance our overall yield on interest-earning assets and as a source of liquidity, as a tool to manage our balance sheet sensitivity and regulatory capital ratios, and as a base fromupon which to pledge assets for public deposits. When our liquidity position exceeds current needs and our expected loan demand, other investments are considered as a secondary earnings alternative. As investments mature, or pay down, they are used to meet current cash needs, or they are reinvested to maintain our desired liquidity position. We have historically designated allthe majority of our securities as available-for-sale to provide flexibility, in case an immediate need for liquidity arises, and we believe that the composition of the portfolio offers needed flexibility in managing our liquidity position and interest rate sensitivity without adversely impacting our regulatory capital levels. In certain cases, we have designated securities as held-to-maturity to protect capital from changes in the value of the securities portfolio. Securities available-for-sale are reported at fair value with unrealized gains or losses reported as a separate component of other comprehensive income, net of related deferred taxes.taxes while securities held-to-maturity are reported at amortized cost. Purchase premiums and discounts are recognized in income using the interest method over the terms of the securities.
During the ninethree months ended September 30, 2017,March 31, 2024, we purchased investment securities totaling $52,587$13.6 million and sold investment securities with proceeds received of $13,246$33.7 million including net realized gainslosses of $3.$1.4 million.
The following tables summarize the amortized cost, gross unrealized gains, gross unrealized losses, and fair value of debt securities available-for-sale at September 30, 2017March 31, 2024 and December 31, 2016.2023 (amounts in thousands).
|
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair Value |
| ||||
March 31, 2024: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential mortgage-backed |
| $ | 406,554 |
|
| $ | 28 |
|
| $ | (60,105 | ) |
| $ | 346,477 |
|
U.S. treasury securities |
|
| 115,822 |
|
|
| - |
|
|
| (10,003 | ) |
|
| 105,819 |
|
U.S. govt. sponsored enterprises |
|
| 61,738 |
|
|
| - |
|
|
| (5,317 | ) |
|
| 56,421 |
|
State, county, and municipal |
|
| 70,397 |
|
|
| - |
|
|
| (9,418 | ) |
|
| 60,979 |
|
Corporate debt obligations |
|
| 16,744 |
|
|
| 4 |
|
|
| (2,006 | ) |
|
| 14,742 |
|
Total available-for-sale |
| $ | 671,255 |
|
| $ | 32 |
|
| $ | (86,849 | ) |
| $ | 584,438 |
|
|
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair Value |
| ||||
March 31, 2024: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Securities held-to-maturity: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential mortgage-backed |
| $ | 62,884 |
|
| $ | - |
|
| $ | (12,819 | ) |
| $ | 50,065 |
|
State, county, and municipal |
|
| 62,827 |
|
|
| - |
|
|
| (12,354 | ) |
|
| 50,473 |
|
Total held-to-maturity |
| $ | 125,711 |
|
| $ | - |
|
| $ | (25,173 | ) |
| $ | 100,538 |
|
|
| Amortized Cost |
|
| Gross Unrealized Gains |
|
| Gross Unrealized Losses |
|
| Fair Value |
| ||||
September 30, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed |
| $ | 131,443 |
|
| $ | 142 |
|
| $ | (1,795 | ) |
| $ | 129,790 |
|
U.S. govt. sponsored enterprises |
|
| 15,923 |
|
|
| 68 |
|
|
| (111 | ) |
|
| 15,880 |
|
State, county, and municipal |
|
| 55,827 |
|
|
| 843 |
|
|
| (200 | ) |
|
| 56,470 |
|
Corporate debt obligations |
|
| 1,828 |
|
|
| 10 |
|
|
| (9 | ) |
|
| 1,829 |
|
Totals |
| $ | 205,021 |
|
| $ | 1,063 |
|
| $ | (2,115 | ) |
| $ | 203,969 |
|
42
|
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair Value |
| ||||
December 31, 2023: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential mortgage-backed |
| $ | 413,179 |
|
| $ | 102 |
|
| $ | (55,981 | ) |
| $ | 357,300 |
|
U.S. treasury securities |
|
| 130,713 |
|
|
| - |
|
|
| (10,661 | ) |
|
| 120,052 |
|
U.S. govt. sponsored enterprises |
|
| 68,751 |
|
|
| - |
|
|
| (5,185 | ) |
|
| 63,566 |
|
State, county, and municipal |
|
| 73,514 |
|
|
| 4 |
|
|
| (8,857 | ) |
|
| 64,661 |
|
Corporate debt obligations |
|
| 17,758 |
|
|
| 5 |
|
|
| (2,251 | ) |
|
| 15,512 |
|
Total available-for-sale |
| $ | 703,915 |
|
| $ | 111 |
|
| $ | (82,935 | ) |
| $ | 621,091 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| Amortized |
|
| Gross |
|
| Gross |
|
| Fair Value |
| ||||
December 31, 2023: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Securities held-to-maturity: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential mortgage-backed |
| $ | 63,953 |
|
| $ | - |
|
| $ | (12,022 | ) |
| $ | 51,931 |
|
State, county, and municipal |
|
| 62,840 |
|
|
| - |
|
|
| (11,597 | ) |
|
| 51,243 |
|
Total held-to-maturity |
| $ | 126,793 |
|
| $ | - |
|
| $ | (23,619 | ) |
| $ | 103,174 |
|
|
| Amortized Cost |
|
| Gross Unrealized Gains |
|
| Gross Unrealized Losses |
|
| Fair Value |
| ||||
December 31, 2016: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed |
| $ | 111,611 |
|
| $ | 63 |
|
| $ | (2,999 | ) |
| $ | 108,675 |
|
U.S. govt. sponsored enterprises |
|
| 15,506 |
|
|
| 44 |
|
|
| (223 | ) |
|
| 15,327 |
|
State, county, and municipal |
|
| 57,837 |
|
|
| 562 |
|
|
| (813 | ) |
|
| 57,586 |
|
Corporate debt obligations |
|
| 1,819 |
|
|
| 4 |
|
|
| (50 | ) |
|
| 1,773 |
|
Totals |
| $ | 186,773 |
|
| $ | 673 |
|
| $ | (4,085 | ) |
| $ | 183,361 |
|
43
Loans
Loans
Loans are the largest category of interest earning assets and typically provide higher yields than other types of interest earning assets. Associated with the higher loan yields are the inherent credit and liquidity risks which management attempts to control and counterbalance. Total loans averaged $517,421$2.25 billion during the three months ended September 30, 2017,March 31, 2024, or 70.2%71.2% of average interest earning assets, as compared to $497,869,$1.85 billion, or 72%65.7% of average interest earning assets, for the three months ended September 30, 2016.March 31, 2023. At September 30, 2017,March 31, 2024, total loans, net of deferred loan fees and discounts, were $523,289,$2.27 billion, compared to $516,441$2.24 billion at December 31, 2016,2023, an increase of $6,848,$29.8 million, or 1.33%.
The organic, or non-acquired, growth in average outstanding loansour loan portfolio is primarily attributable both to the Bank’sour ability to attract new customers and to our ability to benefit from other financial institutions.the overall growth in our markets. We have hired experiencedseek to build relationships with new customers, maintain and even improve our relationships with existing customers, and encourage our bankers to be involved in the markets we servetheir communities. We expect our bankers to recognize business development efforts and these employees were successful in transitioning many of their former clients as well as bringing new clients to the Bank. Our bankers are expected to maintain calling efforts to develophealthy relationships with clients, and our philosophy is to be responsive to customer needs by providing service and decisions in a timely manner. Additionally,In addition to our business development efforts, many of the markets that we serve have shown some signs of economic recovery over the last few years which has increased demand for the services we provide.years.
The following table provides a summary of the loan portfolio as of September 30, 2017,March 31, 2024, and December 31, 2016.2023.
|
| September 30, 2017 |
|
| December 31, 2016 |
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||||||||||||||||||||
|
| Amount |
|
| % of Total |
|
| Amount |
|
| % of Total |
|
| Amount |
|
| % of Total |
|
| Amount |
|
| % of Total |
| ||||||||
Residential real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Closed-end 1-4 family - first lien |
| $ | 112,014 |
|
|
| 21.6 | % |
| $ | 113,807 |
|
|
| 22.2 | % |
| $ | 791,345 |
|
|
| 35.3 | % |
| $ | 771,144 |
|
|
| 34.9 | % |
Closed-end 1-4 family - junior lien |
|
| 4,494 |
|
|
| 0.9 | % |
|
| 4,791 |
|
|
| 0.9 | % |
|
| 12,383 |
|
|
| 0.6 | % |
|
| 11,814 |
|
|
| 0.5 | % |
Multi-family |
|
| 17,452 |
|
|
| 3.4 | % |
|
| 17,043 |
|
|
| 3.3 | % |
|
| 19,402 |
|
|
| 0.9 | % |
|
| 26,739 |
|
|
| 1.2 | % |
Total residential real estate |
|
| 133,960 |
|
|
| 25.9 | % |
|
| 135,641 |
|
|
| 26.4 | % |
|
| 823,130 |
|
|
| 36.8 | % |
|
| 809,697 |
|
|
| 36.6 | % |
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Nonfarm nonresidential |
|
| 162,485 |
|
|
| 31.4 | % |
|
| 161,198 |
|
|
| 31.5 | % |
|
| 594,096 |
|
|
| 26.5 | % |
|
| 557,202 |
|
|
| 25.2 | % |
Farmland |
|
| 7,522 |
|
|
| 1.5 | % |
|
| 13,344 |
|
|
| 2.6 | % |
|
| 68,105 |
|
|
| 3.0 | % |
|
| 58,532 |
|
|
| 2.6 | % |
Total commercial real estate |
|
| 170,007 |
|
|
| 32.9 | % |
|
| 174,542 |
|
|
| 34.1 | % |
|
| 662,201 |
|
|
| 29.5 | % |
|
| 615,734 |
|
|
| 27.8 | % |
Construction and land development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Residential |
|
| 24,040 |
|
|
| 4.6 | % |
|
| 27,228 |
|
|
| 5.3 | % |
|
| 99,056 |
|
|
| 4.4 | % |
|
| 100,974 |
|
|
| 4.6 | % |
Other |
|
| 41,880 |
|
|
| 8.1 | % |
|
| 37,221 |
|
|
| 7.3 | % |
|
| 165,460 |
|
|
| 7.4 | % |
|
| 195,724 |
|
|
| 8.9 | % |
Total construction and land development |
|
| 65,920 |
|
|
| 12.7 | % |
|
| 64,449 |
|
|
| 12.6 | % |
|
| 264,516 |
|
|
| 11.8 | % |
|
| 296,698 |
|
|
| 13.5 | % |
Home equity lines of credit |
|
| 35,087 |
|
|
| 6.8 | % |
|
| 35,761 |
|
|
| 7.0 | % |
|
| 103,643 |
|
|
| 4.6 | % |
|
| 95,544 |
|
|
| 4.3 | % |
Commercial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Other commercial loans |
|
| 89,736 |
|
|
| 17.3 | % |
|
| 81,198 |
|
|
| 15.8 | % |
|
| 271,725 |
|
|
| 12.1 | % |
|
| 273,639 |
|
|
| 12.4 | % |
Agricultural |
|
| 1,543 |
|
|
| 0.3 | % |
|
| 887 |
|
|
| 0.2 | % |
|
| 61,664 |
|
|
| 2.8 | % |
|
| 66,510 |
|
|
| 3.0 | % |
State, county, and municipal loans |
|
| 8,144 |
|
|
| 1.6 | % |
|
| 8,719 |
|
|
| 1.7 | % |
|
| 35,116 |
|
|
| 1.6 | % |
|
| 34,819 |
|
|
| 1.6 | % |
Total commercial loans |
|
| 99,423 |
|
|
| 19.2 | % |
|
| 90,804 |
|
|
| 17.7 | % |
|
| 368,505 |
|
|
| 16.5 | % |
|
| 374,968 |
|
|
| 17.0 | % |
Consumer loans |
|
| 22,558 |
|
|
| 4.4 | % |
|
| 20,858 |
|
|
| 4.1 | % |
|
| 55,909 |
|
|
| 2.5 | % |
|
| 55,587 |
|
|
| 2.5 | % |
Total gross loans |
|
| 526,955 |
|
|
| 101.9 | % |
|
| 522,055 |
|
|
| 101.9 | % |
|
| 2,277,904 |
|
|
| 101.7 | % |
|
| 2,248,228 |
|
|
| 101.7 | % |
Allowance for loan losses |
|
| (5,004 | ) |
|
| -1.0 | % |
|
| (4,007 | ) |
|
| -0.8 | % | ||||||||||||||||
Net deferred loan fees and discounts |
|
| (3,666 | ) |
|
| -0.9 | % |
|
| (5,614 | ) |
|
| -1.1 | % | ||||||||||||||||
Allowance for credit losses |
|
| (29,856 | ) |
|
| -1.3 | % |
|
| (28,991 | ) |
|
| -1.3 | % | ||||||||||||||||
Net discounts |
|
| (21 | ) |
|
| 0.0 | % |
|
| (129 | ) |
|
| 0.0 | % | ||||||||||||||||
Net deferred loan fees |
|
| (8,038 | ) |
|
| -0.4 | % |
|
| (8,093 | ) |
|
| -0.4 | % | ||||||||||||||||
Net loans |
| $ | 518,285 |
|
|
| 100.0 | % |
| $ | 512,434 |
|
|
| 100.0 | % |
| $ | 2,239,989 |
|
|
| 100.0 | % |
| $ | 2,211,015 |
|
|
| 100.0 | % |
In this context, a “real estate loan” is defined as any loan, secured by real estate, regardless of the purpose of the loan. It is common practice for financial institutions in our market areas, and for our Bank, to obtain a security interest or lien in real estate whenever possible, in addition to any other available collateral. This collateral is taken to reinforce the likelihood of the ultimate repayment of the loan and tends to increase the magnitude of the real estate loan portfolio component. In general, we prefer real estate collateral to many other potential collateral sources, such as accounts receivable, inventory and equipment.
44
Real estate loans are the largest component of our loan portfolio and include residential real estate loans, commercial real estate loans, and construction and land development loans, and home equity lines of credit.loans. At September 30, 2017,March 31, 2024, this category totaled $404,974,$1.75 billion, or 76.9%76.82% of total gross loans, compared to $410,393,$1.72 billion, or 78.6%76.60%, at December 31, 2016.2023. Real estate loans decreased $5,419,increased $27.7 million, or 1.32%1.61%, during the period December 31, 20162023 to September 30, 2017.March 31, 2024. Commercial loans increased $8,619,decreased $6.5 million, or 9.49%1.72% during the same period. Our management team and lending officers have a great deal of experience and expertise in real estate lending and commercial lending.
The Federalfederal regulatory agencies issued two “guidance” documents that have a significant impact on real estate related lending and, thus, on the operations of the Bank. One part of the guidance could require lenders to restrict lending secured primarily by certain categories of commercial real estate to a level of 300% of their capital or to raise additional capital. This factor, combined with the current economic environment, could affect the Bank’s lending strategy away from, or to limit its expansion of, commercial real estate lending, which has been a material part of River Financial Corporation’s lending strategy. This could also have a negative impact on our lending and profitability. Management actively monitors the composition of the Bank’s loan portfolio, focusing on concentrations of credit, and the results of that monitoring activity are periodically reported to the Board of Directors.
The other guidance relates to the structuring of certain types of mortgages that allowsallow negative amortization of consumer mortgage loans. Although the Bank does not engage at present in lending using these types of instruments, the guidance could have the effect of making the Bank less competitive in consumer mortgage lending if the local market is driving the demand for such an offering.
The repayment of loans is a source of additional liquidity for us. The following table sets forth our variable rate and fixed rate loans maturing within specific intervals at March 31, 2024.
LOAN MATURITY AND SENSITIVITY TO CHANGES IN INTEREST RATES
|
|
|
|
| Over one |
|
| Over five |
|
|
|
|
|
|
| |||||
|
| One year |
|
| year through |
|
| years through |
|
| Over fifteen |
|
|
|
| |||||
Variable Rate Loans: |
| or less |
|
| five years |
|
| fifteen years |
|
| years |
|
| Total |
| |||||
Residential real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Closed-end 1-4 family - first lien |
| $ | 5,799 |
|
| $ | 3,792 |
|
| $ | 4,337 |
|
| $ | 436,269 |
|
| $ | 450,197 |
|
Closed-end 1-4 family - junior lien |
|
| 652 |
|
|
| - |
|
|
| - |
|
|
| 265 |
|
|
| 917 |
|
Multi-family |
|
| 431 |
|
|
| 2,741 |
|
|
| - |
|
|
| - |
|
|
| 3,172 |
|
Total residential real estate |
|
| 6,882 |
|
|
| 6,533 |
|
|
| 4,337 |
|
|
| 436,534 |
|
|
| 454,286 |
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Nonfarm nonresidential |
|
| 6,517 |
|
|
| 15,140 |
|
|
| 1,886 |
|
|
| - |
|
|
| 23,543 |
|
Farmland |
|
| 3,443 |
|
|
| 1,375 |
|
|
| - |
|
|
| 246 |
|
|
| 5,064 |
|
Total commercial real estate |
|
| 9,960 |
|
|
| 16,515 |
|
|
| 1,886 |
|
|
| 246 |
|
|
| 28,607 |
|
Construction and land development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Residential |
|
| 22,532 |
|
|
| 422 |
|
|
| 240 |
|
|
| 42,829 |
|
|
| 66,023 |
|
Other |
|
| 15,438 |
|
|
| 9,989 |
|
|
| 53 |
|
|
| 4,467 |
|
|
| 29,947 |
|
Total construction and land development |
|
| 37,970 |
|
|
| 10,411 |
|
|
| 293 |
|
|
| 47,296 |
|
|
| 95,970 |
|
Home equity lines of credit |
|
| 7,858 |
|
|
| 4,463 |
|
|
| 67,999 |
|
|
| - |
|
|
| 80,320 |
|
Commercial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other commercial loans |
|
| 75,640 |
|
|
| 15,236 |
|
|
| 8,640 |
|
|
| - |
|
|
| 99,516 |
|
Agricultural |
|
| 37,179 |
|
|
| 743 |
|
|
| - |
|
|
| - |
|
|
| 37,922 |
|
State, county, and municipal loans |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Total commercial loans |
|
| 112,819 |
|
|
| 15,979 |
|
|
| 8,640 |
|
|
| - |
|
|
| 137,438 |
|
Consumer loans |
|
| 2,633 |
|
|
| 1,088 |
|
|
| 52 |
|
|
| - |
|
|
| 3,773 |
|
Total gross variable rate loans |
| $ | 178,122 |
|
| $ | 54,989 |
|
| $ | 83,207 |
|
| $ | 484,076 |
|
| $ | 800,394 |
|
45
|
|
|
|
| Over one |
|
| Over five |
|
|
|
|
|
|
| |||||
|
| One year |
|
| year through |
|
| years through |
|
| Over fifteen |
|
|
|
| |||||
Fixed Rate Loans: |
| or less |
|
| five years |
|
| fifteen years |
|
| years |
|
| Total |
| |||||
Residential real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Closed-end 1-4 family - first lien |
| $ | 21,055 |
|
| $ | 149,117 |
|
| $ | 68,381 |
|
| $ | 102,595 |
|
| $ | 341,148 |
|
Closed-end 1-4 family - junior lien |
|
| 932 |
|
|
| 8,690 |
|
|
| 1,538 |
|
|
| 306 |
|
|
| 11,466 |
|
Multi-family |
|
| 214 |
|
|
| 12,912 |
|
|
| 2,262 |
|
|
| 842 |
|
|
| 16,230 |
|
Total residential real estate |
|
| 22,201 |
|
|
| 170,719 |
|
|
| 72,181 |
|
|
| 103,743 |
|
|
| 368,844 |
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Nonfarm nonresidential |
|
| 28,842 |
|
|
| 284,025 |
|
|
| 252,578 |
|
|
| 5,108 |
|
|
| 570,553 |
|
Farmland |
|
| 1,987 |
|
|
| 41,952 |
|
|
| 19,035 |
|
|
| 67 |
|
|
| 63,041 |
|
Total commercial real estate |
|
| 30,829 |
|
|
| 325,977 |
|
|
| 271,613 |
|
|
| 5,175 |
|
|
| 633,594 |
|
Construction and land development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Residential |
|
| 30,652 |
|
|
| 1,475 |
|
|
| 214 |
|
|
| 692 |
|
|
| 33,033 |
|
Other |
|
| 36,355 |
|
|
| 61,276 |
|
|
| 37,195 |
|
|
| 687 |
|
|
| 135,513 |
|
Total construction and land development |
|
| 67,007 |
|
|
| 62,751 |
|
|
| 37,409 |
|
|
| 1,379 |
|
|
| 168,546 |
|
Home equity lines of credit |
|
| 853 |
|
|
| 4,049 |
|
|
| 18,421 |
|
|
| - |
|
|
| 23,323 |
|
Commercial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other commercial loans |
|
| 23,186 |
|
|
| 111,700 |
|
|
| 37,323 |
|
|
| - |
|
|
| 172,209 |
|
Agricultural |
|
| 5,797 |
|
|
| 16,724 |
|
|
| 1,221 |
|
|
| - |
|
|
| 23,742 |
|
State, county, and municipal loans |
|
| 3,856 |
|
|
| 8,853 |
|
|
| 22,407 |
|
|
| - |
|
|
| 35,116 |
|
Total commercial loans |
|
| 32,839 |
|
|
| 137,277 |
|
|
| 60,951 |
|
|
| - |
|
|
| 231,067 |
|
Consumer loans |
|
| 6,025 |
|
|
| 29,603 |
|
|
| 16,372 |
|
|
| 136 |
|
|
| 52,136 |
|
Total fixed rate gross loans |
| $ | 159,754 |
|
| $ | 730,376 |
|
| $ | 476,947 |
|
| $ | 110,433 |
|
| $ | 1,477,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
| Over one |
|
| Over five |
|
|
|
|
|
|
| |||||
|
| One year |
|
| year through |
|
| years through |
|
| Over fifteen |
|
|
|
| |||||
Total Loans: |
| or less |
|
| five years |
|
| fifteen years |
|
| years |
|
| Total |
| |||||
Residential real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Closed-end 1-4 family - first lien |
| $ | 26,854 |
|
| $ | 152,909 |
|
| $ | 72,718 |
|
| $ | 538,864 |
|
| $ | 791,345 |
|
Closed-end 1-4 family - junior lien |
|
| 1,584 |
|
|
| 8,690 |
|
|
| 1,538 |
|
|
| 571 |
|
|
| 12,383 |
|
Multi-family |
|
| 645 |
|
|
| 15,653 |
|
|
| 2,262 |
|
|
| 842 |
|
|
| 19,402 |
|
Total residential real estate |
|
| 29,083 |
|
|
| 177,252 |
|
|
| 76,518 |
|
|
| 540,277 |
|
|
| 823,130 |
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Nonfarm nonresidential |
|
| 35,359 |
|
|
| 299,165 |
|
|
| 254,464 |
|
|
| 5,108 |
|
|
| 594,096 |
|
Farmland |
|
| 5,430 |
|
|
| 43,327 |
|
|
| 19,035 |
|
|
| 313 |
|
|
| 68,105 |
|
Total commercial real estate |
|
| 40,789 |
|
|
| 342,492 |
|
|
| 273,499 |
|
|
| 5,421 |
|
|
| 662,201 |
|
Construction and land development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Residential |
|
| 53,184 |
|
|
| 1,897 |
|
|
| 454 |
|
|
| 43,521 |
|
|
| 99,056 |
|
Other |
|
| 51,793 |
|
|
| 71,265 |
|
|
| 37,248 |
|
|
| 5,154 |
|
|
| 165,460 |
|
Total construction and land development |
|
| 104,977 |
|
|
| 73,162 |
|
|
| 37,702 |
|
|
| 48,675 |
|
|
| 264,516 |
|
Home equity lines of credit |
|
| 8,711 |
|
|
| 8,512 |
|
|
| 86,420 |
|
|
| - |
|
|
| 103,643 |
|
Commercial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other commercial loans |
|
| 98,826 |
|
|
| 126,936 |
|
|
| 45,963 |
|
|
| - |
|
|
| 271,725 |
|
Agricultural |
|
| 42,976 |
|
|
| 17,467 |
|
|
| 1,221 |
|
|
| - |
|
|
| 61,664 |
|
State, county, and municipal loans |
|
| 3,856 |
|
|
| 8,853 |
|
|
| 22,407 |
|
|
| - |
|
|
| 35,116 |
|
Total commercial loans |
|
| 145,658 |
|
|
| 153,256 |
|
|
| 69,591 |
|
|
| - |
|
|
| 368,505 |
|
Consumer loans |
|
| 8,658 |
|
|
| 30,691 |
|
|
| 16,424 |
|
|
| 136 |
|
|
| 55,909 |
|
Total gross loans |
| $ | 337,876 |
|
| $ | 785,365 |
|
| $ | 560,154 |
|
| $ | 594,509 |
|
| $ | 2,277,904 |
|
The information presented in the table above is based upon the contractual maturities of the individual loans, which may be subject to renewal at their contractual maturity. Renewal of such loans is subject to review and credit approval, as well as modification of terms at their maturity. Consequently, we believe that this treatment presents fairly the maturity structure of the loan portfolio.
46
Allowance for LoanCredit Losses, Provision for LoanCredit Losses and Asset Quality
Allowance for loancredit losses and provision for loancredit losses
The allowance for loancredit losses represents management’s estimate of probable inherent credit losses in the loan portfolio. Management determines the allowance based on an ongoing evaluation of risk as it correlates to potential losses within the portfolio. Increases to the allowance for loancredit losses are made by charges to the provision for loancredit losses. Loans deemed to be uncollectible are charged against the allowance. Recoveries of previously charged-off amounts are credited to the allowance for loancredit losses.
Management utilizes a review process for
The Bank recognizes that all significant factors that affect the collectability of the loan portfolio must be considered to identifydetermine the estimated credit losses as of the evaluation date. Furthermore, the methodology, in and of itself and even when selectively adjusted by comparison to market and peer data, does not provide a sufficient basis to determine the estimated credit losses. The Bank adjusts the modeled historical losses by a qualitative adjustment to incorporate all significant risks to form a sufficient basis to estimate the credit losses. These qualitative adjustments may increase or reduce reserve levels and include adjustments for lending management experience, loan review and audit results, asset quality and portfolio trends, loan portfolio growth, and concentrations, trends in underlying collateral, as well as external factors and economic conditions not already captured.
Loans that do not share risk characteristics are evaluated on an individual basis. Generally, this population includes loans on non-accrual status, however, they can also include any loan that are deemed to be impaired. A loan is considered impaired when itdoes not share risk characteristics with its respective pool. When management determines that foreclosure is probable thatand the Bank will be unable to collectborrower is experiencing financial difficulty, the scheduled payments of principal and interest due underexpected credit losses are based on the contractual terms of the loan agreement or when the loan is deemed to be a troubled debt restructuring. For loans and loan relationships deemed to be impaired that are $100, or greater, management determines the estimatedfair value of the collateral at the reporting date unadjusted for selling costs as appropriate. When the expected source of repayment is from a source other than the underlying collateral, less estimated costs to acquire and sellimpairment will generally be measured based on the collateral, or the estimated net present value of expected proceeds discounted at the cash flows expected to be received on the loan or loan relationship. These amounts are compared to the current investment in the loan and a specific allowance for the deficiency, if any, is specifically included in the analysis of the allowance for loan losses. For loans and loan relationships less than $100 that are deemed to be impaired, management applies a general loss factor of 15% and includes that amount in the analysis of the allowance for loan losses rather than specifically measuring the impairment for each loan.contractual interest rate.
All other loans are deemed to be unimpaired and are grouped into various homogeneous risk pools primarily utilizing regulatory reporting classification codes. The Bank’s historical loss factors are calculated for each of the risk pools based on the percentage of net losses experienced as a percentage of the average loans outstanding. The time periods utilized in these historical loss factor calculations are subjective and vary according to management’s estimate of the impact of current economic cycles. As every loan has a risk of loss, minimum loss factors are estimated based on long term trends for the Bank, the banking industry, and the economy. The greater of the calculated historical loss factors or the minimum loss factors are applied to the unimpaired loan amounts currently outstanding for the risk pool and included in the analysis of the allowance for loan losses. In addition, certain qualitative adjustments may be included by management as additional loss factors. These adjustments may include, among other things, changes in loan policy, loan administration, loan concentrations, and loan growth. The loss allocations for specifically impaired loans, smaller impaired loans not specifically measured for impairment, and unimpaired loans are totaled to yield the allowance for loan losses.
Management believes the data it uses in determining the allowance for loancredit losses is sufficient to estimate potential losses in the loan portfolio; however, actual results could differ from management’s estimate.
47
The following table presents a summary of changes in the allowance for loancredit losses for the periods indicated.indicated (amounts in thousands).
|
| As of and for the |
|
| As of and for the |
| ||||||||||||||||||
|
| Three Months Ended: |
|
| Nine Months Ended: |
|
| As of and for the |
| |||||||||||||||
|
| September 30, |
|
| September 30, |
|
| September 30, |
|
| September 30, |
|
| Three Months Ended: |
| |||||||||
|
| 2017 |
|
|
| 2016 |
|
| 2017 |
|
|
| 2016 |
|
| March 31, |
|
| March 31, |
| ||||
Allowance for loan losses at beginning of period |
| $ | 4,401 |
|
| $ | 4,121 |
|
| $ | 4,007 |
|
| $ | 3,827 |
| ||||||||
|
| 2024 |
|
| 2023 |
| ||||||||||||||||||
Allowance for credit losses at beginning of period |
| $ | 28,991 |
|
| $ | 24,310 |
| ||||||||||||||||
Impact of adopting ASC 326 |
|
| - |
|
|
| 80 |
| ||||||||||||||||
Charge-offs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Residential |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| ||||||||
Residential real estate |
|
| - |
|
|
| - |
| ||||||||||||||||
Commercial real estate |
|
| 21 |
|
|
| 15 |
|
|
| 136 |
|
|
| 15 |
|
|
| 249 |
|
|
| - |
|
Construction and land development |
|
| 7 |
|
|
| - |
|
|
| 7 |
|
|
| - |
|
|
| 19 |
|
|
| - |
|
Total mortgage loans on real estate |
|
| 28 |
|
|
| 15 |
|
|
| 143 |
|
|
| 15 |
|
|
| 268 |
|
|
| - |
|
Home equity lines of credit |
|
| - |
|
|
| - |
|
|
| 100 |
|
|
| 10 |
|
|
| 50 |
|
|
| - |
|
Commercial |
|
| 78 |
|
|
| 35 |
|
|
| 192 |
|
|
| 241 |
|
|
| 88 |
|
|
| 67 |
|
Consumer |
|
| 9 |
|
|
| 27 |
|
|
| 94 |
|
|
| 36 |
|
|
| 61 |
|
|
| 34 |
|
Total |
|
| 115 |
|
|
| 77 |
|
|
| 529 |
|
|
| 302 |
|
|
| 467 |
|
|
| 101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Recoveries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Residential |
|
| 18 |
|
|
| 5 |
|
|
| 24 |
|
|
| 5 |
| ||||||||
Residential real estate |
|
| - |
|
|
| - |
| ||||||||||||||||
Commercial real estate |
|
| 2 |
|
|
| - |
|
|
| 11 |
|
|
| - |
|
|
| 2 |
|
|
| 77 |
|
Construction and land development |
|
| 4 |
|
|
| 3 |
|
|
| 10 |
|
|
| 10 |
|
|
| - |
|
|
| - |
|
Total mortgage loans on real estate |
|
| 24 |
|
|
| 8 |
|
|
| 45 |
|
|
| 15 |
|
|
| 2 |
|
|
| 77 |
|
Home equity lines of credit |
|
| - |
|
|
| (4 | ) |
|
| 2 |
|
|
| 16 |
|
|
| - |
|
|
| - |
|
Commercial |
|
| 33 |
|
|
| 14 |
|
|
| 85 |
|
|
| 52 |
|
|
| 16 |
|
|
| 33 |
|
Consumer |
|
| 1 |
|
|
| 12 |
|
|
| 14 |
|
|
| 19 |
|
|
| 5 |
|
|
| 4 |
|
Total |
|
| 58 |
|
|
| 30 |
|
|
| 146 |
|
|
| 102 |
|
|
| 23 |
|
|
| 114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Net Charge-offs (Recoveries) |
|
| 57 |
|
|
| 47 |
|
|
| 383 |
|
|
| 200 |
| ||||||||
Provision for loan losses |
|
| 660 |
|
|
| 215 |
|
|
| 1,380 |
|
|
| 662 |
| ||||||||
Allowance for loan losses at end of period |
| $ | 5,004 |
|
| $ | 4,289 |
|
| $ | 5,004 |
|
| $ | 4,289 |
| ||||||||
Net charge-offs (recoveries) |
|
| 444 |
|
|
| (13 | ) | ||||||||||||||||
Provision for credit losses |
|
| 1,309 |
|
|
| 1,311 |
| ||||||||||||||||
Allowance for credit losses at end of period |
| $ | 29,856 |
|
| $ | 25,714 |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Total loans outstanding, net of deferred loan fees |
|
| 523,289 |
|
|
| 499,813 |
|
|
| 523,289 |
|
|
| 499,813 |
|
|
| 2,269,845 |
|
|
| 1,910,514 |
|
Average loans outstanding, net of deferred loan fees |
|
| 517,421 |
|
|
| 497,869 |
|
|
| 513,478 |
|
|
| 490,008 |
|
|
| 2,253,010 |
|
|
| 1,850,442 |
|
Allowance for loan losses to period end loans |
|
| 0.96 | % |
|
| 0.86 | % |
|
| 0.96 | % |
|
| 0.86 | % | ||||||||
Net charge-offs (recoveries) to average loans (annualized) |
|
| 0.04 | % |
|
| 0.04 | % |
|
| 0.10 | % |
|
| 0.06 | % | ||||||||
Allowance for credit losses to period end loans |
|
| 1.32 | % |
|
| 1.35 | % | ||||||||||||||||
Net charge-offs to average loans (annualized) |
|
| 0.08 | % |
|
| 0.00 | % |
Allocation of the Allowance for LoanCredit Losses
While no portion of the allowance for loanscredits losses is in any way restricted to any individual loan or group of loans and the entire allowance is available to absorb losses from any and all loans, the following table represents management’s allocation of the allowance for loancredit losses to specific loan categories as of the dates indicated.indicated (amounts in thousands).
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||||||||||
|
|
|
|
| Percent of |
|
|
|
|
| Percent of |
| ||||
|
| Amount |
|
| Total |
|
| Amount |
|
| Total |
| ||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Residential real estate |
| $ | 7,497 |
|
|
| 25.2 | % |
| $ | 7,233 |
|
|
| 25.0 | % |
Commercial real estate |
|
| 11,494 |
|
|
| 38.5 | % |
|
| 10,530 |
|
|
| 36.3 | % |
Construction and land development |
|
| 3,889 |
|
|
| 13.0 | % |
|
| 4,646 |
|
|
| 16.0 | % |
Total mortgage loans on real estate |
|
| 22,880 |
|
|
| 76.7 | % |
|
| 22,409 |
|
|
| 77.3 | % |
Home equity lines of credit |
|
| 1,171 |
|
|
| 3.9 | % |
|
| 1,078 |
|
|
| 3.7 | % |
Commercial |
|
| 5,201 |
|
|
| 17.4 | % |
|
| 4,906 |
|
|
| 16.9 | % |
Consumer |
|
| 604 |
|
|
| 2.0 | % |
|
| 598 |
|
|
| 2.1 | % |
Total |
| $ | 29,856 |
|
|
| 100.0 | % |
| $ | 28,991 |
|
|
| 100.0 | % |
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||||||||||
|
|
|
|
|
| Percent of |
|
|
|
|
|
| Percent of |
| ||
|
| Amount |
|
| Total |
|
| Amount |
|
| Total |
| ||||
Mortgage loans on real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
| $ | 1,084 |
|
|
| 21.7 | % |
| $ | 563 |
|
|
| 14.1 | % |
Commercial real estate |
|
| 1,723 |
|
|
| 34.4 | % |
|
| 1,506 |
|
|
| 37.6 | % |
Construction and land development |
|
| 572 |
|
|
| 11.4 | % |
|
| 723 |
|
|
| 18.0 | % |
Total mortgage loans on real estate |
|
| 3,379 |
|
|
| 67.5 | % |
|
| 2,792 |
|
|
| 69.7 | % |
Home equity lines of credit |
|
| 312 |
|
|
| 6.2 | % |
|
| 187 |
|
|
| 4.7 | % |
Commercial |
|
| 1,074 |
|
|
| 21.5 | % |
|
| 829 |
|
|
| 20.6 | % |
Consumer |
|
| 239 |
|
|
| 4.8 | % |
|
| 199 |
|
|
| 5.0 | % |
Total |
| $ | 5,004 |
|
|
| 100.0 | % |
| $ | 4,007 |
|
|
| 100.0 | % |
48
Nonperforming Assets
The following table presents our nonperforming assets as of the dates indicated:indicated (amounts in thousands):
|
| September 30, |
|
| December 31, |
|
| March 31, |
|
| December 31, |
| ||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2016 |
|
| 2024 |
|
| 2023 |
|
| 2023 |
| ||||||
Nonaccrual loans |
| $ | 2,449 |
|
| $ | 2,420 |
|
| $ | 4,386 |
|
| $ | 4,357 |
|
| $ | 4,714 |
|
| $ | 5,579 |
|
Accruing loans past due 90 days or more |
|
| 962 |
|
|
| 963 |
|
|
| 39 |
|
|
| 68 |
|
|
| - |
|
|
| 288 |
|
Total nonperforming loans |
|
| 3,411 |
|
|
| 3,383 |
|
|
| 4,425 |
|
|
| 4,425 |
|
|
| 4,714 |
|
|
| 5,867 |
|
Foreclosed assets |
|
| 1,485 |
|
|
| 1,184 |
|
|
| 1,151 |
|
|
| 924 |
|
|
| 198 |
|
|
| 92 |
|
Total nonperforming assets |
| $ | 4,896 |
|
| $ | 4,567 |
|
| $ | 5,576 |
|
| $ | 5,349 |
|
| $ | 4,912 |
|
| $ | 5,959 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Allowance for loan losses to period end loans |
|
| 0.96 | % |
|
| 0.86 | % |
|
| 0.78 | % | ||||||||||||
Allowance for loan losses to period end nonperforming loans |
|
| 146.70 | % |
|
| 126.78 | % |
|
| 90.55 | % | ||||||||||||
Allowance for credit losses to period end loans |
|
| 1.32 | % |
|
| 1.35 | % |
|
| 1.29 | % | ||||||||||||
Allowance for credit losses to period end nonperforming loans |
|
| 674.71 | % |
|
| 545.48 | % |
|
| 494.14 | % | ||||||||||||
Net charge-offs (recoveries) to average loans (annualized) |
|
| 0.10 | % |
|
| 0.06 | % |
|
| 0.14 | % |
|
| 0.07 | % |
|
| 0.00 | % |
|
| 0.03 | % |
Nonperforming assets to period end loans and foreclosed property |
|
| 0.93 | % |
|
| 0.91 | % |
|
| 1.08 | % |
|
| 0.24 | % |
|
| 0.26 | % |
|
| 0.27 | % |
Nonperforming loans to period end loans |
|
| 0.65 | % |
|
| 0.68 | % |
|
| 0.86 | % |
|
| 0.19 | % |
|
| 0.25 | % |
|
| 0.26 | % |
Nonperforming assets to total assets |
|
| 0.61 | % |
|
| 0.60 | % |
|
| 0.69 | % |
|
| 0.16 | % |
|
| 0.16 | % |
|
| 0.18 | % |
Period end loans |
|
| 523,289 |
|
|
| 499,813 |
|
|
| 516,441 |
|
|
| 2,269,845 |
|
|
| 1,910,514 |
|
|
| 2,240,006 |
|
Period end total assets |
|
| 809,170 |
|
|
| 766,602 |
|
|
| 810,417 |
|
|
| 3,368,560 |
|
|
| 2,988,952 |
|
|
| 3,235,250 |
|
Allowance for loan losses |
|
| 5,004 |
|
|
| 4,289 |
|
|
| 4,007 |
| ||||||||||||
Allowance for credit losses |
|
| 29,856 |
|
|
| 25,714 |
|
|
| 28,991 |
| ||||||||||||
Average loans for the period |
|
| 517,421 |
|
|
| 497,869 |
|
|
| 495,687 |
|
|
| 2,253,010 |
|
|
| 1,850,442 |
|
|
| 2,043,466 |
|
Net charge-offs for the period |
|
| 383 |
|
|
| 200 |
|
|
| 698 |
| ||||||||||||
Net charge-offs (recoveries) for the period |
|
| 444 |
|
|
| (13 | ) |
|
| 643 |
| ||||||||||||
Period end loans plus foreclosed property |
|
| 524,774 |
|
|
| 500,997 |
|
|
| 517,592 |
|
|
| 2,270,769 |
|
|
| 1,910,712 |
|
|
| 2,240,098 |
|
Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions and collection efforts, that the borrower’s financial condition is such that the collection of interest is doubtful. In addition to consideration of these factors, loans that are past due 90 days or more are generally placed on nonaccrual status. When a loan is placed on nonaccrual status, all accrued interest on the loan is reversed and deducted from earnings as a reduction of reported interest income. No additional interest is accrued on the loan balance until collection of both principal and interest becomes reasonably certain. Payments received while thea loan is on nonaccrual status arewill generally be applied to the loan’s outstanding principal balance. When a problem loan is fullyfinally resolved, there may ultimately be an actual write-down or charge-off of the principal balance of the loan whichthat would necessitate additional charges to the allowance for loancredit losses.
49
Deposits, which include noninterest bearing demand deposits, interest bearing demand deposits, money market accounts, savings accounts, and time deposits, are the principal source of funds for the Bank. We offer a variety of products designed to attract and retain customers, with primary focus on building and expanding client relationships. Management continues to focus on establishing a comprehensive relationship with consumer and business borrowers, seeking deposits as well as lending relationships.
The following table details the composition of our deposit portfolio as of September 30, 2017,March 31, 2024, and December 31, 2016.2023.
|
| September 30, 2017 |
|
| December 31, 2016 |
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||||||||||||||||||||
|
|
|
|
|
| Percent of |
|
|
|
|
|
| Percent of |
|
|
|
|
| Percent of |
|
|
|
|
| Percent of |
| ||||||
|
| Amount |
|
| Total |
|
| Amount |
|
| Total |
|
| Amount |
|
| Total |
|
| Amount |
|
| Total |
| ||||||||
Demand deposits, non-interest bearing |
| $ | 165,897 |
|
|
| 24.3 | % |
| $ | 185,270 |
|
|
| 26.3 | % |
| $ | 647,499 |
|
|
| 22.4 | % |
| $ | 628,415 |
|
|
| 23.0 | % |
Demand deposits, interest bearing |
|
| 191,518 |
|
|
| 28.1 | % |
|
| 197,509 |
|
|
| 28.0 | % |
|
| 706,488 |
|
|
| 24.4 | % |
|
| 693,421 |
|
|
| 25.4 | % |
Money market accounts |
|
| 160,560 |
|
|
| 23.5 | % |
|
| 160,677 |
|
|
| 22.8 | % |
|
| 834,470 |
|
|
| 28.8 | % |
|
| 761,164 |
|
|
| 27.9 | % |
Savings deposits |
|
| 27,977 |
|
|
| 4.1 | % |
|
| 24,022 |
|
|
| 3.4 | % |
|
| 113,562 |
|
|
| 3.9 | % |
|
| 112,563 |
|
|
| 4.1 | % |
Time certificates of $250 or more |
|
| 36,154 |
|
|
| 5.3 | % |
|
| 32,991 |
|
|
| 4.7 | % | ||||||||||||||||
Time certificates of $250 thousand or more |
|
| 312,412 |
|
|
| 10.8 | % |
|
| 272,008 |
|
|
| 10.0 | % | ||||||||||||||||
Other time certificates |
|
| 100,567 |
|
|
| 14.7 | % |
|
| 104,444 |
|
|
| 14.8 | % |
|
| 279,331 |
|
|
| 9.7 | % |
|
| 263,084 |
|
|
| 9.6 | % |
Totals |
| $ | 682,673 |
|
|
| 100.0 | % |
| $ | 704,913 |
|
|
| 100.0 | % |
| $ | 2,893,762 |
|
|
| 100.0 | % |
| $ | 2,730,655 |
|
|
| 100.0 | % |
Total deposits were $682,673$2.89 billion at September 30, 2017, a decreaseMarch 31, 2024, an increase of $22,240$163.1 million from December 31, 20162023 with the decreaseincrease resulting mainly in the balances of interest bearing demand deposits.deposits, money market account, and time deposit accounts. Some of our demand deposit accounts are seasonal and typically have larger balances at year-end than at the end of other calendar quarters.expected balance fluctuations. The seasonality of these demand deposits is related to property tax collections and to agricultural production.
The following table presents the Bank’s time certificates of deposits by various maturities as of September 30, 2017.March 31, 2024 (amounts in thousands).
|
| All Time Deposits |
|
| Time Deposits |
|
| Time Deposits |
| |||
Three months or less |
| $ | 171,004 |
|
| $ | 69,568 |
|
| $ | 101,436 |
|
Greater than three months through six months |
|
| 145,494 |
|
|
| 91,198 |
|
|
| 54,296 |
|
Greater than six months through one year |
|
| 209,001 |
|
|
| 119,385 |
|
|
| 89,616 |
|
Greater than one year through three years |
|
| 60,690 |
|
|
| 30,032 |
|
|
| 30,658 |
|
Greater than three years |
|
| 5,554 |
|
|
| 2,228 |
|
|
| 3,326 |
|
Total |
| $ | 591,743 |
|
| $ | 312,411 |
|
| $ | 279,332 |
|
|
| All Time Deposits |
|
| Time Deposits $100 or more |
|
| Time Deposits less than $100 |
| |||
Three months or less |
| $ | 19,512 |
|
| $ | 11,513 |
|
| $ | 7,999 |
|
Greater than three months through six months |
|
| 28,728 |
|
|
| 19,015 |
|
|
| 9,713 |
|
Greater than six months through one year |
|
| 38,375 |
|
|
| 23,879 |
|
|
| 14,496 |
|
Greater than one year through three years |
|
| 32,528 |
|
|
| 20,664 |
|
|
| 11,864 |
|
Greater than three years |
|
| 17,578 |
|
|
| 13,176 |
|
|
| 4,402 |
|
Total |
| $ | 136,721 |
|
| $ | 88,247 |
|
| $ | 48,474 |
|
50
Other Funding Sources
We supplement our deposit funding with wholesale funding when needed for balance sheet planning and management or when the terms are attractive and will not disrupt our offering rates in our markets. A source we have used for wholesale funding is the Federal Home Loan Bank of Atlanta (FHLB). The line of credit with the FHLB is secured by pledges of various loans in our loan portfolio. At September 30, 2017,March 31, 2024, the FHLB line of credit available was $85,342$350.0 million and at December 31, 20162023 it was $88,071.$210.3 million. As of September 30, 2017March 31, 2024 and December 31, 2023, we have $15,000 ofhad $205 million and $230 million Federal Home Loan Bank Advances outstanding.advances outstanding, respectively. We also have lines of credit for federal funds borrowings with other banks that totaled $28,500$100.0 million and $88.5 million at September 30, 2017March 31, 2024 and December 31, 2016.2023, respectively. Furthermore, we have pledged certain loans to the Federal Reserve Bank (FRB) to secure a line of credit. At September 30, 2017,March 31, 2024, the FRB line of credit available was $65,898$357.2 million and at December 31, 2016,2023, the FRB line of credit available was $51,236. We$157.6 million. Another source that we have never drawn onused for wholesale funding is the FRBFederal Reserve Bank discount window. At both March 31, 2024 and December 31, 2023, we had no borrowings outstanding with the Federal Reserve Bank discount window.
On August 9, 2021, the Company entered into a line of credit and consider it a contingencyagreement with ServisFirst Bank for $10 million. The line of credit agreement was amended on March 17, 2023 to increase the line to $20 million. The line of credit is to be used only for emergency liquidity management.
River borrowed $7,500general capital needs and investments. The line, when drawn, will require quarterly payments of interest only. The line of credit was amended on January 4, 2016March 15, 2024 and usedextended the proceedsmaturity date 24 months to fundMarch 15, 2026. Additionally, the cash payments made to Keystone shareholders according toamendment dated March 15, 2024 increased the merger agreement. The loan matures on December 31, 2022. The interest rate is floating and is equal to thefloat at Wall Street Journal Prime Rate. Quarterlywith a floor of 4.50% up from 3.25%. The line of credit is secured by 51% of the Company’s stock.
On March 9, 2021, River Financial Corporation (“the Company”) entered into a Subordinated Note Purchase Agreement (the “Purchase Agreement”) with the purchasers signatory thereto providing for a private placement of $40 million in aggregate principal paymentsamount of $268 plus accrued4.00% fixed-to-floating rate Subordinated Notes due March 15, 2031 (the “Notes”). The Notes were issued by the Company to the purchasers at a price equal to 100% of their face amount. Interest on the Notes will accrue from March 9, 2021, and the Company will pay interest are duesemi-annually on March 31, June 30,15th and September 30, and December 3115th of each year.year, beginning on September 15, 2021, until the Notes mature. The Notes will bear interest at a fixed rate of 4.00% per year, from and including March 9, 2021 to, but excluding, March 15, 2026. From and including March 15, 2026, but excluding the maturity date or early redemption date, the interest rate will reset quarterly at a variable rate equal to the then current three-month term SOFR plus 342 basis points. The Notes may not be prepaid by the Company prior to March 15, 2026. From and after March 15, 2026, the Company may prepay all or, from time to time, any part of the Notes at 100% of the principal amount (plus accrued interest) without penalty, subject to any requirement under Federal Reserve Board regulations to obtain prior approval from the Board of Governors of the Federal Reserve System before making any prepayment. The Notes may also be prepaid by the Company at any time after the occurrence of an event that would preclude the Notes from being included in the Tier 2 Capital of the Company. The Purchase Agreement contains customary representations and warranties, events of default, and affirmative and negative covenants, including the requirement that, subject to certain limitations, the Company restructure any portion of the Notes that ceases to be deemed Tier 2 Capital. The Company used approximately $19.7 million of the net proceeds from the issuance of the Notes to pay off its note with CenterState Bank dated October 31, 2018, including interest accrued on such notes, and the remaining proceeds for general corporate purposes, including providing capital to support the organic growth of its bank subsidiary, River Bank.
51
Liquidity
Market and public confidence in our financial strength and financial institutions in general will largely determine our access to appropriate levels of liquidity. This confidence is significantly dependent on our ability to maintain sound asset quality and appropriate levels of capital reserves.
Liquidity is defined as the ability to meet anticipated customer demands for funds under credit commitments and deposit withdrawals at a reasonable cost and on a timely basis. We measure our liquidity position by giving consideration to both on- and off-balance sheet sources of and demands for funds on a daily, weekly and monthly basis.
Liquidity risk involves the risk of being unable to fund assets with the appropriate duration and rate-based liabilities, as well as the risk of not being able to meet unexpected cash needs. Liquidity planning and management are necessary to ensure the ability to fund operations cost-effectively and to meet current and future potential obligations such as loan commitments and unexpected deposit outflows. In this process, we focus on assets and liabilities and on the manner in which they combine to provide adequate liquidity to meet our needs.
Funds are available from a number of basic banking activity sources, including the core deposit base, the repayment and maturity of loans, and investment cash flows. Other funding sources include federal funds borrowings, brokered certificates of deposit and borrowings from the FHLB and FRB.
Cash and cash equivalents at September 30, 2017March 31, 2024 and December 31, 2016,2023, were $17,920$213.9 million and $42,499,$72.6 million, respectively. Based on recorded cash and cash equivalents, management believes River Financial Corporation’s liquidity resources were sufficient at September 30, 2017March 31, 2024 to fund loans and meet other cash needs as necessary.
CommitmentsOff-Balance Sheet Arrangements
The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financial needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. ThoseSuch instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized by the balance sheet. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.
The exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. In most cases, the Company requires collateral or other security to support financial instruments with credit risk.
Financial instruments whose contract amount represents credit risk at September 30, 2017March 31, 2024 and December 31, 20162023 were as follows (amounts in (thousands)thousands):
| March 31, 2024 |
|
| December 31, 2023 |
| ||
Commitments to extend credit | $ | 466,161 |
|
| $ | 477,476 |
|
Stand-by and performance letters of credit |
| 7,666 |
|
|
| 8,025 |
|
Total | $ | 473,827 |
|
| $ | 485,501 |
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||
Commitments to extend credit | $ | 133,940 |
|
| $ | 108,564 |
|
Stand-by and performance letters of credit |
| 2,528 |
|
|
| 2,219 |
|
Total | $ | 136,468 |
|
| $ | 110,783 |
|
52
While our liquidity monitoring and management considers both present and future demands for and sources of liquidity, the following table of contractual commitments focuses only on future obligations as of September 30, 2017.March 31, 2024 (amounts in thousands).
|
|
|
|
|
| Due after 1 |
|
| Due after 3 |
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
|
| Due in 1 |
|
| through |
|
| through |
|
| Due after |
|
|
|
|
|
|
|
|
| Due after 1 |
|
| Due after 3 |
|
|
|
|
|
|
| |||||||||
|
| year or less |
|
| 3 years |
|
| 5 years |
|
| 5 years |
|
| Total |
|
| Due in 1 |
|
| through |
|
| through |
|
| Due after |
|
|
|
| ||||||||||
|
| year or less |
|
| 3 years |
|
| 5 years |
|
| 5 years |
|
| Total |
| |||||||||||||||||||||||||
Deposits without a stated maturity |
| $ | 2,302,019 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 2,302,019 |
| ||||||||||||||||||||
Certificates of deposit of less than $250 |
|
| 245,348 |
|
|
| 30,658 |
|
|
| 3,326 |
|
|
| - |
|
|
| 279,332 |
| ||||||||||||||||||||
Certificates of deposit of $250 or more |
|
| 280,151 |
|
|
| 30,032 |
|
|
| 2,228 |
|
|
| - |
|
|
| 312,411 |
| ||||||||||||||||||||
Securities sold under agreements to repurchase |
|
| 14,588 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 14,588 |
| ||||||||||||||||||||
Federal Home Loan Bank advances |
| $ | 15,000 |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 15,000 |
|
|
| 55,000 |
|
|
| 50,000 |
|
|
| 40,000 |
|
|
| 60,000 |
|
|
| 205,000 |
|
Certificates of deposit of less than $100 |
|
| 32,208 |
|
|
| 11,864 |
|
|
| 4,402 |
|
|
| - |
|
|
| 48,474 |
| ||||||||||||||||||||
Certificates of deposit of $100 or more |
|
| 54,408 |
|
|
| 20,664 |
|
|
| 12,601 |
|
|
| 574 |
|
|
| 88,247 |
| ||||||||||||||||||||
Securities sold under agreements to repurchase |
|
| 12,608 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 12,608 |
| ||||||||||||||||||||
Note payable |
|
| 1,071 |
|
|
| 2,143 |
|
|
| 2,143 |
|
|
| 268 |
|
|
| 5,625 |
| ||||||||||||||||||||
Subordinated debt, net of loan costs |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 39,510 |
|
|
| 39,510 |
| ||||||||||||||||||||
Operating leases |
|
| 595 |
|
|
| 998 |
|
|
| 969 |
|
|
| 668 |
|
|
| 3,230 |
|
|
| 770 |
|
|
| 1,097 |
|
|
| 734 |
|
|
| 1,667 |
|
|
| 4,268 |
|
Total contractual obligations |
| $ | 115,890 |
|
| $ | 35,669 |
|
| $ | 20,115 |
|
| $ | 1,510 |
|
| $ | 173,184 |
|
| $ | 2,897,876 |
|
| $ | 111,787 |
|
| $ | 46,288 |
|
| $ | 101,177 |
|
| $ | 3,157,128 |
|
Capital Position and Dividends
At September 30, 2017March 31, 2024 and December 31, 2016,2023, total stockholders’ equity was $88,929$197.7 million and $81,827,$198.3 million, respectively. The increasedecrease of $7,102approximately $612.0 thousand resulted mainly from the net change in retained earnings and accumulated other comprehensive incomeloss for the ninethree months ended September 30, 2017.March 31, 2024. Retained earnings for the first ninethree months of 20172024 increased $5,628 and$2.0 million while accumulated other comprehensive incomeloss increased $1,489.$2.9 million. The ratio of stockholders’ equity to total assets was 10.99%5.87% and 10.1%6.13% at September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively.
River Bank & Trust is subject to various regulatory capital requirements administered by the federal banking agencies. Certain items such as goodwill and other intangible assets are deducted from total capital in arriving at the various regulatory capital measures such as Common Equity Tier 1capital,1 capital, Tier 1 capital, and total risk basedrisk-based capital. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on River Financial Corporation’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the River Bank & Trust must meet specific capital guidelines that involve quantitative measures of the bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory regulations and guidelines. River Bank & Trust’sBank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
River Bank is eligible to utilize the community bank leverage ratio (CBLR) framework. The Bank has evaluated this option and has elected not to utilize the CBLR framework at this time, but may do so in the future.
53
Quantitative measures, established by regulation to ensure capital adequacy effective January 1, 2015, require River Financial Corporation and River Bank & Trust to maintain minimum amounts and ratios (set forth in the table below) of total risk based capital, Common Equity Tier 1 capital, and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined)defined in the regulations), and of Tier 1 capital (as defined)defined in the regulations) to average assets (as defined)defined in the regulations).
Management believes, as of September 30, 2017,March 31, 2024, that the Company and Bank meetsmeet all capital adequacy requirements to which it isthey are subject. The following table presents the Company's and Bank’s capital amounts and ratios as of September 30, 2017March 31, 2024 with the required minimum levels for capital adequacy purposes including the phase in of the capital conservation buffer under Basel III and minimum levels to be well capitalized (as defined) under the regulatory prompt corrective action regulations.
As of September 30, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
As of March 31, 2024: |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| To Be Well Capitalized |
|
|
|
|
|
|
| To Be Well Capitalized | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| Required For Capital |
| Under Prompt Corrective |
|
|
|
|
| Required For Capital |
| Under Prompt Corrective | ||||||||||||||||||||
|
| Actual |
|
| Adequacy Purposes |
| Action Regulations |
| Actual |
|
| Adequacy Purposes |
| Action Regulations (1) | ||||||||||||||||||||||||||
|
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
| Amount |
|
| Ratio |
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
| Amount |
|
| Ratio | ||||||||
River Financial Corporation: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
Total Capital (To Risk-Weighted Assets) |
| $ | 88,761 |
|
|
| 14.77 | % |
| $ | 55,588 |
|
| >= 9.250% |
| $ | 60,095 |
|
| >= 10.00% |
| $ | 310,205 |
|
|
| 12.884 | % |
| $ | 252,806 |
|
| >= 10.500% |
| N/A |
|
| N/A | |
Common Equity Tier 1 Capital (To Risk-weighted Assets) |
|
| 83,757 |
|
|
| 13.94 | % |
|
| 34,548 |
|
| >= 5.750% |
|
| 39,055 |
|
| >= 6.50% | ||||||||||||||||||||
Common Equity Tier 1 Capital (To Risk-Weighted Assets) |
|
| 240,350 |
|
|
| 9.983 | % |
|
| 168,532 |
|
| >= 7.000% |
| N/A |
|
| N/A | |||||||||||||||||||||
Tier 1 Capital (To Risk-Weighted Assets) |
|
| 83,757 |
|
|
| 13.94 | % |
|
| 43,561 |
|
| >= 7.250% |
|
| 48,067 |
|
| >= 8.00% |
|
| 240,350 |
|
|
| 9.983 | % |
|
| 204,645 |
|
| >= 8.500% |
| N/A |
|
| N/A | |
Tier 1 Capital (To Average Assets) |
|
| 83,757 |
|
|
| 10.55 | % |
|
| 31,756 |
|
| >= 4.000% |
|
| 39,695 |
|
| >= 5.00% |
|
| 240,350 |
|
|
| 7.400 | % |
|
| 129,919 |
|
| >= 4.000% |
| N/A |
|
| N/A | |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
River Bank: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
Total Capital (To Risk-Weighted Assets) |
| $ | 306,856 |
|
|
| 12.745 | % |
| $ | 252,802 |
|
| >= 10.500% |
| $ | 240,764 |
|
| >= 10.00% | ||||||||||||||||||||
Common Equity Tier 1 Capital (To Risk-Weighted Assets) |
|
| 277,001 |
|
|
| 11.505 | % |
|
| 168,535 |
|
| >= 7.000% |
|
| 156,496 |
|
| >= 6.50% | ||||||||||||||||||||
Tier 1 Capital (To Risk-Weighted Assets) |
|
| 277,001 |
|
|
| 11.505 | % |
|
| 204,649 |
|
| >= 8.500% |
|
| 192,611 |
|
| >= 8.00% | ||||||||||||||||||||
Tier 1 Capital (To Average Assets) |
|
| 277,001 |
|
|
| 8.529 | % |
|
| 129,913 |
|
| >= 4.000% |
|
| 162,392 |
|
| >= 5.00% | ||||||||||||||||||||
(1) the prompt corrective action provisions are applicable at the Bank level only. |
|
|
|
|
|
|
|
|
|
|
|
|
Management believes, as of December 31, 2016,2023, that the Bank met all capital adequacy requirements to which it was subject at the time. The following table presents the Company's and Bank’s capital amounts and ratios as of December 31, 20162023 with the required minimum levels for capital adequacy purposes and minimum levels to be well capitalized (as defined) under the prompt corrective action regulations.
As of December 31, 2023: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| To Be Well Capitalized | |||||||
|
|
|
|
|
|
|
| Required For Capital |
| Under Prompt Corrective | ||||||||||
|
| Actual |
|
| Adequacy Purposes |
| Action Regulations (1) | |||||||||||||
|
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
| Amount |
|
| Ratio | ||||
River Financial Corporation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Capital (To Risk-Weighted Assets) |
| $ | 306,917 |
|
|
| 12.948 | % |
| $ | 248,890 |
|
| >= 10.500% |
| N/A |
|
| N/A | |
Common Equity Tier 1 Capital (To Risk-Weighted Assets) |
|
| 237,927 |
|
|
| 10.037 | % |
|
| 165,935 |
|
| >= 7.000% |
| N/A |
|
| N/A | |
Tier 1 Capital (To Risk-Weighted Assets) |
|
| 237,927 |
|
|
| 10.037 | % |
|
| 201,492 |
|
| >= 8.500% |
| N/A |
|
| N/A | |
Tier 1 Capital (To Average Assets) |
|
| 237,927 |
|
|
| 7.505 | % |
|
| 126,810 |
|
| >= 4.000% |
| N/A |
|
| N/A | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
River Bank: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Capital (To Risk-Weighted Assets) |
| $ | 303,279 |
|
|
| 12.794 | % |
| $ | 248,892 |
|
| >= 10.500% |
| $ | 237,040 |
|
| >= 10.00% |
Common Equity Tier 1 Capital (To Risk-Weighted Assets) |
|
| 274,289 |
|
|
| 11.571 | % |
|
| 165,928 |
|
| >= 7.000% |
|
| 154,076 |
|
| >= 6.50% |
Tier 1 Capital (To Risk-Weighted Assets) |
|
| 274,289 |
|
|
| 11.571 | % |
|
| 201,484 |
|
| >= 8.500% |
|
| 189,632 |
|
| >= 8.00% |
Tier 1 Capital (To Average Assets) |
|
| 274,289 |
|
|
| 8.652 | % |
|
| 126,807 |
|
| >= 4.000% |
|
| 158,508 |
|
| >= 5.00% |
(1) the prompt corrective action provisions are applicable at the Bank level only. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2016: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| To Be Well Capitalized | ||||
|
|
|
|
|
|
|
|
|
| Required For Capital |
| Under Prompt Corrective | ||||||||
|
| Actual |
|
| Adequacy Purposes |
| Action Regulations | |||||||||||||
|
| Amount |
|
| Ratio |
|
| Amount |
|
| Ratio |
| Amount |
|
| Ratio | ||||
Total Capital (To Risk-Weighted Assets) |
| $ | 81,719 |
|
|
| 13.68 | % |
| $ | 51,522 |
|
| >= 8.625% |
| $ | 59,736 |
|
| >= 10.00% |
Common Equity Tier 1 Capital (To Risk-weighted Assets) |
|
| 77,712 |
|
|
| 13.01 | % |
|
| 30,613 |
|
| >= 5.125% |
|
| 38,826 |
|
| >= 6.50% |
Tier 1 Capital (To Risk-Weighted Assets) |
|
| 77,712 |
|
|
| 13.01 | % |
|
| 39,573 |
|
| >= 6.625% |
|
| 47,786 |
|
| >= 8.00% |
Tier 1 Capital (To Average Assets) |
|
| 77,712 |
|
|
| 9.96 | % |
|
| 31,210 |
|
| >= 4.000% |
|
| 39,012 |
|
| >= 5.00% |
54
River Financial Corporation’s principal source of funds for dividend payments and debt service is dividends received from River Bank & Trust.Bank. There are statutory limitations on the payment of dividends by River Bank & Trust to River Financial Corporation. As of September 30, 2017,March 31, 2024, the maximum amount the Bank could dividend to River Financial Corporation without prior regulatory authority approval was approximately $11,243.$60.9 million. In addition to dividend restrictions, federal statutes prohibit unsecured loans from banks to bank holding companies.
During the ninethree months ending September 30, 2017March 31, 2024 there were 19,0003,500 incentive stock options issued with a weighted average exercise price of $20.25$33.84 per share. During the same period, there were 19,5506,806 incentive stock options exercised at a weighted average exercise price of $11.73$23.34 per share. During the same period, there were no incentive stock options forfeited. A total of 266,875337,044 incentive stock options were outstanding as of September 30, 2017March 31, 2024 with a weighted average exercise price of $14.72$25.45 per share and a weighted average remaining life of 6.104.89 years.
During the three months ending March 31, 2024 there were no restricted stock grants issued. During the same time period, there were 10,350 stock grants that vested with a weighted average exercise price of $31.40. During the same time period, there were no stock grants forfeited. A total of 55,383 restricted stock grants remained nonvested as of March 31, 2024 with a weighted average exercise price of $32.07 per share and a weighted average remaining life of 2.57 years.
55
Interest Sensitivity and Market Risk
Management monitors and manages the pricing and maturity of our assets and liabilities in order to diminish the potential adverse impact that changes in interest rates could have on net interest income. The principal monitoring technique employed by the Bank is simulation analysis.
In simulation analysis, we review each asset and liability category and its projected behavior in various different interest rate environments. These projected behaviors are based on management’s past experience and on current competitive environments, including the various environments in the different markets in which we compete. Using projected behavior and differing rate scenarios as inputs, the simulation analysis generates projections of net interest income. We also periodically verify the validity of this approach by comparing actual results with those that were projected in previous models.
Another technique used in interest rate management, but to a lesser degree than simulation analysis, is the measurement of the interest sensitivity “gap”, which is the positive or negative dollar difference between assets and liabilities that are subject to interest rate repricing within a given period of time. Interest rate sensitivity can be managed by repricing assets and liabilities, selling securities available for sale, replacing an asset or liability at maturity or by adjusting the interest rate during the life of an asset or liability.
We evaluate interest rate sensitivity risk and then formulate guidelines regarding asset generation and repricing, and sources and prices of off-balance sheet commitments in order to maintain interest sensitivity risk at levels deemed prudent by management. We use computer simulations to measure the net income effect of various rate scenarios. The modeling reflects interest rate changes and the related impact on net income over specified periods of time.
The following table illustrates our interest rate sensitivity at September 30, 2017,March 31, 2024, assuming the relevant assets and liabilities are collected and paid, respectively, based upon historical experience rather than their stated maturities.maturities (amounts in thousands).
|
| 0-1 Mos |
|
| 1-3 Mos |
|
| 3-12 Mos |
|
| 1-2 Yrs |
|
| 2-3 Yrs |
|
| >3 Yrs |
|
| Total |
|
| 0-1 Mos |
|
| 1-3 Mos |
|
| 3-12 Mos |
|
| 1-2 Yrs |
|
| 2-3 Yrs |
|
| >3 Yrs |
|
| Total |
| ||||||||||||||
Interest earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Loans |
| $ | 124,660 |
|
| $ | 38,749 |
|
| $ | 107,722 |
|
| $ | 87,660 |
|
| $ | 64,121 |
|
| $ | 100,377 |
|
| $ | 523,289 |
|
| $ | 379,292 |
|
| $ | 108,053 |
|
| $ | 346,114 |
|
| $ | 348,729 |
|
| $ | 259,606 |
|
| $ | 828,051 |
|
| $ | 2,269,845 |
|
Securities |
|
| 3,171 |
|
|
| 10,535 |
|
|
| 26,903 |
|
|
| 35,009 |
|
|
| 23,280 |
|
|
| 105,071 |
|
|
| 203,969 |
|
|
| 25,069 |
|
|
| 13,450 |
|
|
| 39,348 |
|
|
| 66,773 |
|
|
| 144,344 |
|
|
| 421,165 |
|
|
| 710,149 |
|
Certificates of deposit in banks |
|
| - |
|
|
| - |
|
|
| 1,493 |
|
|
| 251 |
|
|
| 973 |
|
|
| 2,497 |
|
|
| 5,214 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,250 |
|
|
| 2,500 |
|
|
| 468 |
|
|
| 4,218 |
|
Cash balances in banks |
|
| 6,276 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 6,276 |
|
|
| 134,893 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 134,893 |
|
Federal funds sold |
|
| 46,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 46,000 |
| ||||||||||||||||||||||||||||
Total interest earning assets |
| $ | 134,107 |
|
| $ | 49,284 |
|
| $ | 136,118 |
|
| $ | 122,920 |
|
| $ | 88,374 |
|
| $ | 207,945 |
|
| $ | 738,748 |
|
| $ | 585,254 |
|
| $ | 121,503 |
|
| $ | 385,462 |
|
| $ | 416,752 |
|
| $ | 406,450 |
|
| $ | 1,249,684 |
|
| $ | 3,165,105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Interest bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Interest bearing transaction accounts |
| $ | 78,734 |
|
| $ | 3,832 |
|
| $ | 17,000 |
|
| $ | 22,988 |
|
| $ | 22,988 |
|
| $ | 45,976 |
|
| $ | 191,518 |
|
| $ | 223,205 |
|
| $ | 11,644 |
|
| $ | 52,401 |
|
| $ | 69,866 |
|
| $ | 69,866 |
|
| $ | 279,506 |
|
| $ | 706,488 |
|
Savings and money market accounts |
|
| 106,122 |
|
|
| 3,370 |
|
|
| 15,444 |
|
|
| 20,218 |
|
|
| 20,218 |
|
|
| 23,165 |
|
|
| 188,537 |
|
|
| 467,990 |
|
|
| 9,624 |
|
|
| 43,314 |
|
|
| 57,752 |
|
|
| 57,752 |
|
|
| 311,600 |
|
|
| 948,032 |
|
Time deposits |
|
| 5,962 |
|
|
| 14,001 |
|
|
| 66,654 |
|
|
| 23,468 |
|
|
| 9,060 |
|
|
| 17,576 |
|
|
| 136,721 |
|
|
| 66,079 |
|
|
| 85,598 |
|
|
| 369,847 |
|
|
| 54,581 |
|
|
| 8,737 |
|
|
| 6,901 |
|
|
| 591,743 |
|
Securities sold under agreements to repurchase |
|
| 12,608 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 12,608 |
|
|
| 14,588 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 14,588 |
|
Note payable |
|
| - |
|
|
| 268 |
|
|
| 804 |
|
|
| 1,072 |
|
|
| 1,072 |
|
|
| 2,409 |
|
|
| 5,625 |
| ||||||||||||||||||||||||||||
Federal Home Loan Bank advances |
|
| 60,000 |
|
|
| 55,000 |
|
|
| 40,000 |
|
|
| 25,000 |
|
|
| 25,000 |
|
|
| - |
|
|
| 205,000 |
| ||||||||||||||||||||||||||||
Subordinated debentures, net of loan costs |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 39,510 |
|
|
| 39,510 |
| ||||||||||||||||||||||||||||
Total interest bearing liabilities |
| $ | 208,426 |
|
| $ | 31,471 |
|
| $ | 99,902 |
|
| $ | 67,746 |
|
| $ | 53,338 |
|
| $ | 89,126 |
|
| $ | 550,009 |
|
| $ | 831,862 |
|
| $ | 161,866 |
|
| $ | 505,562 |
|
| $ | 207,199 |
|
| $ | 161,355 |
|
| $ | 637,517 |
|
| $ | 2,505,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Interest sensitive gap |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Period gap |
| $ | (74,319 | ) |
| $ | 17,813 |
|
| $ | 36,216 |
|
| $ | 55,174 |
|
| $ | 35,036 |
|
| $ | 118,819 |
|
| $ | 188,739 |
|
| $ | (246,608 | ) |
| $ | (40,363 | ) |
| $ | (120,100 | ) |
| $ | 209,553 |
|
| $ | 245,095 |
|
| $ | 612,167 |
|
| $ | 659,744 |
|
Cumulative gap |
| $ | (74,319 | ) |
| $ | (56,506 | ) |
| $ | (20,290 | ) |
| $ | 34,884 |
|
| $ | 69,920 |
|
| $ | 188,739 |
|
|
|
|
|
| $ | (246,608 | ) |
| $ | (286,971 | ) |
| $ | (407,071 | ) |
| $ | (197,518 | ) |
| $ | 47,577 |
|
| $ | 659,744 |
|
|
|
| |
Cumulative gap - Rate Sensitive Assets/ Rate Sensitive Liabilities |
|
| -10.1 | % |
|
| -7.6 | % |
|
| -2.7 | % |
|
| 4.7 | % |
|
| 9.5 | % |
|
| 25.5 | % |
|
|
|
|
|
| -7.8 | % |
|
| -9.1 | % |
|
| -12.9 | % |
|
| -6.2 | % |
|
| 1.5 | % |
|
| 20.8 | % |
|
|
|
The Bank generally benefits from increasing market interest rates when it has an asset-sensitive gap (a positive number) and generally benefits from decreasing market interest rates when it is liability sensitive (a negative number). As shown in the table above, the Bank is liability sensitive on a cumulative basis throughout the one to two year time frame. The interest sensitivity analysis presents only a static view of the timing and repricing opportunities, without taking into consideration that changes in interest rates do not affect all assets and liabilities equally. For example, rates paid on a substantial portion of core deposits may change contractually within a relatively short time frame, but those are viewed by management as significantly less interest sensitive than market-based rates such as those paid on non-core deposits. For this and other reasons, management relies more upon the simulations analysis (as noted above) in managing interest rate risk. Net interest income may be impacted by other significant factors in a given interest rate environment, including changes in volume and mix of interest earning assets and interest bearing liabilities.
56
The Bank’s earnings are dependent, to a large degree, on its net interest income, which is the difference between interest income earned on all interest earning assets, primarily loans and securities, and interest paid on all interest bearing liabilities, primarily deposits. Market risk is the risk of loss from adverse changes in market prices and interest rates. Our market risk arises primarily from inherent interest rate risk in our lending, investing and deposit gathering activities. We seek to reduce our exposure to market risk through actively monitoring and managing interest rate risk. Management relies on simulations analysis to evaluate the impact of varying levels of prevailing interest rates and the sensitivity of specific earning assets and interest bearing liabilities to changes in those prevailing rates. Simulation analysis consists of evaluating the impact on net interest income given changes from 400 basis points below the current prevailing rates to 400 basis points above current prevailing interest rates. Management makes certain assumptions as to the effect varying levels of interest rates have on certain interest earning assets and interest bearing liabilities, which assumptions consider both historical experience and consensus estimates of outside sources.
The following table illustrates the results of our simulation analysis to determine the extent to which market risk would affect net interest income for the next twelve months if prevailing interest rates increased or decreased by the specified amounts from current rates. As noted above, this model uses estimates and assumptions in asset and liability account rate reactions to changes in prevailing interest rates. However, to isolate the market risk inherent in the balance sheet, the model assumes that no growth in the balance sheet occurs during the projection period. This model also assumes an immediate and parallel shift in interest rates, which would result in no change in the shape or slope of the interest rate yield curve. Because of the inherent use of the estimates and assumptions in the simulation model to derive this market risk information, the actual results of the future impact of market risk on our net interest income may differ from that found in the table. Given the current level of prevailing interest rates, management believes prevailing market rates falling 300 basis points and 400 basis points are not reasonable assumptions. All other simulated prevailing interest rates changes modeled indicate a level of sensitivity of the Bank’s net interest income to those changes that is acceptable to management and within established Bank policy limits as of both dates shown.
|
| Impact on net interest income |
| |||||
|
| As of |
|
| As of |
| ||
|
| March 31, 2024 |
|
| December 31, 2023 |
| ||
Change in prevailing rates: |
|
|
|
|
|
| ||
+ 400 basis points |
|
| (10.10 | )% |
|
| (13.84 | )% |
+ 300 basis points |
|
| (7.51 | )% |
|
| (10.27 | )% |
+ 200 basis points |
|
| (5.01 | )% |
|
| (6.87 | )% |
+ 100 basis points |
|
| (2.50 | )% |
|
| (3.35 | )% |
+ 0 basis points |
|
| - |
|
|
| - |
|
- 100 basis points |
|
| 2.28 | % |
|
| 3.02 | % |
- 200 basis points |
|
| 4.20 | % |
|
| 5.59 | % |
- 300 basis points |
|
| 5.22 | % |
|
| 8.11 | % |
- 400 basis points |
|
| 7.08 | % |
|
| 12.40 | % |
|
| Impact on net interest income |
| |||||
|
| As of |
|
| As of |
| ||
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||
Change in prevailing rates: |
|
|
|
|
|
|
|
|
+ 400 basis points |
|
| (1.46 | )% |
|
| (0.40 | )% |
+ 300 basis points |
|
| (0.47 | )% |
|
| 0.20 | % |
+ 200 basis points |
|
| 0.09 | % |
|
| 0.48 | % |
+ 100 basis points |
|
| 0.50 | % |
|
| 0.38 | % |
+ 0 basis points |
|
| — |
|
|
| — |
|
- 100 basis points |
|
| (4.47 | )% |
|
| (3.10 | )% |
- 200 basis points |
|
| (9.82 | )% |
|
| (8.68 | )% |
- 300 basis points |
|
| (11.37 | )% |
|
| (10.50 | )% |
- 400 basis points |
|
| (12.30 | )% |
|
| (11.52 | )% |
57
ITEM 3. QUANTITATIVE AND QUALITATIVEQUALITATIVE DISCLOSURES ABOUT MARKET RISK
This item is not applicable to smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Management,The Company has carried out an evaluation under the supervision and with participation of management, including ourthe Company’s Chief Executive Officer and Chief Financial Officer, has evaluatedof the effectiveness of ourthe design and operation of the Company’s disclosure controls and procedures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, (as defined in Exchange Act Rules 13a-15(e)including the possibility of human error and 15d-15(e)) asthe circumvention or overriding of the endcontrols and procedures. Accordingly, even the effective disclosure controls and procedures can only provide reasonable assurance of the period covered by this report.achieving their control objectives. Based upon thatthis evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, ouras of March 31, 2024, the Company’s disclosure controls and procedures wereare effective in ensuring that material information relating to ensure that informationthe Company required to be disclosed in the reports we file and submitthat it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported aswithin the requisite time periods and when required and (ii)is accumulated and communicated to our management, including our Chief Executive Officer and theour Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There has been no change in the Company’s internal control over financial reporting during the ninethree months ended September 30, 2017March 31, 2024 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
58
Various legal proceedingsFrom time to which River Financial Corporation (the “Company”) or a subsidiary oftime the Company is a party arise fromto legal proceedings. At the present time to time in the normal courseCompany is not part of business. There are no material pending legal proceedings toany proceeding which the Company or a subsidiary is a party or of which any of their property isdeems to be material except as described in the subject.Company's Annual Report on Form 10-K for the year ended December 31, 2023 at Item 1., "Supervision and Regulation - USA Patriot Act."
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 20162023 that could materially affect the Company’s business, financial condition or future results. The risks described in the Company’s Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On June 30, 2017, the Company sold 9,755 shares to its employee stock ownership plan for cash. The Company relied upon the exemption from registration under SEC Rule 147.Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
None.Not applicable.
59
Exhibit Number | Description | |
| Certificate of Incorporation of River Financial Corporation included as Exhibit 3.1 in the River Financial Corporation Form 8-K filed May 18, 2023 and incorporated herein by reference. | |
Bylaws of River Financial Corporation included as Exhibit 3.2 in the River Financial Corporation 8-K filed May 18, 2023 and incorporated herein by reference. | ||
4.1 | Article IV and Article V of the Certificates of Incorporation filed at Exhibit 3.1 to the Registrants’ Form 8-K filed May 18, 2023, and Article II and Article VI of the Bylaws included as Exhibit 3.2 of the Registrants’ Form 8-K filed May 18, 2023, and incorporated herein by reference. | |
River Financial 2006 Stock Compensation Plan filed as Exhibit 10.1 to the Registrant’s Registration Statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference. | ||
River Financial Change in Control Agreement for Jimmy Stubbs filed as Exhibit 10.2 to the Registrant’s Registration Statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference. | ||
River Financial Change in Control Agreement for Kenneth H. Givens filed as Exhibit 10.3 to the Registrant’s Registration Statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference. | ||
River Financial Change in Control Agreement for Joel K. Winslett filed as Exhibit 10.4 to the Registrant’s Registration Statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference. | ||
River Financial Change in Control Agreement for Ray Smith filed as Exhibit 10.5 to the Registrant’s Registration Statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference. | ||
River Financial Change in Control Agreement for Boles Pegues filed as Exhibit 10.6 to the Registrant’s Registration Statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference. | ||
River Financial Employment Term Sheet for Ray Smith filed as Exhibit 10.7 to the Registrant’s Registration Statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference. | ||
River Financial Employment Term Sheet for Boles Pegues filed as Exhibit 10.8 to the Registrant’s Registration Statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference. | ||
River Bank & Trust Form of Warrant Agreement, assumed by River Financial filed as Exhibit 10.9 to the Registrant’s Registration statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference. | ||
River Financial 2015 Incentive Stock Compensation Plan filed as Annex E to the Registrant’s Registration Statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference. | ||
Loan Agreement between River Financial Corporation and CenterState Bank (now SouthState Bank) filed as Exhibit 10.1 to the Registrant’s Form 8-K/A filed November 2, 2018 and incorporated herein by reference. | ||
Form of Subordinated Note Purchase Agreement, dated March 9, 2021, between River Financial Corporation and certain accredited investors, included as Exhibit 10.1 in the River Financial Corporation Form 8-K, filed on March 10, 2021 and incorporated herein by reference. | ||
Loan and Security Agreement, dated August 9, 2021, between River Financial Corporation and ServisFirst Bank, included as Exhibit 10.13 in the River Financial Corporation Form 10-K, filed on March 15, 2022 and incorporated herein by reference. | ||
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101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Document | |
| Cover Page Interactive Data File (embedded within the Inline XBRL | |
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* Schedules omitted. Registrant agrees to furnish a copy of any omitted schedule to the SEC upon request.
** Filed herewith.
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SIGNATURES
The following is an index of exhibits including items incorporated by reference:
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RIVER | ||||
Date: | By: | /s/ James M. Stubbs | ||
James M. Stubbs | ||||
Chief Executive Officer (principal executive officer) | ||||
Date: | By: | /s/ | ||
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Chief Financial Officer |
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