Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 30, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | HERITAGE COMMERCE CORP | |
Entity Central Index Key | 0001053352 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 43,338,253 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Assets | ||
Cash and due from banks | $ 38,699 | $ 30,273 |
Other investments and interest-bearing deposits in other financial institutions | 196,278 | 134,295 |
Total cash and cash equivalents | 234,977 | 164,568 |
Securities available-for-sale, at fair value | 452,521 | 459,043 |
Securities held-to-maturity, at amortized cost (fair value of $362,581 at March 31, 2019 and $366,175 at December 31, 2018) | 367,023 | 377,198 |
Loans held-for-sale - SBA, at lower of cost or fair value, including deferred costs | 3,216 | 2,649 |
Loans, net of deferred fees | 1,848,318 | 1,886,405 |
Allowance for loan losses | (27,318) | (27,848) |
Loans, net | 1,821,000 | 1,858,557 |
Federal Home Loan Bank and Federal Reserve Bank stock and other investments, at cost | 25,221 | 25,216 |
Company-owned life insurance | 62,189 | 61,859 |
Premises and equipment, net | 6,998 | 7,137 |
Goodwill | 83,753 | 83,753 |
Other intangible assets | 11,454 | 12,007 |
Accrued interest receivable and other assets | 47,525 | 44,575 |
Total assets | 3,115,877 | 3,096,562 |
Deposits: | ||
Demand, noninterest-bearing | 1,016,770 | 1,021,582 |
Demand, interest-bearing | 704,996 | 702,000 |
Savings and money market | 759,306 | 754,277 |
Time deposits - under $250 | 56,385 | 58,661 |
Time deposits - $250 and over | 90,042 | 86,114 |
CDARS - interest-bearing demand, money market and time deposits | 12,745 | 14,898 |
Total deposits | 2,640,244 | 2,637,532 |
Subordinated debt, net of issuance costs | 39,414 | 39,369 |
Accrued interest payable and other liabilities | 57,703 | 52,195 |
Total liabilities | 2,737,361 | 2,729,096 |
Shareholders' equity: | ||
Preferred stock, no par value; 10,000,000 shares authorized; none issued and outstanding at March 31, 2019 and December 31, 2018 | ||
Common stock, no par value; 60,000,000 shares authorized; 43,323,753 shares issued and outstanding at March 31, 2019 and 43,288,750 shares issued and outstanding at December 31, 2018 | 301,550 | 300,844 |
Retained earnings | 85,953 | 79,003 |
Accumulated other comprehensive loss | (8,987) | (12,381) |
Total shareholders' equity | 378,516 | 367,466 |
Total liabilities and shareholders' equity | $ 3,115,877 | $ 3,096,562 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Securities held-to-maturity | ||
Securities held-to-maturity, fair value (in dollars) | $ 362,581 | $ 366,175 |
Preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock | ||
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 43,323,753 | 43,288,750 |
Common stock, shares outstanding | 43,323,753 | 43,288,750 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Interest income: | ||
Loans, including fees | $ 26,807 | $ 22,284 |
Securities, taxable | 4,509 | 3,862 |
Securities, exempt from Federal tax | 548 | 560 |
Other investments, interest-bearing deposits in other financial institutions and Federal funds sold | 1,585 | 1,171 |
Total interest income | 33,449 | 27,877 |
Interest expense: | ||
Deposits | 1,836 | 958 |
Subordinated debt | 571 | 571 |
Total interest expense | 2,407 | 1,529 |
Net interest income before provision for loan losses | 31,042 | 26,348 |
Provision (credit) for loan losses | (1,061) | 506 |
Net interest income after provision for loan losses | 32,103 | 25,842 |
Noninterest income: | ||
Service charges and fees on deposit accounts | 1,161 | 902 |
Increase in cash surrender value of life insurance | 330 | 363 |
Servicing income | 191 | 181 |
Gain on sales of SBA loans | 139 | 235 |
Gain on sales of securities | 87 | |
Other | 647 | 427 |
Total noninterest income | 2,468 | 2,195 |
Noninterest expense: | ||
Salaries and employee benefits | 10,770 | 9,777 |
Occupancy and equipment | 1,506 | 1,106 |
Professional fees | 818 | 684 |
Other | 4,824 | 4,423 |
Total noninterest expense | 17,918 | 15,990 |
Income before income taxes | 16,653 | 12,047 |
Income tax expense | 4,507 | 3,238 |
Net income | $ 12,146 | $ 8,809 |
Earnings per common share: | ||
Basic (in dollars per share) | $ 0.28 | $ 0.23 |
Diluted (in dollars per share) | $ 0.28 | $ 0.23 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 12,146 | $ 8,809 |
Other comprehensive income: | ||
Change in net unrealized holding (losses) gains on available-for-sale securities and I/O strips | 4,871 | (7,985) |
Deferred income taxes | (1,467) | 2,315 |
Change in net unamortized unrealized gain on securities available-for-sale that were reclassified to securities held-to-maturity | (26) | (11) |
Deferred income taxes | 8 | 3 |
Reclassification adjustment for losses (gains) realized in income | (87) | |
Deferred income taxes | 26 | |
Change in unrealized (losses) gains on securities and I/O strips, net of deferred income taxes | 3,386 | (5,739) |
Change in net pension and other benefit plan liability adjustment | 12 | 50 |
Deferred income taxes | (4) | (15) |
Change in pension and other benefit plan liability, net of deferred income taxes | 8 | 35 |
Other comprehensive income (loss) | 3,394 | (5,704) |
Total comprehensive income | $ 15,540 | $ 3,105 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income / (Loss) | Total |
Balance at Dec. 31, 2017 | $ 218,355 | $ 62,136 | $ (9,252) | $ 271,239 |
Balance (in shares) at Dec. 31, 2017 | 38,200,883 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Net income | 8,809 | 8,809 | ||
Other comprehensive income (loss) | (5,704) | (5,704) | ||
Amortization of restricted stock awards, net of forfeitures | $ 228 | 228 | ||
Cash dividend declared | (4,206) | (4,206) | ||
Stock option expense, net of forfeitures | 176 | 176 | ||
Stock options exercised | $ 449 | 449 | ||
Stock options exercised (in shares) | 68,906 | |||
Balance at Mar. 31, 2018 | $ 219,208 | 66,739 | (14,956) | 270,991 |
Balance (in shares) at Mar. 31, 2018 | 38,269,789 | |||
Balance at Dec. 31, 2018 | $ 300,844 | 79,003 | (12,381) | 367,466 |
Balance (in shares) at Dec. 31, 2018 | 43,288,750 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Net income | 12,146 | 12,146 | ||
Other comprehensive income (loss) | 3,394 | 3,394 | ||
Amortization of restricted stock awards, net of forfeitures | $ 271 | 271 | ||
Cash dividend declared | (5,196) | (5,196) | ||
Stock option expense, net of forfeitures | 166 | 166 | ||
Stock options exercised | $ 269 | 269 | ||
Stock options exercised (in shares) | 35,003 | |||
Balance at Mar. 31, 2019 | $ 301,550 | $ 85,953 | $ (8,987) | $ 378,516 |
Balance (in shares) at Mar. 31, 2019 | 43,323,753 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY | ||
Cash dividend declared per share (in dollars per share) | $ 0.12 | $ 0.11 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 12,146 | $ 8,809 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of discounts and premiums on securities | 516 | 1,131 |
(Gain) loss on sale of securities available-for-sale | (87) | |
Gain on sale of SBA loans | (139) | (235) |
Proceeds from sale of SBA loans originated for sale | 1,935 | 3,041 |
SBA loans originated for sale | (2,363) | (2,246) |
Provision (credit) for loan losses | (1,061) | 506 |
Increase in cash surrender value of life insurance | (330) | (363) |
Depreciation and amortization | 188 | 196 |
Amortization of other intangible assets | 553 | 241 |
Stock option expense, net | 166 | 176 |
Amortization of restricted stock awards, net | 271 | 228 |
Amortization of subordinated debt issuance costs | 45 | 46 |
Effect of changes in: | ||
Accrued interest receivable and other assets | 5,145 | 3,288 |
Accrued interest payable and other liabilities | (4,062) | (2,297) |
Net cash provided by operating activities | 13,010 | 12,434 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of securities available-for-sale | (15,193) | |
Purchase of securities held-to-maturity | (5,022) | |
Maturities/paydowns/calls of securities available-for-sale | 11,242 | 14,957 |
Maturities/paydowns/calls of securities held-to-maturity | 9,808 | 13,002 |
Proceeds from sales of securities available-for-sale | 38,754 | |
Net change in loans | 38,618 | (8,559) |
Changes in Federal Home Loan Bank stock and other investments | (5) | (6) |
Purchase of premises and equipment | (49) | (46) |
Net cash provided by investing activities | 59,614 | 37,887 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net change in deposits | 2,712 | (60,797) |
Exercise of stock options | 269 | 449 |
Payment of cash dividends | (5,196) | (4,206) |
Net cash used in financing activities | (2,215) | (64,554) |
Net increase (decrease) in cash and cash equivalents | 70,409 | (14,233) |
Cash and cash equivalents, beginning of period | 164,568 | 316,222 |
Cash and cash equivalents, end of period | 234,977 | 301,989 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 1,724 | 977 |
Income taxes paid | 8 | 4 |
Supplemental schedule of non-cash activity: | ||
Due to broker for securities purchased | $ 5,439 | |
Recording of right to use assets in exchange for lease obligations | $ 9,566 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
Basis of Presentation | |
Basis of Presentation | 1) Basis of Presentation The unaudited consolidated financial statements of Heritage Commerce Corp (the “Company” or “HCC”) and its wholly owned subsidiary, Heritage Bank of Commerce (“HBC”), have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements are not included herein. The interim statements should be read in conjunction with the consolidated financial statements and notes that were included in the Company’s Form 10-K for the year ended December 31, 2018. HBC is a commercial bank serving customers primarily located in Santa Clara, Alameda, Contra Costa, San Benito, and San Mateo counties of California. CSNK Working Capital Finance Corp. a California corporation, dba Bay View Funding (“Bay View Funding”) is a wholly owned subsidiary of HBC, and provides business-essential working capital factoring financing to various industries throughout the United States. No customer accounts for more than 10% of revenue for HBC or the Company. The Company reports its results for two segments: banking and factoring. The Company’s management uses segment results in its operating and strategic planning. In management’s opinion, all adjustments necessary for a fair presentation of these consolidated financial statements have been included and are of a normal and recurring nature. All intercompany transactions and balances have been eliminated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from these estimates. The results for the three months ended March 31, 2019 are not necessarily indicative of the results expected for any subsequent period or for the entire year ending December 31, 2019. Business Combinations The Company accounts for acquisitions of businesses using the acquisition method of accounting. Under the acquisition method, assets acquired and liabilities assumed are recorded at their estimated fair values at the date of acquisition. Management utilizes various valuation techniques including discounted cash flow analyses to determine these fair values. Any excess of the purchase price over amounts allocated to the acquired assets, including identifiable intangible assets, and liabilities assumed is recorded as goodwill. Goodwill and Other Intangible Assets Goodwill resulted from the acquisition of Tri-Valley Bank (“Tri-Valley”) on April 6, 2018 and United American Bank (“United American”) on May 4, 2018, and from acquisitions in prior years. Goodwill represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is assessed at least annually for impairment and any such impairment is recognized in the period identified. Other intangible assets consist of core deposit intangible assets and a below market value lease intangible asset, arising from the United American and Tri-Valley acquisitions. They are initially measured at fair value and then are amortized over their estimated useful lives. The core deposit intangible assets from the acquisitions of United American and Tri-Valley are being amortized on an accelerated method over ten years. The below market value lease intangible assets are being amortized on the straight line method over three years for United American and eleven years for Tri-Valley. Reclassifications Certain reclassifications of prior year balances have been made to conform to the current year presentation. These reclassifications had no impact on the Company’s consolidated financial position, results of operations or net change in cash and cash equivalents. Adoption of New Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This update revises the model to assess how a lease should be classified and provides guidance for lessees and lessors, when presenting right-of-use assets and lease liabilities on the balance sheet. Under the new guidance, lessees will be required to recognize the following for all leases, with the exception of short-term leases, at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. This update became effective for the Company on January 1, 2019. In July 2018, the FASB issued supplementary ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides for an additional transition method allowing for a modified retrospective adoption approach where the guidance would only be applied to existing leases in effect at the adoption date and new leases going forward, with a cumulative effect adjustment to retained earnings as of the adoption date and additional required disclosures regarding leasing arrangements only for those periods after adoption. This update also allows lessors to not separate non-lease components from the associated lease component if certain conditions are met. The Company has elected the practical expedients permitted by ASU 2018-11. The Company adopted the new guidance on January 1, 2019. At the adoption date, the Company reported increase assets and liabilities of approximately $9.6 million on its consolidated balance sheet as a result of recognizing right-of-use assets and lease liabilities related to non-cancellable operating lease agreements for office space. The adoption of this guidance did not have a material impact to its Consolidated Statetements of Income or Cash Flows. See Note 17 – Leases for more information. In March 2017, the FASB issued ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities. This update shortens the amortization period of certain callable debt securities held at a premium to the earliest call date. The amendments in this update were effective for the Company on January 1, 2019. The amendments are applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption and the Company is required to provide change in accounting principle disclosures. The Company adopted the new guidance on January 1, 2019, and there was no material impact to the financial statements and no cumulative adjustments were made. Newly Issued, but not yet Effective Accounting Standards In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. The standard is the final guidance on the new current expected credit loss (“CECL”) model. The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to estimate future credit loss estimates. As CECL encompasses all financial assets carried at amortized cost, the requirement that reserves be established based on an organization’s reasonable and supportable estimate of expected credit losses extends to held-to-maturity debt securities. The guidance allows for a modified retrospective approach with a cumulative effect adjustment to the balance sheet upon adoption (charge to retained earnings instead of the income statement). The new guidance is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2019. While early application is permitted for fiscal years beginning after December 15, 2018, the Company plans to adopt this standard on January 1, 2020. The Company has established a company-wide, cross-functional governance structure, which oversees overall strategy for implementation of CECL. We are currently evaluating various loss methodologies to determine their correlation to our various loan categories historical performance. The project plan is targeting the data and model validation completion during the second quarter of 2019, with parallel processing of our existing allowance for loan loss model with CECL prior to implementation. The Company is focused on completing data and model validation, refining assumptions and continued review of the models. The Company also continues to focus on researching and resolving interpretive accounting issues in the ASU, contemplating various related accounting policies, developing processes and related controls and considering various reporting disclosures. The Company also continues to believe that the adoption of the standard will result in an overall increase in the allowance for loan losses to cover credit losses over the estimated life of the financial assets. However, the magnitude of the increase in its allowance for loan losses at the adoption date will depend upon the nature and characteristics of the portfolio at the adoption date, as well as macroeconomic conditions and forecasts at that time. In January 2017, the FASB issued accounting standards ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The provisions of the update eliminate the existing second step of the goodwill impairment test which provides for the allocation of reporting unit fair value among existing assets and liabilities, with the net remaining amount representing the implied fair value of goodwill. In replacement of the existing goodwill impairment rule, the update will provide that impairment should be recognized as the excess of any of the reporting unit’s goodwill over the fair value of the reporting unit. Under the provisions of this update, the amount of the impairment is limited to the carrying value of the reporting unit’s goodwill. For public business entities that are SEC filers, the amendments of the update will become effective in fiscal years beginning after December 15, 2019. Management does not expect the requirements of this update to have a material impact on the Company’s financial position, results of operations or cash flows. |
Shareholders' Equity and Earnin
Shareholders' Equity and Earnings Per Share | 3 Months Ended |
Mar. 31, 2019 | |
Shareholders' Equity and Earnings Per Share. | |
Shareholders' Equity and Earnings Per Share | 2) Shareholders’ Equity and Earnings Per Share Basic earnings per common share is computed by dividing net income by the weighted average common shares outstanding. Diluted earnings per share reflect potential dilution from outstanding stock options using the treasury stock method. There were 539,000 and 275,000 stock options for the three months ended March 31, 2019 and 2018, respectively, considered to be antidilutive and excluded from the computation of diluted earnings per share. A reconciliation of these factors used in computing basic and diluted earnings per common share is as follows: Three Months Ended March 31, 2019 2018 (Dollars in thousands, except per share amounts) Net income $ 12,146 $ 8,809 Weighted average common shares outstanding for basic earnings per common share 43,108,208 38,240,495 Dilutive potential common shares 562,133 574,227 Shares used in computing diluted earnings per common share 43,670,341 38,814,722 Basic earnings per share $ 0.28 $ 0.23 Diluted earnings per share $ 0.28 $ 0.23 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) (“AOCI”) | 3 Months Ended |
Mar. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss) (“AOCI”) | |
Accumulated Other Comprehensive Income (“AOCI”) | 3) Accumulated Other Comprehensive Income (Loss) (“AOCI”) The following table reflects the changes in AOCI by component for the periods indicated: Three Months Ended March 31, 2019 and 2018 Unamortized Unrealized Unrealized Gain on Gains (Losses) on Available- Available- for-Sale Defined for-Sale Securities Benefit Securities Reclassified Pension and I/O to Held-to- Plan Strips(1) Maturity Items Total (Dollars in thousands) Beginning balance January 1, 2019, net of taxes $ (5,007) $ 344 $ (7,718) $ (12,381) Other comprehensive income (loss) before reclassification, net of taxes 3,404 — (7) 3,397 Amounts reclassified from other comprehensive income (loss), net of taxes — (18) 15 (3) Net current period other comprehensive income (loss), net of taxes 3,404 (18) 8 3,394 Ending balance March 31, 2019, net of taxes $ (1,603) $ 326 $ (7,710) $ (8,987) Beginning balance January 1, 2018, net of taxes $ (362) $ 375 $ (9,265) $ (9,252) Other comprehensive income (loss) before reclassification, net of taxes (5,670) — (5) (5,675) Amounts reclassified from other comprehensive income (loss), net of taxes (61) (8) 40 (29) Net current period other comprehensive income (loss), net of taxes (5,731) (8) 35 (5,704) Ending balance March 31, 2018, net of taxes $ (6,093) $ 367 $ (9,230) $ (14,956) Amounts Reclassified from AOCI(1) Three Months Ended March 31, Affected Line Item Where Details About AOCI Components 2019 2018 Net Income is Presented (Dollars in thousands) Unrealized gains on available-for-sale securities and I/O strips $ — $ 87 Gain on sales of securities — (26) Income tax expense — 61 Net of tax Amortization of unrealized gain on securities available- for-sale that were reclassified to securities held-to-maturity 26 11 Interest income on taxable securities (8) (3) Income tax expense 18 8 Net of tax Amortization of defined benefit pension plan items (1) Prior transition obligation 25 16 Actuarial losses (46) (73) (21) (57) Salaries and employee benefits 6 17 Income tax benefit (15) (40) Net of tax Total reclassification for the year $ 3 $ 29 (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 9—Benefit Plans) and includes split-dollar life insurance benefit plan. |
Securities
Securities | 3 Months Ended |
Mar. 31, 2019 | |
Securities | |
Securities | 4) Securities The amortized cost and estimated fair value of securities at March 31, 2019 and December 31, 2018 were as follows: Gross Gross Estimated Amortized Unrealized Unrealized Fair March 31, 2019 Cost Gains (Losses) Value (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 299,847 $ 343 $ (4,612) $ 295,578 U.S. Treasury 148,095 1,387 — 149,482 U.S. Government sponsored entities 7,447 14 — 7,461 Total $ 455,389 $ 1,744 $ (4,612) $ 452,521 Securities held-to-maturity: Agency mortgage-backed securities $ 281,102 $ 281 $ (4,758) $ 276,625 Municipals - exempt from Federal tax 85,921 683 (648) 85,956 Total $ 367,023 $ 964 $ (5,406) $ 362,581 Gross Gross Estimated Amortized Unrealized Unrealized Fair December 31, 2018 Cost Gains (Losses) Value (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 311,523 $ 98 $ (8,767) $ 302,854 U.S. Treasury 147,823 930 — 148,753 U.S. Government sponsored entities 7,433 4 (1) 7,436 Total $ 466,779 $ 1,032 $ (8,768) $ 459,043 Securities held-to-maturity: Agency mortgage-backed securities $ 291,241 $ 59 $ (9,153) $ 282,147 Municipals - exempt from Federal tax 85,957 312 (2,241) 84,028 Total $ 377,198 $ 371 $ (11,394) $ 366,175 Securities with unrealized losses at March 31, 2019 and December 31, 2018, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position are as follows: Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized March 31, 2019 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ — $ — $ 269,629 $ (4,612) $ 269,629 $ (4,612) Total $ — $ — $ 269,629 $ (4,612) $ 269,629 $ (4,612) Securities held-to-maturity: Agency mortgage-backed securities $ — $ — $ 250,516 $ (4,758) $ 250,516 $ (4,758) Municipals - exempt from Federal tax — — 32,440 (648) 32,440 (648) Total $ — $ — $ 282,956 $ (5,406) $ 282,956 $ (5,406) Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2018 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 3,868 $ (21) $ 281,082 $ (8,746) $ 284,950 $ (8,767) U.S. Government sponsored entities 3,974 (1) — — 3,974 (1) Total $ 7,842 $ (22) $ 281,082 $ (8,746) $ 288,924 $ (8,768) Securities held-to-maturity: Agency mortgage-backed securities $ 16,088 $ (103) $ 255,917 $ (9,050) $ 272,005 $ (9,153) Municipals - exempt from Federal tax 5,019 (27) 57,301 (2,214) 62,320 (2,241) Total $ 21,107 $ (130) $ 313,218 $ (11,264) $ 334,325 $ (11,394) There were no holdings of securities of any one issuer, other than the U.S. Government and its sponsored entities, in an amount greater than 10% of shareholders’ equity. At March 31, 2019, the Company held 525 securities (202 available-for-sale and 323 held‑to‑maturity), of which 288 had fair values below amortized cost. At March 31, 2019, there were $269,629,000 of agency mortgage-back securities available-for-sale, $250,516,000 of agency mortgage-backed securities held-to-maturity, and $32,440,000 of municipal bonds held-to-maturity, carried with an unrealized loss for 12 months or more. The total unrealized loss for securities 12 months or more was $10,018,000 at March 31, 2019. The unrealized losses were due to higher interest rates. The issuers are of high credit quality and all principal amounts are expected to be paid when securities mature. The fair value is expected to recover as the securities approach their maturity date and/or market rates decline. The Company does not believe that it is more likely than not that the Company will be required to sell a security in an unrealized loss position prior to recovery in value. The Company does not consider these securities to be other than temporarily impaired at March 31, 2019. The proceeds from sales of securities and the resulting gains and losses were as follows for the periods indicated: Three Months Ended March 31, 2019 2018 (Dollars in thousands) Proceeds $ — $ 38,754 Gross gains — 1,050 Gross losses — (963) The amortized cost and estimated fair values of securities as of March 31, 2019 are shown by contractual maturity below. The expected maturities will differ from contractual maturities if borrowers have the right to call or pre‑pay obligations with or without call or pre‑payment penalties. Securities not due at a single maturity date are shown separately. Available-for-sale Amortized Estimated Cost Fair Value (Dollars in thousands) Due after 3 months through one year $ 5,468 $ 5,475 Due after one through five years 150,074 151,468 Agency mortgage-backed securities 299,847 295,578 Total $ 455,389 $ 452,521 Held-to-maturity Amortized Estimated Cost Fair Value (Dollars in thousands) Due after 3 months through one year $ 770 $ 771 Due after one through five years 4,941 5,038 Due after five through ten years 27,670 27,988 Due after ten years 52,540 52,159 Agency mortgage-backed securities 281,102 276,625 Total $ 367,023 $ 362,581 Securities with amortized cost of $34,806,000 and $36,229,000 as of March 31, 2019 and December 31, 2018 were pledged to secure public deposits and for other purposes as required or permitted by law or contract. |
Loans
Loans | 3 Months Ended |
Mar. 31, 2019 | |
Loans | |
Loans | 5) Loans Loans were as follows for the periods indicated: March 31, December 31, 2019 2018 (Dollars in thousands) Loans held-for-investment: Commercial $ 559,718 $ 597,763 Real estate: CRE 1,012,641 994,067 Land and construction 98,222 122,358 Home equity 118,448 109,112 Residential mortgages 49,786 50,979 Consumer 9,690 12,453 Loans 1,848,505 1,886,732 Deferred loan fees, net (187) (327) Loans, net of deferred fees 1,848,318 1,886,405 Allowance for loan losses (27,318) (27,848) Loans, net $ 1,821,000 $ 1,858,557 At March 31, 2019, total net loans included in the table above include $34,433,000, $103,540,000 and $174,328,000, of the loans acquired in the Focus Business Bank (“Focus”), Tri-Valley, and United American acquisitions that were not purchased credit impaired loans, respectively. At December 31, 2018, total net loans included in the table above include $36,958,000, $111,952,000 and $181,453,000, of the loans acquired in the Focus, Tri-Valley, and United American acquisitions, respectively, that were not purchased credit impaired loans. There was a ($1,061,000) credit to the provision for loan losses for the first quarter of 2019, compared to a provision for loan losses of $506,000 for the first quarter of 2018. Net recoveries totaled $531,000 for the first quarter of 2019, compared to net charge-offs of ($25,000) for the first quarter of 2018. Changes in the allowance for loan losses were as follows for the periods indicated: Three Months Ended March 31, 2019 Commercial Real Estate Consumer Total (Dollars in thousands) Beginning of period balance $ 17,061 $ 10,671 $ 116 $ 27,848 Charge-offs (226) — — (226) Recoveries 715 42 — 757 Net recoveries 489 42 — 531 Provision (credit) for loan losses (1,993) 958 (26) (1,061) End of year balance $ 15,557 $ 11,671 $ 90 $ 27,318 Three Months Ended March 31, 2018 Commercial Real Estate Consumer Total (Dollars in thousands) Beginning of period balance $ 10,608 $ 8,950 $ 100 $ 19,658 Charge-offs (245) — — (245) Recoveries 157 63 — 220 Net (charge-offs) recoveries (88) 63 — (25) Provision (credit) for loan losses 645 (155) 16 506 End of period balance $ 11,165 $ 8,858 $ 116 $ 20,139 The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment, based on the impairment method at the following period‑ends: March 31, 2019 Commercial Real Estate Consumer Total (Dollars in thousands) Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 6,467 $ 897 $ — $ 7,364 Collectively evaluated for impairment 9,090 10,774 90 19,954 Total allowance balance $ 15,557 $ 11,671 $ 90 $ 27,318 Loans: Individually evaluated for impairment $ 8,536 $ 8,980 $ — $ 17,516 Collectively evaluated for impairment 551,182 1,270,117 9,690 1,830,989 Total loan balance $ 559,718 $ 1,279,097 $ 9,690 $ 1,848,505 December 31, 2018 Commercial Real Estate Consumer Total (Dollars in thousands) Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 6,944 $ — $ — $ 6,944 Collectively evaluated for impairment 10,117 10,671 116 20,904 Total allowance balance $ 17,061 $ 10,671 $ 116 $ 27,848 Loans: Individually evaluated for impairment $ 9,495 $ 5,645 $ — $ 15,140 Collectively evaluated for impairment 588,268 1,270,871 12,453 1,871,592 Total loan balance $ 597,763 $ 1,276,516 $ 12,453 $ 1,886,732 The following table presents loans held-for-investment individually evaluated for impairment by class of loans as of March 31, 2019 and December 31, 2018. The recorded investment included in the following table represents loan principal net of any partial charge-offs recognized on the loans. The unpaid principal balance represents the recorded balance prior to any partial charge-offs. The recorded investment in consumer loans collateralized by residential real estate property that are in process of foreclosure according to local requirements of the applicable jurisdiction are not material as of the periods indicated: March 31, 2019 December 31, 2018 Allowance Allowance Unpaid for Loan Unpaid for Loan Principal Recorded Losses Principal Recorded Losses Balance Investment Allocated Balance Investment Allocated (Dollars in thousands) With no related allowance recorded: Commercial $ 1,615 $ 1,615 $ — $ 1,849 $ 1,849 $ — Real estate: CRE — — — 5,094 5,094 — Land and construction — — — — — — Home Equity 538 538 — 551 551 — Total with no related allowance recorded 2,153 2,153 — 7,494 7,494 — With an allowance recorded: Commercial 6,921 6,921 6,467 7,646 7,646 6,944 Real estate: Commercial 8,442 8,442 897 — — — Total with an allowance recorded 15,363 15,363 7,364 7,646 7,646 6,944 Total $ 17,516 $ 17,516 $ 7,364 $ 15,140 $ 15,140 $ 6,944 The following tables present interest recognized and cash‑basis interest earned on impaired loans for the periods indicated: Three Months Ended March 31, 2019 Real Estate Land and Home Commercial CRE Construction Equity Consumer Total (Dollars in thousands) Average of impaired loans during the period $ 9,016 $ 6,768 $ — $ 544 $ — $ 16,328 Interest income during impairment $ — $ — $ — $ — $ — $ — Cash-basis interest recognized $ — $ — $ — $ — $ — $ — Three Months Ended March 31, 2018 Real Estate Land and Home Commercial CRE Construction Equity Consumer Total (Dollars in thousands) Average of impaired loans during the period $ 2,474 $ 501 $ 59 $ 371 $ 1 $ 3,406 Interest income during impairment $ — $ — $ — $ — $ — $ — Cash-basis interest recognized $ — $ — $ — $ — $ — $ — Nonperforming loans include both smaller dollar balance homogenous loans that are collectively evaluated for impairment and individually classified loans. Nonperforming loans were as follows at period‑end: March 31, December 31, 2019 2018 2018 (Dollars in thousands) Nonaccrual loans - held-for-investment $ 15,958 $ 3,637 $ 13,699 Restructured and loans over 90 days past due and still accruing 1,357 158 1,188 Total nonperforming loans 17,315 3,795 14,887 Other restructured loans 201 241 253 Total impaired loans $ 17,516 $ 4,036 $ 15,140 The following table presents the nonperforming loans by class for the periods indicated: March 31, 2019 December 31, 2018 Restructured Restructured and Loans and Loans over 90 Days over 90 Days Past Due Past Due and Still and Still Nonaccrual Accruing Total Nonaccrual Accruing Total (Dollars in thousands) Commercial $ 7,203 $ 1,132 $ 8,335 $ 8,279 $ 963 $ 9,242 Real estate: CRE 8,442 — 8,442 5,094 — 5,094 Home equity 313 225 538 326 225 551 Total $ 15,958 $ 1,357 $ 17,315 $ 13,699 $ 1,188 $ 14,887 The following tables present the aging of past due loans by class for the periods indicated: March 31, 2019 30 - 59 60 - 89 90 Days or Days Days Greater Total Loans Not Past Due Past Due Past Due Past Due Past Due Total (Dollars in thousands) Commercial $ 4,207 $ 6,948 $ 2,014 $ 13,169 $ 546,549 $ 559,718 Real estate: CRE — 6,192 2,251 8,443 1,004,198 1,012,641 Land and construction — — — — 98,222 98,222 Home equity 168 — — 168 118,280 118,448 Residential mortgages — — — — 49,786 49,786 Consumer — — — — 9,690 9,690 Total $ 4,375 $ 13,140 $ 4,265 $ 21,780 $ 1,826,725 $ 1,848,505 December 31, 2018 30 - 59 60 - 89 90 Days or Days Days Greater Total Loans Not Past Due Past Due Past Due Past Due Past Due Total (Dollars in thousands) Commercial $ 5,698 $ 1,916 $ 1,258 $ 8,872 $ 588,891 $ 597,763 Real estate: CRE — — — — 994,067 994,067 Land and construction — — — — 122,358 122,358 Home equity — — — 109,112 109,112 Residential mortgages — — — — 50,979 50,979 Consumer 1 — — 1 12,452 12,453 Total $ 5,699 $ 1,916 $ 1,258 $ 8,873 $ 1,877,859 $ 1,886,732 Past due loans 30 days or greater totaled $21,780,000 and $8,873,000 at March 31, 2019 and December 31, 2018, respectively, of which $15,089,000 and $430,000 were on nonaccrual, respectively. At March 31, 2019, there were also $869,000 of loans less than 30 days past due included in nonaccrual loans held-for-investment. At December 31, 2018, there were also $13,269,000 loans less than 30 days past due included in nonaccrual loans held-for-investment. Management’s classification of a loan as “nonaccrual” is an indication that there is reasonable doubt as to the full recovery of principal or interest on the loan. At that point, the Company stops accruing interest income, and reverses any uncollected interest that had been accrued as income. The Company begins recognizing interest income only as cash interest payments are received and it has been determined the collection of all outstanding principal is not in doubt. The loans may or may not be collateralized, and collection efforts are pursued. Credit Quality Indicators Concentrations of credit risk arise when a number of customers are engaged in similar business activities, or activities in the same geographic region, or have similar features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. The Company’s loan portfolio is concentrated in commercial (primarily manufacturing, wholesale, and service) and real estate lending, with the remaining balance in consumer loans. While no specific industry concentration is considered significant, the Company’s lending operations are located in the Company’s market areas that are dependent on the technology and real estate industries and their supporting companies. Thus, the Company’s borrowers could be adversely impacted by a downturn in these sectors of the economy which could reduce the demand for loans and adversely impact the borrowers’ ability to repay their loans. The Company categorizes loans into 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 Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. Nonclassified loans generally include those loans that are expected to be repaid in accordance with contractual loans terms. Classified loans are those loans that are assigned a substandard, substandard-nonaccrual, or doubtful risk rating using the following Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well‑defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Substandard‑Nonaccrual. Loans classified as substandard‑nonaccrual are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any, and it is probable that the Company will not receive payment of the full contractual principal and interest. Loans so classified have a well‑defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. In addition, the Company no longer accrues interest on the loan because of the underlying weaknesses. Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loss. Loans classified as loss are considered uncollectable or of so little value that their continuance as assets is not warranted. This classification does not necessarily mean that a loan has no recovery or salvage value; but rather, there is much doubt about whether, how much, or when the recovery would occur. Loans classified as loss are immediately charged off against the allowance for loan losses. Therefore, there is no balance to report as of March 31, 2019 and December 31, 2018. The following table provides a summary of the loan portfolio by loan type and credit quality classification at period end: March 31, 2019 December 31, 2018 Nonclassified Classified Total Nonclassified Classified Total (Dollars in thousands) Commercial $ 545,151 14,567 $ 559,718 $ 584,845 $ 12,918 $ 597,763 Real estate: CRE 1,003,770 8,871 1,012,641 985,193 8,874 994,067 Land and construction 98,222 — 98,222 122,358 — 122,358 Home equity 116,710 1,738 118,448 107,495 1,617 109,112 Residential mortgages 49,786 — 49,786 50,979 — 50,979 Consumer 9,690 — 9,690 12,453 — 12,453 Total $ 1,823,329 $ 25,176 $ 1,848,505 $ 1,863,323 $ 23,409 $ 1,886,732 Classified loans were $25.2 million, or 0.81% of total assets, at March 31, 2019, compared to $30.8 million, or 1.07% of total assets, at March 31, 2018 and $23.4 million, or 0.76% of total assets, at December 31, 2018. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed in accordance with the Company’s underwriting policy. The book balance of troubled debt restructurings at March 31, 2019 was $580,000, accruing loans. The book balance of troubled debt restructurings at December 31, 2018 was $649,000, which included $36,000 of nonaccrual loans and $613,000 of accruing loans. Approximately $1,000 and $38,000 of specific reserves were established with respect to these loans as of March 31, 2019 and December 31, 2018, respectively. There were no new loans modified as troubled debt restructurings during the three months ended March 31, 2019 and 2018. During the three months ended March 31, 2019, there were no new loans modified as troubled debt restructurings in which the amount of principal or accrued interest owed from the borrower was forgiven or which resulted in a charge-off or change to the allowance for loan losses. A loan is considered to be in payment default when it is 30 days contractually past due under the modified terms. There were no defaults on troubled debt restructurings, within twelve months following the modification, during the three and ended March 31, 2019 and 2018. A loan that is a troubled debt restructuring on nonaccrual status may return to accruing status after a period of at least six months of consecutive payments in accordance with the modified terms. |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2019 | |
Business Combinations | |
Business Combinations | 6) Business Combinations On April 6, 2018, the Company completed its acquisition of Tri-Valley for a transaction value of $32,320,000. At closing the Company issued 1,889,613 shares of the Company’s common stock with an aggregate market value of $30,725,000 on the date of closing. The number of shares issued was based on a fixed exchange ratio of 0.0489 of a share of the Company’s common stock for each outstanding share of Tri-Valley common stock. In addition, at closing the Company paid cash to the holder of a stock warrant and holders of outstanding stock options and related fees and fractional shares totaling $1,595,000. The following table summarizes the consideration paid for Tri-Valley: (Dollars in thousands) Cash paid for: Warrant $ 889 Options 615 Other 91 Total cash paid 1,595 Issuance of 1,889,613 shares of common stock to Tri- Valley shareholders at $16.26 per share at Closing 30,725 Total consideration $ 32,320 The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition. As As Recorded Fair Recorded by Value at Tri-Valley Adjustments Acquisition (Dollars in thousands) Assets acquired: Cash and cash equivalents $ 21,757 $ 1,153 (a) $ 22,910 Loans 123,532 (2,563) (b) 120,969 Allowance for loan losses (1,969) 1,969 (c) — Other intangible assets — 1,978 (d) 1,978 Other assets, net 9,939 (2,894) (e) 7,045 Total assets acquired $ 153,259 $ (357) 152,902 Liabilities assumed: Deposits $ 135,351 $ 37 (f) 135,388 Other liabilities 608 — 608 Total liabilities assumed $ 135,959 $ 37 135,996 Net assets acquired 16,906 Purchase price 30,725 Goodwill recorded in the merger $ 13,819 Explanation of certain fair value related adjustments for the Tri-Valley acquisition: (a) Represents the cash acquired in the merger, the disposition of other real estate owned of $1,132,000, a gain on the sale of securities of $53,000, partially offset by invoices paid after closing for services prior to closing of $29,000, and cash paid for fractional shares in the transaction of $3,000. The remaining $1,592,000 of cash paid for the transaction is an adjustment to prepaid assets included in other assets, net. (b) (c) (d) (e) (f) Represents the fair value adjustment on time deposits, which was be accreted as a reduction of interest expense. Tri-Valley’s results of operations have been included in the Company’s results of operations beginning April 7, 2018. On May 4, 2018, the Company completed its acquisition of United American for a transaction value of $56,417,000. At closing the Company issued 2,826,032 shares of the Company’s common stock with an aggregate market value of $47,280,000 on the date of closing. The number of shares issued was based on a fixed exchange ratio of 2.1644 of a share of the Company’s common stock for each outstanding share of United American common stock and each common stock equivalent underlying the United American Series D Preferred Stock and Series E Preferred Stock. The shareholders of the United American Series A Preferred Stock and Series B Preferred Stock received $1,000 cash for each share totaling $8,700,000 and $435,000, respectively. In addition, the Company paid $2,000 in cash for fractional shares, for total cash consideration of $9,137,000. The following table summarizes the consideration paid for United American: (Dollars in thousands) Consideration paid: Cash paid for: Series A Preferred Stock $ 8,700 Series B Preferred Stock 435 Other 2 Total cash paid 9,137 Issuance of 2,826,032 shares of common stock to United American shareholders at $16.73 per share at Closing 47,280 Total consideration $ 56,417 The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition. As As Recorded Fair Recorded by Value at United American Adjustments Acquisition (Dollars in thousands) Assets acquired: Cash and cash equivalents $ 45,638 $ (32,520) (a) $ 13,118 Securities available-for-sale 64,144 (421) (b) 63,723 Loans 196,694 18,783 (c) 215,477 Allowance for loan losses (2,952) 2,952 (d) — Other intangible assets — 6,383 (e) 6,383 Other assets, net 9,119 (1,078) (f) 8,041 Total assets acquired $ 312,643 $ (5,901) 306,742 Liabilities assumed: Deposits $ 281,189 $ 51 (g) 281,240 Other borrowings 62 — 62 Other liabilities 2,617 (187) (h) 2,430 Total liabilities $ 283,868 $ (136) 283,732 Net assets acquired 23,010 Purchase price 47,280 Goodwill recorded in the merger $ 24,270 Explanation of certain fair value related adjustments for the United American acquisition: (a) Represents the cash acquired in the merger, net of cash paid for the transaction of $9,137,000, the repurchase of $23,732,000 loan participations from ATBancorp, and $51,000 for invoices paid after closing for services prior to closing, partially offset by a tax refund of $400,000. (b) Represents the fair value adjustment on investment securities available-for-sale. (c) Represents the repurchase of $23,732,000 loan participations from ATBancorp, partially offset by the fair value adjustment to the net book value of loans of $4,680,000, which includes an interest rate mark and credit mark adjustment, and net charge-offs of $269,000 subsequent to closing. (d) Represents the elimination of United American’s allowance for loan losses. (e) Represents intangible assets recorded to reflect the fair value of core deposits and a below market lease. The core deposit intangible asset was recorded as an identifiable intangible asset and is amortized on an accelerated basis over the estimated average life of the deposit base. The below market lease intangible assets are amortized on the straight line method over three years. (f) Represents an adjustment to net deferred tax assets resulting from the fair value adjustments related to the acquired assets, liabilities assumed and identifiable intangible assets recorded. (g) Represents the fair value adjustment on time deposits, which was be accreted as a reduction of interest expense. (h) Represents the reversal of accrued accounts payable. United American’s results of operations have been included in the Company’s results of operations beginning May 5, 2018. The Company believed the mergers provide the opportunity to combine three independent business banking franchises with similar philosophies and cultures into a combined $3.1 billion business bank based in San Jose, California. The pooling of the three banks’ resources and knowledge enhanced the Company’s capabilities, operational efficiencies, and community outreach. The Company also believed the combined bank will be much better positioned to meet the needs of the Company’s customers, shareholders and the community. Pre-tax acquisition and integration costs of $615,000 for the first quarter of 2018 was included in other noninterest expense. The fair value of net assets acquired includes fair value adjustments to certain receivables of which some were considered impaired and some were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows, adjusted for expected losses and prepayments, where appropriate. The receivables that were not considered impaired at the acquisition date were not subject to the guidance relating to purchased credit impaired loans, which have shown evidence of credit deterioration since origination. There were no PCI loans at March 31, 2019 and December 31, 2018. Goodwill of $13,819,000 arising from the Tri-Valley acquisition and $24,270,000 from the United American acquisition is largely attributable to synergies and cost savings resulting from combining the operations of the companies. As these transactions were structured as a tax-free exchange, the goodwill will not be deductible for tax purposes. As of April 6, 2019 and May 4, 2019 the Company finalized its valuation of all assets acquired and liabilities assumed in its acquisition of Tri-Valley and United American, respectively, resulting in no material changes to acquisition accounting adjustments. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | 7) Goodwill and Other Intangible Assets Goodwill At March 31, 2019, the carrying value of goodwill was $83,753,000, which included $13,044,000 of goodwill related to its acquisition of Bay View Funding, $32,620,000 from its acquisition of Focus, $13,819,000 from its acquisition of Tri-Valley and $24,270,000 from its acquisition of United American. Goodwill impairment exists when a reporting unit’s carrying value exceeds its fair value, which is determined through a qualitative assessment whether it is more likely than not that the fair value of equity of the reporting unit exceeds the carrying value (“Step Zero”). If the qualitative assessment indicates it is more likely than not that the fair value of equity of a reporting unit is less than book value, then a quantitative two-step impairment test is required. Step 1 includes the determination of the carrying value of the Company’s single reporting unit, including the existing goodwill and intangible assets, and estimating the fair value of the reporting unit. If the carrying amount of a reporting unit exceeds its fair value, the Company is required to perform a second step to the impairment test. Step 2 requires that the implied fair value of the reporting unit goodwill be compared to the carrying amount of that goodwill. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess. The Company completed its annual goodwill impairment analysis as of November 30, 2018 with the assistance of an independent valuation firm. No events or circumstances since the November 30, 2018 annual impairment test were noted that would indicate it was more likely than not a goodwill impairment exists. Other Intangible Assets Other intangible assets acquired in the acquisition of United American in May 2018 included a core deposit intangible asset of $5,723,000, amortized on an accelerated method over its estimated useful life of 10 years, and a below market value lease intangible asset of $660,000, amortized over its estimated useful life of 3 years. Accumulated amortization of the core deposit intangible and below market lease was $1,014,000 and $756,000 at March 31, 2019 and December 31, 2018, respectively. Other intangible assets acquired in the acquisition of Tri-Valley in April 2018 include a core deposit intangible asset of $1,768,000, amortized on an accelerated method over its estimated useful life of 10 years, and a below market value lease intangible asset of $210,000, amortized over its estimated useful life of 11 years. Accumulated amortization of the core deposit intangible and below market lease was $287,000 and $222,000 at March 31, 2019 and December 31, 2018, respectively. The core deposit intangible asset acquired in the acquisition of Focus in August 2015 was $6,285,000. This asset is amortized on an accelerated method over its estimated useful life of 10 years. Accumulated amortization of this intangible asset was $2,953,000 and $2,770,000 at March 31, 2019 and December 31, 2018, respectively. Other intangible assets acquired in the acquisition of Bay View Funding in November 2014 included a below market value lease intangible assets of $109,000, a non-compete agreement intangible asset of $250,000, and a customer relationship and brokered relationship intangible assets of $1,900,000, amortized over the 10 year estimated useful lives. Accumulated amortization of the customer relationship and brokered relationship intangible assets was $838,000 and $791,000 at March 31, 2019 and December 31, 2018, respectively. The below market lease and non-compete agreement intangible assets were fully amortized at December 31, 2017. Estimated amortization expense for 2019, the next five years and thereafter is as follows: United United Bay View Funding American American Tri-Valley Tri-Valley Focus Customer & Core Below Core Below Core Brokered Total Deposit Market Deposit Market Deposit Relationship Amortization Year Intangible Lease Intangible Lease Intangible Intangible Expense (Dollars in thousands) 2019 $ 777 $ 255 $ 240 $ 18 $ 734 $ 190 $ 2,214 2020 665 235 208 18 716 190 2,032 2021 602 — 184 18 596 190 1,590 2022 553 — 167 18 502 190 1,430 2023 521 — 158 18 420 190 1,307 2024 499 — 152 18 346 159 1,174 Thereafter 1,520 — 451 88 201 — 2,260 $ 5,137 $ 490 $ 1,560 $ 196 $ 3,515 $ 1,109 $ 12,007 Impairment testing of the intangible assets is performed at the individual asset level. Impairment exists if the carrying amount of the asset is not recoverable and exceeds its fair value at the date of the impairment test. For intangible assets, estimates of expected future cash flows (cash inflows less cash outflows) that are directly associated with an intangible asset are used to determine the fair value of that asset. Management makes certain estimates and assumptions in determining the expected future cash flows from core deposit and customer relationship intangibles including account attrition, expected lives, discount rates, interest rates, servicing costs and other factors. Significant changes in these estimates and assumptions could adversely impact the valuation of these intangible assets. If an impairment loss exists, the carrying amount of the intangible asset is adjusted to a new cost basis. The new cost basis is then amortized over the remaining useful life of the asset. Based on its assessment, management concluded that there was no impairment of intangible assets at March 31, 2019 and December 31, 2018. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Taxes | |
Income Taxes | 8) Income Taxes Some items of income and expense are recognized in different years for tax purposes than when applying generally accepted accounting principles, leading to timing differences between the Company’s actual current tax liability and the amount accrued for this liability based on book income. These temporary differences comprise the “deferred” portion of the Company’s tax expense or benefit, which is accumulated on the Company’s books as a deferred tax asset or deferred tax liability until such time as they reverse. Under generally accepted accounting principles, a valuation allowance is required if it is “more likely than not” that a deferred tax asset will not be realized. The determination of the realizability of the deferred tax assets is highly subjective and dependent upon judgment concerning management’s evaluation of both positive and negative evidence, including forecasts of future income, cumulative losses, applicable tax planning strategies, and assessments of current and future economic and business conditions. The Company had net deferred tax assets of $24,263,000, and $27,089,000, at March 31, 2019 and December 31, 2018, respectively. After consideration of the matters in the preceding paragraph, the Company determined that it is more likely than not that the net deferred tax assets at March 31, 2019 and December 31, 2018 will be fully realized in future years. The following table reflects the carry amounts of the low income housing investments included in accrued interest receivable and other assets, and the future commitments included in accrued interest payable and other liabilities for the periods indicated: March 31, December 31, 2019 2018 (Dollars in thousands) Low income housing investments $ 3,253 $ 3,172 Future commitments $ 273 $ 273 The Company expects $14,000 of the future commitments to be paid in 2019, $14,000 in 2020, and $245,000 in 2021 through 2023. For tax purposes, the Company had low income housing tax credits of $106,000 for the three months ended March 31, 2019 and March 31, 2018, and low income housing investment expense of $109,000 and $119,000, respectively. The Company recognized low income housing investment expense as a component of income tax expense. |
Benefit Plans
Benefit Plans | 3 Months Ended |
Mar. 31, 2019 | |
Benefit Plans | |
Benefit Plans | 9) Benefit Plans Supplemental Retirement Plan The Company has a supplemental retirement plan (the “Plan”) covering some current and some former key employees and directors. The Plan is a nonqualified defined benefit plan. Benefits are unsecured as there are no Plan assets. The following table presents the amount of periodic cost recognized for the periods indicated: Three Months Ended March 31, 2019 2018 Components of net periodic benefit cost: Service cost $ 55 $ 62 Interest cost 264 237 Amortization of net actuarial loss 46 73 Net periodic benefit cost $ 365 $ 372 Split‑Dollar Life Insurance Benefit Plan The Company maintains life insurance policies for some current and some former directors and officers that are subject to split‑dollar life insurance agreements. The following table sets forth the funded status of the split‑dollar life insurance benefits for the periods indicated: March 31, December 31, 2019 2018 (Dollars in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 6,903 $ 6,711 Interest cost 70 227 Actuarial loss (gain) — (35) Projected benefit obligation at end of period $ 6,973 $ 6,903 March 31, December 31, 2019 2018 (Dollars in thousands) Net actuarial loss $ 2,620 $ 2,573 Prior transition obligation 1,126 1,149 Accumulated other comprehensive loss $ 3,746 $ 3,722 Three Months Ended March 31, 2019 2018 Amortization of prior transition obligation $ (25) $ (16) Interest cost 70 57 Net periodic benefit cost $ 45 $ 41 |
Fair Value
Fair Value | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value | |
Fair Value | 10) Fair Value Accounting guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data (for example, interest rates and yield curves observable at commonly quoted intervals, prepayment speeds, credit risks, and default rates). Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. Financial Assets and Liabilities Measured on a Recurring Basis The fair values of securities available-for sale-are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The fair value of interest‑only (“I/O”) strip receivable assets is based on a valuation model used by a third party. The Company is able to compare the valuation model inputs and results to widely available published industry data for reasonableness (Level 2 inputs). Fair Value Measurements Using Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Balance (Level 1) (Level 2) (Level 3) (Dollars in thousands) Assets at March 31, 2019 Available-for-sale securities: Agency mortgage-backed securities $ 295,578 — $ 295,578 — U.S. Treasury 149,482 149,482 — — U.S. Government sponsored entities 7,461 — 7,461 — I/O strip receivables 571 — 571 — Assets at December 31, 2018 Available-for-sale securities: Agency mortgage-backed securities $ 302,854 — $ 302,854 — U.S. Treasury 148,753 148,753 — — U.S. Government sponsored entities 7,436 — 7,436 — I/O strip receivables 568 — 568 — There were no transfers between Level 1 and Level 2 during the period for assets measured at fair value on a recurring basis. Assets and Liabilities Measured on a Non‑Recurring Basis The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals. The appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Foreclosed assets are valued at the time the loan is foreclosed upon and the asset is transferred to foreclosed assets. The fair value is based primarily on third party appraisals, less costs to sell. The appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales and income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Fair Value Measurements Using Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Balance (Level 1) (Level 2) (Level 3) (Dollars in thousands) Assets at March 31, 2019 Impaired loans - held-for-investment: Commercial $ 454 — — $ 454 Real estate: CRE 7,546 — — 7,546 $ 8,000 — — $ 8,000 Assets at December 31, 2018 Impaired loans - held-for-investment: Commercial $ 702 — — $ 702 $ 702 — — $ 702 The following table shows the detail of the impaired loans held-for-investment and the impaired loans held‑for‑investment carried at fair value for the periods indicated: March 31, 2019 December 31, 2018 (Dollars in thousands) Impaired loans held-for-investment: Book value of impaired loans held-for-investment carried at fair value $ 15,364 $ 7,646 Book value of impaired loans held-for-investment carried at cost 2,152 7,494 Total impaired loans held-for-investment $ 17,516 $ 15,140 Impaired loans held-for-investment carried at fair value: Book value of impaired loans held-for-investment carried at fair value $ 15,364 $ 7,646 Specific valuation allowance (7,364) (6,944) Impaired loans held-for-investment carried at fair value, net $ 8,000 $ 702 Impaired loans held‑for‑investment which are measured primarily for impairment using the fair value of the collateral were $17,516,000 at March 31, 2019. In addition, these loans had a specific valuation allowance of $7,364,000 at March 31, 2019. Impaired loans held‑for‑investment totaling $15,364,000 at March 31, 2019, were carried at fair value as a result of partial charge‑offs and specific valuation allowances at period‑end. The remaining $2,152,000 of impaired loans were carried at cost at March 31, 2019, as the fair value of the collateral exceeded the cost basis of each respective loan. Partial charge‑offs and changes in specific valuation allowances during the first three months of 2019 on impaired loans held‑for‑investment carried at fair value at March 31, 2019 resulted in an additional provision for loan losses of $288,000. At March 31, 2019, there were no foreclosed assets. Impaired loans held‑for‑investment were $15,140,000 at December 31, 2018. In addition, these loans had a specific valuation allowance of $6,944,000 at December 31, 2018. Impaired loans held‑for‑investment totaling $7,646,000 at December 31, 2018 were carried at fair value as a result of partial charge‑offs and specific valuation allowances at year‑end. The remaining $7,494,000 of impaired loans were carried at cost at December 31, 2018, as the fair value of the collateral exceeded the cost basis of each respective loan. Partial charge‑offs and changes in specific valuation allowances during 2018 on impaired loans held‑for‑investment carried at fair value at December 31, 2018 resulted in an additional provision for loan losses of $7,042,000. At December 31, 2018, there were no foreclosed assets. The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non‑recurring basis at the periods indicated: March 31, 2019 Valuation Unobservable Range Fair Value Techniques Inputs (Weighted Average) (Dollars in thousands) Impaired loans - held-for-investment: Commercial $ 454 Market Approach Discount adjustment for differences between comparable sales 0% to 1% (1%) Real estate: CRE 7,546 Market Approach Discount adjustment for differences between comparable sales 0% to 13% (5%) December 31, 2018 Valuation Unobservable Range Fair Value Techniques Inputs (Weighted Average) (Dollars in thousands) Impaired loans - held-for-investment: Commercial $ 702 Market Approach Discount adjustment for differences between comparable sales 0% to 1% The Company obtains third party appraisals on its impaired loans held-for-investment and foreclosed assets to determine fair value. Generally, the third party appraisals apply the “market approach,” which is a valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable (that is, similar) assets, liabilities, or a group of assets and liabilities, such as a business. Adjustments are then made based on the type of property, age of appraisal, current status of property and other related factors to estimate the current value of collateral. The carrying amounts and estimated fair values of financial instruments at March 31, 2019 are as follows: Estimated Fair Value Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Carrying Identical Assets Inputs Inputs Amounts (Level 1) (Level 2) (Level 3) Total (Dollars in thousands) Assets: Cash and cash equivalents $ 234,977 $ 234,977 $ — $ — $ 234,977 Securities available-for-sale 452,521 149,482 303,039 — 452,521 Securities held-to-maturity 367,023 — 362,581 — 362,581 Loans (including loans held-for-sale), net 1,824,216 — 3,216 1,799,945 1,803,161 FHLB stock, FRB stock, and other investments 25,221 — — — N/A Accrued interest receivable 9,014 876 2,229 6,785 9,890 I/O strips receivables 571 — 571 — 571 Liabilities: Time deposits $ 148,969 $ — $ 149,347 $ — $ 149,347 Other deposits 2,491,275 — 2,491,275 — 2,491,275 Subordinated debt 39,414 — 39,064 — 39,064 Accrued interest payable 1,135 — 1,135 — 1,135 The carrying amounts and estimated fair values of the Company’s financial instruments at December 31, 2018: Estimated Fair Value Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Carrying Identical Assets Inputs Inputs Amounts (Level 1) (Level 2) (Level 3) Total (Dollars in thousands) Assets: Cash and cash equivalents $ 164,568 $ 164,568 $ — $ — $ 164,568 Securities available-for-sale 459,043 148,753 310,290 — 459,043 Securities held-to-maturity 377,198 — 366,175 — 366,175 Loans (including loans held-for-sale), net 1,861,206 — 2,649 1,826,654 1,829,303 FHLB stock, FRB stock, and other investments 25,216 — — — N/A Accrued interest receivable 9,577 597 2,274 6,706 9,577 I/O strips receivables 568 — 568 — 568 Liabilities: Time deposits $ 147,560 $ — $ 147,916 $ — $ 147,916 Other deposits 2,489,972 — 2,489,972 — 2,489,972 Subordinated debt 39,369 — 38,969 — 38,969 Accrued interest payable 497 — 497 — 497 In accordance with our adoption of ASU 2016-01 in 2018, the methods utilized to measure the fair value of financial instruments at March 31, 2019 and December 31, 2018 represent an approximation of exit price, however, an actual exit price may differ. |
Equity Plan
Equity Plan | 3 Months Ended |
Mar. 31, 2019 | |
Equity Plan | |
Equity Plan | 11) Equity Plan The Company maintained an Amended and Restated 2004 Equity Plan (the “2004 Plan”) for directors, officers, and key employees. The 2004 Plan was terminated on May 23, 2013. On May 23, 2013, the Company’s shareholders approved the 2013 Equity Incentive Plan (the “2013 Plan”). On May 25, 2017, the shareholders approved an amendment to the Heritage Commerce Corp 2013 Equity Incentive Plan to increase the number of shares available from 1,750,000 to 3,000,000 shares. The equity plans provide for the grant of incentive and nonqualified stock options and restricted stock. The equity plans provide that the option price for both incentive and nonqualified stock options will be determined by the Board of Directors at no less than the fair value at the date of grant. Options granted vest on a schedule determined by the Board of Directors at the time of grant. Generally options vest over four years. All options expire no later than ten years from the date of grant. Restricted stock is subject to time vesting. There were 1,172,592 shares available for the issuance of equity awards under the 2013 Plan as of March 31, 2019. Stock option activity under the equity plans is as follows: Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic Total Stock Options of Shares Price Life (Years) Value Outstanding at January 1, 2019 1,570,603 $ 10.76 Exercised (35,003) $ 7.66 Forfeited or expired (9,086) $ 15.02 Outstanding at March 31, 2019 1,526,514 $ 10.81 6.29 $ 3,932,974 Vested or expected to vest 1,434,923 6.29 $ 3,696,996 Exercisable at March 31, 2019 1,083,415 5.37 $ 3,806,137 Information related to the equity plans for the periods indicated: Three Months Ended March 31, 2019 2018 Intrinsic value of options exercised $ 197,994 $ 560,332 Cash received from option exercise $ 268,691 $ 449,294 Tax benefit realized from option exercises $ 26,578 $ 164,978 Weighted average fair value of options granted $ 3.24 $ 3.00 As of March 31, 2019, there was $1,199,000 of total unrecognized compensation cost related to nonvested stock options granted under the equity plans. That cost is expected to be recognized over a weighted‑average period of approximately 2.53 years. The fair value of each option grant is estimated on the date of grant using the Black Scholes option pricing model that uses the assumptions noted in the following table, including the weighted average assumptions for the option grants for the periods indicated: Three Months Ended March 31, 2019 2018 Expected life in months(1) N/A 72 Volatility(1) N/A 22 % Weighted average risk-free interest rate(2) N/A 2.58 % Expected dividends(3) N/A 2.51 % (1) The expected life of employee stock options represents the weighted average period the stock options are expected to remain outstanding based on historical experience. Volatility is based on the historical volatility of the stock price over the same period of the expected life of the option. (2) Based on the U.S. Treasury constant maturity interest rate with a term consistent with the expected life of the option granted. (3) Each grant’s dividend yield is calculated by annualizing the most recent quarterly cash dividend and dividing that amount by the market price of the Company’s common stock as of the grant date Restricted stock activity under the equity plans is as follows: Weighted Average Grant Number Date Fair Total Restricted Stock Award of Shares Value Nonvested shares at January 1, 2019 193,298 $ 11.04 Vested (1,250) $ 14.01 Nonvested shares at March 31, 2019 192,048 $ 11.04 As of March 31, 2019, there was $1,817,000 of total unrecognized compensation cost related to nonvested restricted stock awards granted under the equity plans. The cost is expected to be recognized over a weighted‑average period of approximately 2.46 years. |
Subordinated Debt
Subordinated Debt | 3 Months Ended |
Mar. 31, 2019 | |
Subordinated Debt | |
Subordinated Debt | 12) Subordinated Debt On May 26, 2017, the Company completed an underwritten public offering of $40,000,000 aggregate principal amount of its fixed-to-floating rate subordinated notes (“Subordinated Debt”) due June 1, 2027. The Subordinated Debt initially bears a fixed interest rate of 5.25% per year. Commencing on June 1, 2022, the interest rate on the Subordinated Debt resets quarterly to the three-month LIBOR rate plus a spread of 336.5 basis points, payable quarterly in arrears. Interest on the Subordinated Debt is payable semi-annually on June 1 st and December 1 st of each year through June 1, 2022 and quarterly thereafter on March 1 st , June 1 st , September 1 st and December 1 st of each year through the maturity date or early redemption date. The Company at its option may redeem the Subordinated Debt, in whole or in part, on any interest payment date on or after June 1, 2022 without a premium. |
Capital Requirements
Capital Requirements | 3 Months Ended |
Mar. 31, 2019 | |
Capital Requirements | |
Capital Requirements | 13) Capital Requirements The Company and its subsidiary bank are subject to various regulatory capital requirements administered by the banking agencies. 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 the Company’s financial statements and operations. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and HBC must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off balance sheet items as calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. There are no conditions or events since March 31, 2019, that management believes have changed the categorization of the Company or HBC as “well-capitalized.” As of January 1, 2015, HCC and HBC along with other community banking organizations became subject to new capital requirements and certain provisions of the new rules will be phased in from 2015 through 2019. The Federal Banking regulators approved the new rules to implement the revised capital adequacy standards of the Basel Committee on Banking Supervision, commonly called Basel III, and address relevant provisions of The Dodd Frank Wall Street Reform and Consumer Protection Act of 2010, as amended. The new capital rules establish a “capital conservation buffer,” which must consist entirely of common equity Tier 1 capital. The capital conservation buffer is to be phased-in over four years beginning on January 1, 2016. The buffer was 0.625% of risk-weighted assets for 2016, 1.25% for 2017, 1.875% for 2018, and is 2.5% for 2019 and thereafter. The Company and HBC must maintain a capital conservation buffer above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The Company’s consolidated capital ratios and the Bank’s capital ratios exceeded the regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements at March 31, 2019. Quantitative measures established by regulation to help ensure capital adequacy require the Company and HBC to maintain minimum amounts and ratios (set forth in the tables below) of total, Tier 1 capital, and common equity Tier 1 capital (as defined in the regulations) to risk weighted assets (as defined), and of Tier 1 capital to average assets (as defined). Management believes that, as of March 31, 2019 and December 31, 2018, the Company and HBC met all capital adequacy guidelines to which they were subject. The Company’s consolidated capital amounts and ratios are presented in the following table, together with capital adequacy requirements, under the Basel III regulatory requirements as of March 31, 2019 and December 31, 2018. Required For Capital Adequacy Purposes Actual Under Basel III Amount Ratio Amount Ratio (1) (Dollars in thousands) As of March 31, 2019 Total Capital $ 352,830 15.6 % $ 237,991 10.5 % (to risk-weighted assets) Tier 1 Capital $ 285,417 12.6 % $ 192,660 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 285,417 12.6 % $ 158,661 7.0 % (to risk-weighted assets) Tier 1 Capital $ 285,417 9.5 % $ 120,576 4.0 % (to average assets) (1) Includes 2.5% capital conservation buffer, effective January 1, 2019, except the Tier 1 Capital to average assets ratio. Required For Capital Adequacy Purposes Actual Under Basel III Amount Ratio Amount Ratio (1) (Dollars in thousands) As of December 31, 2018 Total Capital $ 344,597 15.0 % $ 227,514 9.875 % (to risk-weighted assets) Tier 1 Capital $ 276,675 12.0 % $ 181,435 7.875 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 276,675 12.0 % $ 146,876 6.375 % (to risk-weighted assets) Tier 1 Capital $ 276,675 8.9 % $ 124,726 4.000 % (to average assets) (1) Includes 1.875% capital conservation buffer, effective January 1, 2018 except the Tier 1 Capital to average assets ratio. HBC’s actual capital amounts and ratios are presented in the following table, together with capital adequacy requirements, under the Basel III regulatory requirements as of March 31, 2019, and December 31, 2018. Required For Capital To Be Well-Capitalized Adequacy Under Basel III PCA Regulatory Purposes Actual Requirements Under Basel III Amount Ratio Amount Ratio Amount Ratio (1) (Dollars in thousands) As of March 31, 2019 Total Capital $ 330,915 14.6 % $ 226,530 10.0 % $ 237,856 10.5 % (to risk-weighted assets) Tier 1 Capital $ 302,917 13.4 % $ 181,224 8.0 % $ 192,550 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 302,917 13.4 % $ 147,244 6.5 % $ 158,571 7.0 % (to risk-weighted assets) Tier 1 Capital $ 302,917 10.1 % $ 150,656 5.0 % $ 120,525 4.0 % (to average assets) (1) Includes 2.5% capital conservation buffer, effective January 1, 2018, except the Tier 1 Capital to average assets ratio. Required For Capital To Be Well-Capitalized Adequacy Under Basel III PCA Regulatory Purposes Actual Requirements Under Basel III Amount Ratio Amount Ratio Amount Ratio (1) (Dollars in thousands) As of December 31, 2018 Total Capital $ 322,283 14.0 % $ 230,275 10.0 % $ 227,397 9.875 % (to risk-weighted assets) Tier 1 Capital $ 293,730 12.8 % $ 184,220 8.0 % $ 181,342 7.875 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 293,730 12.8 % $ 149,679 6.5 % $ 146,800 6.375 % (to risk-weighted assets) Tier 1 Capital $ 293,730 9.4 % $ 155,832 5.0 % $ 124,666 4.000 % (to average assets) (1) Includes 1.875% capital conservation buffer, effective January 1, 2018, except the Tier 1 Capital to average assets ratio. The Subordinated Debt, net of unamortized issuance costs, totaled $39,414,000 at March 31, 2019, and qualifies as Tier 2 capital for the Company under the guidelines established by the Federal Reserve Bank. Under California General Corporation Law, the holders of common stock are entitled to receive dividends when and as declared by the Board of Directors, out of funds legally available. The California Financial Code provides that a state licensed bank may not make a cash distribution to its shareholders in excess of the lesser of the following: (i) the bank’s retained earnings; or (ii) the bank’s net income for its last three fiscal years, less the amount of any distributions made by the bank to its shareholders during such period. However, a bank, with the prior approval of the Commissioner of the California Department of Business Oversight—Division of Financial Institutions (“DBO”) may make a distribution to its shareholders of an amount not to exceed the greater of (i) a bank’s retained earnings; (ii) its net income for its last fiscal year; or (iii) its net income for the current fiscal year. Also with the prior approval of the Commissioner of the DBO and the shareholders of the bank, the bank may make a distribution to its shareholders, as a reduction in capital of the bank. In the event that the Commissioner determines that the shareholders’ equity of a bank is inadequate or that the making of a distribution by a bank would be unsafe or unsound, the Commissioner may order a bank to refrain from making such a proposed distribution. As of March 31, 2019, HBC would not be required to obtain regulatory approval, and the amount available for cash dividends is $38,136,000. Similar restrictions applied to the amount and sum of loan advances and other transfers of funds from HBC to the parent company. During the first quarter of 2019, HBC distributed to HCC dividends of $5,000,000. |
Loss Contingencies
Loss Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Loss Contingencies | |
Loss Contingencies | 14) Loss Contingencies The Company is involved in certain legal actions arising from normal business activities. Management, based upon the advice of legal counsel, believes the ultimate resolution of all pending legal actions will not have a material effect on the financial statements of the Company. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2019 | |
Revenue Recognition | |
Revenue Recognition | 15) Revenue Recognition On January 1, 2018, the Company adopted ASU No. 2014-09 (Topic 606) and all subsequent ASUs that modified Topic 606. Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. In addition, certain noninterest income streams such as fees associated with mortgage servicing rights, financial guarantees, gain on sale of securities, bank-owned life insurance, gain on sales of SBA loans, and certain credit card fees are also not in scope of the new guidance. Topic 606 is applicable to noninterest revenue streams such as deposit related fees, interchange fees, and merchant income. However, the recognition of these revenue streams did not change significantly upon adoption of Topic 606. Substantially all of the Company’s revenue is generated from contracts with customers. The following noninterest income revenue streams are in-scope of Topic 606: Service charges and fees on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. We sometimes charge customers fees that are not specifically related to the customer accessing its funds, such as account maintenance or dormancy fees. The amount of deposit fees assessed varies based on a number of factors, such as the type of customer and account, the quantity of transactions, and the size of the deposit balance. We charge, and in some circumstances do not charge, fees to earn additional revenue and influence certain customer behavior. An example would be where we do not charge a monthly service fee, or do not charge for certain transactions, for customers that have a high deposit balance. Deposit fees are considered either transactional in nature (such as wire transfers, nonsufficient fund fees, and stop payment orders) or non-transactional (such as account maintenance and dormancy fees). These fees are recognized as earned or as transactions occur and services are provided. Check orders and other deposit account related fees are largely transactional based and, therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts. The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the periods indicated: Three Months Ended March 31, 2019 2018 (Dollars in thousands) Noninterest Income In-scope of Topic 606: Service charges and fees on deposit accounts $ 1,161 $ 902 Noninterest Income Out-of-scope of Topic 606 1,307 1,293 Total noninterest income $ 2,468 $ 2,195 |
Noninterest Expense
Noninterest Expense | 3 Months Ended |
Mar. 31, 2019 | |
Noninterest Expense | |
Noninterest Expense | 16) Noninterest Expense The following table sets forth the various components of the Company’s noninterest expense for the periods indicated: Three Months Ended March 31, 2019 2018 Salaries and employee benefits $ 10,770 $ 9,777 Occupancy and equipment 1,506 1,106 Professional fees 818 684 Data processing 679 353 Software subscriptions 589 593 Amortization of intangible assets 553 241 Insurance expense 436 407 Other acquisition and integration related costs — 615 Other 2,567 2,214 Total $ 17,918 $ 15,990 |
Lease
Lease | 3 Months Ended |
Mar. 31, 2019 | |
Leases | |
Leases | 17) Leases On January 1, 2019, the Company adopted ASU No. 2016-02, Leases (Topic 842) . Under the new guidance, the Company recognizes the following for all leases, at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. While the new standard impacts lessors and lessees, the Company is impacted as a lessee of the offices and real estate used for operations. The Company's lease agreements include options to renew at the Company's discretion. The extensions are not reasonably certain to be exercised, therefore it was not considered in the calculation of the ROU asset and lease liability. Total assets and total liabilities increased $8.6 million on its consolidated statement of financial condition at March 31, 2019, as a result of recognizing right-of-use assets, included in other assets, and lease liabilities, included in other liabilities, related to non-cancelable operating lease agreements for office space. The following table presents the quantitative information for the Company’s leases: March 31, 2019 (Dollars in thousands) Operating Lease Cost (Cost resulting from lease payments) $ 1,050 Operating Lease - Operating Cash Flows (Fixed Payments) $ 1,013 Operating Lease - ROU assets $ 8,630 Operating Lease - Liabilities $ 8,630 Weighted Average Lease Term - Operating Leases 3.50 years Weighted Average Discount Rate - Operating Leases The following maturity analysis shows the undiscounted cash flows due on the Company’s operating lease liabilities: (Dollars in thousands) 2019 $ 3,040 2020 2,666 2021 1,351 2022 1,144 2023 605 Thereafter 691 Total undiscounted cash flows 9,497 Discount on cash flows (867) Total lease liability $ 8,630 |
Business Segment Information
Business Segment Information | 3 Months Ended |
Mar. 31, 2019 | |
Business Segment Information | |
Business Segment Information | 18) Business Segment Information The following presents the Company’s operating segments. The Company operates through two business segments: Banking segment and Factoring segment. Transactions between segments consist primarily of borrowed funds. Intersegment interest expense is allocated to the Factoring segment based on the Company’s prime rate and funding costs. The provision for loan loss is allocated based on the segment’s allowance for loan loss determination which considers the effects of charge-offs. Noninterest income and expense directly attributable to a segment are assigned to it. Taxes are paid on a consolidated basis and allocated for segment purposes. The Factoring segment includes only factoring originated by Bay View Funding. Three Months Ended March 31, 2019 Banking(1) Factoring Consolidated (Dollars in thousands) Interest income $ 30,496 2,953 $ 33,449 Intersegment interest allocations 314 (314) — Total interest expense 2,407 — 2,407 Net interest income 28,403 2,639 31,042 Provision (credit) for loan losses (892) (169) (1,061) Net interest income after provision 29,295 2,808 32,103 Noninterest income 2,232 236 2,468 Noninterest expense 16,201 1,717 17,918 Intersegment expense allocations 121 (121) — Income before income taxes 15,447 1,206 16,653 Income tax (benefit) expense 4,151 356 4,507 Net income $ 11,296 $ 850 $ 12,146 Total assets $ 3,053,116 $ 62,761 $ 3,115,877 Loans, net of deferred fees $ 1,800,064 $ 48,254 $ 1,848,318 Goodwill $ 70,709 $ 13,044 $ 83,753 (1) Includes the holding company’s results of operations Three Months Ended March 31, 2018 Banking(1) Factoring Consolidated (Dollars in thousands) Interest income $ 24,731 $ 3,146 $ 27,877 Intersegment interest allocations 327 (327) — Total interest expense 1,529 — 1,529 Net interest income 23,529 2,819 26,348 Provision for loan losses 488 18 506 Net interest income after provision 23,041 2,801 25,842 Noninterest income 2,086 109 2,195 Noninterest expense 14,467 1,523 15,990 Intersegment expense allocations 175 (175) — Income before income taxes 10,835 1,212 12,047 Income tax expense 2,880 358 3,238 Net income $ 7,955 $ 854 $ 8,809 Total assets $ 2,722,472 $ 63,076 $ 2,785,548 Loans, net of deferred fees $ 1,541,466 $ 49,735 $ 1,591,201 Goodwill $ 32,620 $ 13,044 $ 45,664 (1) Includes the holding company’s results of operations |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events | |
Subsequent Events | 19) Subsequent Events On April 25, 2019, the Company announced that its Board of Directors declared a $0.12 per share quarterly cash dividend to holders of common stock. The dividend will be paid on May 23, 2019 to shareholders of record on May 9, 2019. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Basis of Presentation | |
Basis of Presentation | 1) Basis of Presentation The unaudited consolidated financial statements of Heritage Commerce Corp (the “Company” or “HCC”) and its wholly owned subsidiary, Heritage Bank of Commerce (“HBC”), have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements are not included herein. The interim statements should be read in conjunction with the consolidated financial statements and notes that were included in the Company’s Form 10-K for the year ended December 31, 2018. HBC is a commercial bank serving customers primarily located in Santa Clara, Alameda, Contra Costa, San Benito, and San Mateo counties of California. CSNK Working Capital Finance Corp. a California corporation, dba Bay View Funding (“Bay View Funding”) is a wholly owned subsidiary of HBC, and provides business-essential working capital factoring financing to various industries throughout the United States. No customer accounts for more than 10% of revenue for HBC or the Company. The Company reports its results for two segments: banking and factoring. The Company’s management uses segment results in its operating and strategic planning. In management’s opinion, all adjustments necessary for a fair presentation of these consolidated financial statements have been included and are of a normal and recurring nature. All intercompany transactions and balances have been eliminated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from these estimates. The results for the three months ended March 31, 2019 are not necessarily indicative of the results expected for any subsequent period or for the entire year ending December 31, 2019. |
Business Combinations | Business Combinations The Company accounts for acquisitions of businesses using the acquisition method of accounting. Under the acquisition method, assets acquired and liabilities assumed are recorded at their estimated fair values at the date of acquisition. Management utilizes various valuation techniques including discounted cash flow analyses to determine these fair values. Any excess of the purchase price over amounts allocated to the acquired assets, including identifiable intangible assets, and liabilities assumed is recorded as goodwill. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill resulted from the acquisition of Tri-Valley Bank (“Tri-Valley”) on April 6, 2018 and United American Bank (“United American”) on May 4, 2018, and from acquisitions in prior years. Goodwill represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is assessed at least annually for impairment and any such impairment is recognized in the period identified. Other intangible assets consist of core deposit intangible assets and a below market value lease intangible asset, arising from the United American and Tri-Valley acquisitions. They are initially measured at fair value and then are amortized over their estimated useful lives. The core deposit intangible assets from the acquisitions of United American and Tri-Valley are being amortized on an accelerated method over ten years. The below market value lease intangible assets are being amortized on the straight line method over three years for United American and eleven years for Tri-Valley. |
Reclassifications | Reclassifications Certain reclassifications of prior year balances have been made to conform to the current year presentation. These reclassifications had no impact on the Company’s consolidated financial position, results of operations or net change in cash and cash equivalents. |
Adoption of New Accounting Standards | Adoption of New Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This update revises the model to assess how a lease should be classified and provides guidance for lessees and lessors, when presenting right-of-use assets and lease liabilities on the balance sheet. Under the new guidance, lessees will be required to recognize the following for all leases, with the exception of short-term leases, at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. This update became effective for the Company on January 1, 2019. In July 2018, the FASB issued supplementary ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides for an additional transition method allowing for a modified retrospective adoption approach where the guidance would only be applied to existing leases in effect at the adoption date and new leases going forward, with a cumulative effect adjustment to retained earnings as of the adoption date and additional required disclosures regarding leasing arrangements only for those periods after adoption. This update also allows lessors to not separate non-lease components from the associated lease component if certain conditions are met. The Company has elected the practical expedients permitted by ASU 2018-11. The Company adopted the new guidance on January 1, 2019. At the adoption date, the Company reported increase assets and liabilities of approximately $9.6 million on its consolidated balance sheet as a result of recognizing right-of-use assets and lease liabilities related to non-cancellable operating lease agreements for office space. The adoption of this guidance did not have a material impact to its Consolidated Statetements of Income or Cash Flows. See Note 17 – Leases for more information. In March 2017, the FASB issued ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities. This update shortens the amortization period of certain callable debt securities held at a premium to the earliest call date. The amendments in this update were effective for the Company on January 1, 2019. The amendments are applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption and the Company is required to provide change in accounting principle disclosures. The Company adopted the new guidance on January 1, 2019, and there was no material impact to the financial statements and no cumulative adjustments were made. Newly Issued, but not yet Effective Accounting Standards In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. The standard is the final guidance on the new current expected credit loss (“CECL”) model. The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to estimate future credit loss estimates. As CECL encompasses all financial assets carried at amortized cost, the requirement that reserves be established based on an organization’s reasonable and supportable estimate of expected credit losses extends to held-to-maturity debt securities. The guidance allows for a modified retrospective approach with a cumulative effect adjustment to the balance sheet upon adoption (charge to retained earnings instead of the income statement). The new guidance is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2019. While early application is permitted for fiscal years beginning after December 15, 2018, the Company plans to adopt this standard on January 1, 2020. The Company has established a company-wide, cross-functional governance structure, which oversees overall strategy for implementation of CECL. We are currently evaluating various loss methodologies to determine their correlation to our various loan categories historical performance. The project plan is targeting the data and model validation completion during the second quarter of 2019, with parallel processing of our existing allowance for loan loss model with CECL prior to implementation. The Company is focused on completing data and model validation, refining assumptions and continued review of the models. The Company also continues to focus on researching and resolving interpretive accounting issues in the ASU, contemplating various related accounting policies, developing processes and related controls and considering various reporting disclosures. The Company also continues to believe that the adoption of the standard will result in an overall increase in the allowance for loan losses to cover credit losses over the estimated life of the financial assets. However, the magnitude of the increase in its allowance for loan losses at the adoption date will depend upon the nature and characteristics of the portfolio at the adoption date, as well as macroeconomic conditions and forecasts at that time. In January 2017, the FASB issued accounting standards ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The provisions of the update eliminate the existing second step of the goodwill impairment test which provides for the allocation of reporting unit fair value among existing assets and liabilities, with the net remaining amount representing the implied fair value of goodwill. In replacement of the existing goodwill impairment rule, the update will provide that impairment should be recognized as the excess of any of the reporting unit’s goodwill over the fair value of the reporting unit. Under the provisions of this update, the amount of the impairment is limited to the carrying value of the reporting unit’s goodwill. For public business entities that are SEC filers, the amendments of the update will become effective in fiscal years beginning after December 15, 2019. Management does not expect the requirements of this update to have a material impact on the Company’s financial position, results of operations or cash flows. |
Shareholders' Equity and Earn_2
Shareholders' Equity and Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Shareholders' Equity and Earnings Per Share. | |
Schedule of reconciliation of factors used in computing basic and diluted earnings per common share | Three Months Ended March 31, 2019 2018 (Dollars in thousands, except per share amounts) Net income $ 12,146 $ 8,809 Weighted average common shares outstanding for basic earnings per common share 43,108,208 38,240,495 Dilutive potential common shares 562,133 574,227 Shares used in computing diluted earnings per common share 43,670,341 38,814,722 Basic earnings per share $ 0.28 $ 0.23 Diluted earnings per share $ 0.28 $ 0.23 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (“AOCI”) (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss) (“AOCI”) | |
Schedule of changes in AOCI by component | Three Months Ended March 31, 2019 and 2018 Unamortized Unrealized Unrealized Gain on Gains (Losses) on Available- Available- for-Sale Defined for-Sale Securities Benefit Securities Reclassified Pension and I/O to Held-to- Plan Strips(1) Maturity Items Total (Dollars in thousands) Beginning balance January 1, 2019, net of taxes $ (5,007) $ 344 $ (7,718) $ (12,381) Other comprehensive income (loss) before reclassification, net of taxes 3,404 — (7) 3,397 Amounts reclassified from other comprehensive income (loss), net of taxes — (18) 15 (3) Net current period other comprehensive income (loss), net of taxes 3,404 (18) 8 3,394 Ending balance March 31, 2019, net of taxes $ (1,603) $ 326 $ (7,710) $ (8,987) Beginning balance January 1, 2018, net of taxes $ (362) $ 375 $ (9,265) $ (9,252) Other comprehensive income (loss) before reclassification, net of taxes (5,670) — (5) (5,675) Amounts reclassified from other comprehensive income (loss), net of taxes (61) (8) 40 (29) Net current period other comprehensive income (loss), net of taxes (5,731) (8) 35 (5,704) Ending balance March 31, 2018, net of taxes $ (6,093) $ 367 $ (9,230) $ (14,956) |
Schedule of reclassifications out of AOCI into net income | Amounts Reclassified from AOCI(1) Three Months Ended March 31, Affected Line Item Where Details About AOCI Components 2019 2018 Net Income is Presented (Dollars in thousands) Unrealized gains on available-for-sale securities and I/O strips $ — $ 87 Gain on sales of securities — (26) Income tax expense — 61 Net of tax Amortization of unrealized gain on securities available- for-sale that were reclassified to securities held-to-maturity 26 11 Interest income on taxable securities (8) (3) Income tax expense 18 8 Net of tax Amortization of defined benefit pension plan items (1) Prior transition obligation 25 16 Actuarial losses (46) (73) (21) (57) Salaries and employee benefits 6 17 Income tax benefit (15) (40) Net of tax Total reclassification for the year $ 3 $ 29 (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 9—Benefit Plans) and includes split-dollar life insurance benefit plan. |
Securities (Tables)
Securities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Securities | |
Schedule of amortized cost and estimated fair value of securities | Gross Gross Estimated Amortized Unrealized Unrealized Fair March 31, 2019 Cost Gains (Losses) Value (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 299,847 $ 343 $ (4,612) $ 295,578 U.S. Treasury 148,095 1,387 — 149,482 U.S. Government sponsored entities 7,447 14 — 7,461 Total $ 455,389 $ 1,744 $ (4,612) $ 452,521 Securities held-to-maturity: Agency mortgage-backed securities $ 281,102 $ 281 $ (4,758) $ 276,625 Municipals - exempt from Federal tax 85,921 683 (648) 85,956 Total $ 367,023 $ 964 $ (5,406) $ 362,581 Gross Gross Estimated Amortized Unrealized Unrealized Fair December 31, 2018 Cost Gains (Losses) Value (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 311,523 $ 98 $ (8,767) $ 302,854 U.S. Treasury 147,823 930 — 148,753 U.S. Government sponsored entities 7,433 4 (1) 7,436 Total $ 466,779 $ 1,032 $ (8,768) $ 459,043 Securities held-to-maturity: Agency mortgage-backed securities $ 291,241 $ 59 $ (9,153) $ 282,147 Municipals - exempt from Federal tax 85,957 312 (2,241) 84,028 Total $ 377,198 $ 371 $ (11,394) $ 366,175 |
Schedule of securities with unrealized losses | Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized March 31, 2019 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ — $ — $ 269,629 $ (4,612) $ 269,629 $ (4,612) Total $ — $ — $ 269,629 $ (4,612) $ 269,629 $ (4,612) Securities held-to-maturity: Agency mortgage-backed securities $ — $ — $ 250,516 $ (4,758) $ 250,516 $ (4,758) Municipals - exempt from Federal tax — — 32,440 (648) 32,440 (648) Total $ — $ — $ 282,956 $ (5,406) $ 282,956 $ (5,406) Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2018 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 3,868 $ (21) $ 281,082 $ (8,746) $ 284,950 $ (8,767) U.S. Government sponsored entities 3,974 (1) — — 3,974 (1) Total $ 7,842 $ (22) $ 281,082 $ (8,746) $ 288,924 $ (8,768) Securities held-to-maturity: Agency mortgage-backed securities $ 16,088 $ (103) $ 255,917 $ (9,050) $ 272,005 $ (9,153) Municipals - exempt from Federal tax 5,019 (27) 57,301 (2,214) 62,320 (2,241) Total $ 21,107 $ (130) $ 313,218 $ (11,264) $ 334,325 $ (11,394) |
Schedule of proceeds from sales of securities and the resulting gains and losses | Three Months Ended March 31, 2019 2018 (Dollars in thousands) Proceeds $ — $ 38,754 Gross gains — 1,050 Gross losses — (963) |
Schedule of amortized cost and estimated fair values of securities, by contractual maturity | Available-for-sale Amortized Estimated Cost Fair Value (Dollars in thousands) Due after 3 months through one year $ 5,468 $ 5,475 Due after one through five years 150,074 151,468 Agency mortgage-backed securities 299,847 295,578 Total $ 455,389 $ 452,521 Held-to-maturity Amortized Estimated Cost Fair Value (Dollars in thousands) Due after 3 months through one year $ 770 $ 771 Due after one through five years 4,941 5,038 Due after five through ten years 27,670 27,988 Due after ten years 52,540 52,159 Agency mortgage-backed securities 281,102 276,625 Total $ 367,023 $ 362,581 |
Loans (Tables)
Loans (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Loans | |
Schedule of loans | March 31, December 31, 2019 2018 (Dollars in thousands) Loans held-for-investment: Commercial $ 559,718 $ 597,763 Real estate: CRE 1,012,641 994,067 Land and construction 98,222 122,358 Home equity 118,448 109,112 Residential mortgages 49,786 50,979 Consumer 9,690 12,453 Loans 1,848,505 1,886,732 Deferred loan fees, net (187) (327) Loans, net of deferred fees 1,848,318 1,886,405 Allowance for loan losses (27,318) (27,848) Loans, net $ 1,821,000 $ 1,858,557 |
Schedule of changes in allowance for loan losses | Three Months Ended March 31, 2019 Commercial Real Estate Consumer Total (Dollars in thousands) Beginning of period balance $ 17,061 $ 10,671 $ 116 $ 27,848 Charge-offs (226) — — (226) Recoveries 715 42 — 757 Net recoveries 489 42 — 531 Provision (credit) for loan losses (1,993) 958 (26) (1,061) End of year balance $ 15,557 $ 11,671 $ 90 $ 27,318 Three Months Ended March 31, 2018 Commercial Real Estate Consumer Total (Dollars in thousands) Beginning of period balance $ 10,608 $ 8,950 $ 100 $ 19,658 Charge-offs (245) — — (245) Recoveries 157 63 — 220 Net (charge-offs) recoveries (88) 63 — (25) Provision (credit) for loan losses 645 (155) 16 506 End of period balance $ 11,165 $ 8,858 $ 116 $ 20,139 |
Schedule of balance in allowance for loan losses and recorded investment in loans by portfolio segment, based on impairment method | March 31, 2019 Commercial Real Estate Consumer Total (Dollars in thousands) Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 6,467 $ 897 $ — $ 7,364 Collectively evaluated for impairment 9,090 10,774 90 19,954 Total allowance balance $ 15,557 $ 11,671 $ 90 $ 27,318 Loans: Individually evaluated for impairment $ 8,536 $ 8,980 $ — $ 17,516 Collectively evaluated for impairment 551,182 1,270,117 9,690 1,830,989 Total loan balance $ 559,718 $ 1,279,097 $ 9,690 $ 1,848,505 December 31, 2018 Commercial Real Estate Consumer Total (Dollars in thousands) Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 6,944 $ — $ — $ 6,944 Collectively evaluated for impairment 10,117 10,671 116 20,904 Total allowance balance $ 17,061 $ 10,671 $ 116 $ 27,848 Loans: Individually evaluated for impairment $ 9,495 $ 5,645 $ — $ 15,140 Collectively evaluated for impairment 588,268 1,270,871 12,453 1,871,592 Total loan balance $ 597,763 $ 1,276,516 $ 12,453 $ 1,886,732 |
Schedule of loans held-for-investment individually evaluated for impairment by class of loans | March 31, 2019 December 31, 2018 Allowance Allowance Unpaid for Loan Unpaid for Loan Principal Recorded Losses Principal Recorded Losses Balance Investment Allocated Balance Investment Allocated (Dollars in thousands) With no related allowance recorded: Commercial $ 1,615 $ 1,615 $ — $ 1,849 $ 1,849 $ — Real estate: CRE — — — 5,094 5,094 — Land and construction — — — — — — Home Equity 538 538 — 551 551 — Total with no related allowance recorded 2,153 2,153 — 7,494 7,494 — With an allowance recorded: Commercial 6,921 6,921 6,467 7,646 7,646 6,944 Real estate: Commercial 8,442 8,442 897 — — — Total with an allowance recorded 15,363 15,363 7,364 7,646 7,646 6,944 Total $ 17,516 $ 17,516 $ 7,364 $ 15,140 $ 15,140 $ 6,944 |
Schedule of average impaired loans with interest recognized and cash-basis interest earned on impaired loans | Three Months Ended March 31, 2019 Real Estate Land and Home Commercial CRE Construction Equity Consumer Total (Dollars in thousands) Average of impaired loans during the period $ 9,016 $ 6,768 $ — $ 544 $ — $ 16,328 Interest income during impairment $ — $ — $ — $ — $ — $ — Cash-basis interest recognized $ — $ — $ — $ — $ — $ — Three Months Ended March 31, 2018 Real Estate Land and Home Commercial CRE Construction Equity Consumer Total (Dollars in thousands) Average of impaired loans during the period $ 2,474 $ 501 $ 59 $ 371 $ 1 $ 3,406 Interest income during impairment $ — $ — $ — $ — $ — $ — Cash-basis interest recognized $ — $ — $ — $ — $ — $ — |
Schedule of nonperforming loans | March 31, December 31, 2019 2018 2018 (Dollars in thousands) Nonaccrual loans - held-for-investment $ 15,958 $ 3,637 $ 13,699 Restructured and loans over 90 days past due and still accruing 1,357 158 1,188 Total nonperforming loans 17,315 3,795 14,887 Other restructured loans 201 241 253 Total impaired loans $ 17,516 $ 4,036 $ 15,140 |
Schedule of nonperforming loans by class | March 31, 2019 December 31, 2018 Restructured Restructured and Loans and Loans over 90 Days over 90 Days Past Due Past Due and Still and Still Nonaccrual Accruing Total Nonaccrual Accruing Total (Dollars in thousands) Commercial $ 7,203 $ 1,132 $ 8,335 $ 8,279 $ 963 $ 9,242 Real estate: CRE 8,442 — 8,442 5,094 — 5,094 Home equity 313 225 538 326 225 551 Total $ 15,958 $ 1,357 $ 17,315 $ 13,699 $ 1,188 $ 14,887 |
Schedule of aging of past due loans by class of loans | March 31, 2019 30 - 59 60 - 89 90 Days or Days Days Greater Total Loans Not Past Due Past Due Past Due Past Due Past Due Total (Dollars in thousands) Commercial $ 4,207 $ 6,948 $ 2,014 $ 13,169 $ 546,549 $ 559,718 Real estate: CRE — 6,192 2,251 8,443 1,004,198 1,012,641 Land and construction — — — — 98,222 98,222 Home equity 168 — — 168 118,280 118,448 Residential mortgages — — — — 49,786 49,786 Consumer — — — — 9,690 9,690 Total $ 4,375 $ 13,140 $ 4,265 $ 21,780 $ 1,826,725 $ 1,848,505 December 31, 2018 30 - 59 60 - 89 90 Days or Days Days Greater Total Loans Not Past Due Past Due Past Due Past Due Past Due Total (Dollars in thousands) Commercial $ 5,698 $ 1,916 $ 1,258 $ 8,872 $ 588,891 $ 597,763 Real estate: CRE — — — — 994,067 994,067 Land and construction — — — — 122,358 122,358 Home equity — — — 109,112 109,112 Residential mortgages — — — — 50,979 50,979 Consumer 1 — — 1 12,452 12,453 Total $ 5,699 $ 1,916 $ 1,258 $ 8,873 $ 1,877,859 $ 1,886,732 |
Summary of loan portfolio by loan type and credit quality classification | March 31, 2019 December 31, 2018 Nonclassified Classified Total Nonclassified Classified Total (Dollars in thousands) Commercial $ 545,151 14,567 $ 559,718 $ 584,845 $ 12,918 $ 597,763 Real estate: CRE 1,003,770 8,871 1,012,641 985,193 8,874 994,067 Land and construction 98,222 — 98,222 122,358 — 122,358 Home equity 116,710 1,738 118,448 107,495 1,617 109,112 Residential mortgages 49,786 — 49,786 50,979 — 50,979 Consumer 9,690 — 9,690 12,453 — 12,453 Total $ 1,823,329 $ 25,176 $ 1,848,505 $ 1,863,323 $ 23,409 $ 1,886,732 |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Tri Valley Bank | |
Business Acquisition [Line Items] | |
Summary of consideration paid | (Dollars in thousands) Cash paid for: Warrant $ 889 Options 615 Other 91 Total cash paid 1,595 Issuance of 1,889,613 shares of common stock to Tri- Valley shareholders at $16.26 per share at Closing 30,725 Total consideration $ 32,320 |
Schedule of recognized identified assets acquired and liabilities assumed | As As Recorded Fair Recorded by Value at Tri-Valley Adjustments Acquisition (Dollars in thousands) Assets acquired: Cash and cash equivalents $ 21,757 $ 1,153 (a) $ 22,910 Loans 123,532 (2,563) (b) 120,969 Allowance for loan losses (1,969) 1,969 (c) — Other intangible assets — 1,978 (d) 1,978 Other assets, net 9,939 (2,894) (e) 7,045 Total assets acquired $ 153,259 $ (357) 152,902 Liabilities assumed: Deposits $ 135,351 $ 37 (f) 135,388 Other liabilities 608 — 608 Total liabilities assumed $ 135,959 $ 37 135,996 Net assets acquired 16,906 Purchase price 30,725 Goodwill recorded in the merger $ 13,819 Explanation of certain fair value related adjustments for the Tri-Valley acquisition: (a) Represents the cash acquired in the merger, the disposition of other real estate owned of $1,132,000, a gain on the sale of securities of $53,000, partially offset by invoices paid after closing for services prior to closing of $29,000, and cash paid for fractional shares in the transaction of $3,000. The remaining $1,592,000 of cash paid for the transaction is an adjustment to prepaid assets included in other assets, net. (b) (c) (d) (e) (f) Represents the fair value adjustment on time deposits, which was be accreted as a reduction of interest expense. |
United American Bank | |
Business Acquisition [Line Items] | |
Summary of consideration paid | (Dollars in thousands) Consideration paid: Cash paid for: Series A Preferred Stock $ 8,700 Series B Preferred Stock 435 Other 2 Total cash paid 9,137 Issuance of 2,826,032 shares of common stock to United American shareholders at $16.73 per share at Closing 47,280 Total consideration $ 56,417 |
Schedule of recognized identified assets acquired and liabilities assumed | As As Recorded Fair Recorded by Value at United American Adjustments Acquisition (Dollars in thousands) Assets acquired: Cash and cash equivalents $ 45,638 $ (32,520) (a) $ 13,118 Securities available-for-sale 64,144 (421) (b) 63,723 Loans 196,694 18,783 (c) 215,477 Allowance for loan losses (2,952) 2,952 (d) — Other intangible assets — 6,383 (e) 6,383 Other assets, net 9,119 (1,078) (f) 8,041 Total assets acquired $ 312,643 $ (5,901) 306,742 Liabilities assumed: Deposits $ 281,189 $ 51 (g) 281,240 Other borrowings 62 — 62 Other liabilities 2,617 (187) (h) 2,430 Total liabilities $ 283,868 $ (136) 283,732 Net assets acquired 23,010 Purchase price 47,280 Goodwill recorded in the merger $ 24,270 Explanation of certain fair value related adjustments for the United American acquisition: (a) Represents the cash acquired in the merger, net of cash paid for the transaction of $9,137,000, the repurchase of $23,732,000 loan participations from ATBancorp, and $51,000 for invoices paid after closing for services prior to closing, partially offset by a tax refund of $400,000. (b) Represents the fair value adjustment on investment securities available-for-sale. (c) Represents the repurchase of $23,732,000 loan participations from ATBancorp, partially offset by the fair value adjustment to the net book value of loans of $4,680,000, which includes an interest rate mark and credit mark adjustment, and net charge-offs of $269,000 subsequent to closing. (d) Represents the elimination of United American’s allowance for loan losses. (e) Represents intangible assets recorded to reflect the fair value of core deposits and a below market lease. The core deposit intangible asset was recorded as an identifiable intangible asset and is amortized on an accelerated basis over the estimated average life of the deposit base. The below market lease intangible assets are amortized on the straight line method over three years. (f) Represents an adjustment to net deferred tax assets resulting from the fair value adjustments related to the acquired assets, liabilities assumed and identifiable intangible assets recorded. (g) Represents the fair value adjustment on time deposits, which was be accreted as a reduction of interest expense. (h) Represents the reversal of accrued accounts payable. |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Other Intangible Assets | |
Schedule of estimated amortization expense | United United Bay View Funding American American Tri-Valley Tri-Valley Focus Customer & Core Below Core Below Core Brokered Total Deposit Market Deposit Market Deposit Relationship Amortization Year Intangible Lease Intangible Lease Intangible Intangible Expense (Dollars in thousands) 2019 $ 777 $ 255 $ 240 $ 18 $ 734 $ 190 $ 2,214 2020 665 235 208 18 716 190 2,032 2021 602 — 184 18 596 190 1,590 2022 553 — 167 18 502 190 1,430 2023 521 — 158 18 420 190 1,307 2024 499 — 152 18 346 159 1,174 Thereafter 1,520 — 451 88 201 — 2,260 $ 5,137 $ 490 $ 1,560 $ 196 $ 3,515 $ 1,109 $ 12,007 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Income Taxes | |
Summary of carrying amount of low income tax housing investment | March 31, December 31, 2019 2018 (Dollars in thousands) Low income housing investments $ 3,253 $ 3,172 Future commitments $ 273 $ 273 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Supplemental Retirement Plan | |
Benefit plans | |
Schedule of components of net periodic benefit cost | Three Months Ended March 31, 2019 2018 Components of net periodic benefit cost: Service cost $ 55 $ 62 Interest cost 264 237 Amortization of net actuarial loss 46 73 Net periodic benefit cost $ 365 $ 372 |
Split-Dollar Life Insurance Benefit Plan | |
Benefit plans | |
Schedule of change in projected benefit obligation | March 31, December 31, 2019 2018 (Dollars in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 6,903 $ 6,711 Interest cost 70 227 Actuarial loss (gain) — (35) Projected benefit obligation at end of period $ 6,973 $ 6,903 |
Schedule of amounts recognized in accumulated other comprehensive loss | March 31, December 31, 2019 2018 (Dollars in thousands) Net actuarial loss $ 2,620 $ 2,573 Prior transition obligation 1,126 1,149 Accumulated other comprehensive loss $ 3,746 $ 3,722 |
Schedule of components of net periodic benefit cost | Three Months Ended March 31, 2019 2018 Amortization of prior transition obligation $ (25) $ (16) Interest cost 70 57 Net periodic benefit cost $ 45 $ 41 |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value | |
Schedule of financial assets and liabilities measured on a recurring basis | Fair Value Measurements Using Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Balance (Level 1) (Level 2) (Level 3) (Dollars in thousands) Assets at March 31, 2019 Available-for-sale securities: Agency mortgage-backed securities $ 295,578 — $ 295,578 — U.S. Treasury 149,482 149,482 — — U.S. Government sponsored entities 7,461 — 7,461 — I/O strip receivables 571 — 571 — Assets at December 31, 2018 Available-for-sale securities: Agency mortgage-backed securities $ 302,854 — $ 302,854 — U.S. Treasury 148,753 148,753 — — U.S. Government sponsored entities 7,436 — 7,436 — I/O strip receivables 568 — 568 — |
Schedule of assets and liabilities measured on a non-recurring basis | Fair Value Measurements Using Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Balance (Level 1) (Level 2) (Level 3) (Dollars in thousands) Assets at March 31, 2019 Impaired loans - held-for-investment: Commercial $ 454 — — $ 454 Real estate: CRE 7,546 — — 7,546 $ 8,000 — — $ 8,000 Assets at December 31, 2018 Impaired loans - held-for-investment: Commercial $ 702 — — $ 702 $ 702 — — $ 702 |
Schedule of impaired loans held-for-investment and impaired loans held-for-investment carried at fair value | March 31, 2019 December 31, 2018 (Dollars in thousands) Impaired loans held-for-investment: Book value of impaired loans held-for-investment carried at fair value $ 15,364 $ 7,646 Book value of impaired loans held-for-investment carried at cost 2,152 7,494 Total impaired loans held-for-investment $ 17,516 $ 15,140 Impaired loans held-for-investment carried at fair value: Book value of impaired loans held-for-investment carried at fair value $ 15,364 $ 7,646 Specific valuation allowance (7,364) (6,944) Impaired loans held-for-investment carried at fair value, net $ 8,000 $ 702 |
Schedule of quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis | March 31, 2019 Valuation Unobservable Range Fair Value Techniques Inputs (Weighted Average) (Dollars in thousands) Impaired loans - held-for-investment: Commercial $ 454 Market Approach Discount adjustment for differences between comparable sales 0% to 1% (1%) Real estate: CRE 7,546 Market Approach Discount adjustment for differences between comparable sales 0% to 13% (5%) December 31, 2018 Valuation Unobservable Range Fair Value Techniques Inputs (Weighted Average) (Dollars in thousands) Impaired loans - held-for-investment: Commercial $ 702 Market Approach Discount adjustment for differences between comparable sales 0% to 1% |
Schedule of carrying amounts and estimated fair values of financial instruments | The carrying amounts and estimated fair values of financial instruments at March 31, 2019 are as follows: Estimated Fair Value Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Carrying Identical Assets Inputs Inputs Amounts (Level 1) (Level 2) (Level 3) Total (Dollars in thousands) Assets: Cash and cash equivalents $ 234,977 $ 234,977 $ — $ — $ 234,977 Securities available-for-sale 452,521 149,482 303,039 — 452,521 Securities held-to-maturity 367,023 — 362,581 — 362,581 Loans (including loans held-for-sale), net 1,824,216 — 3,216 1,799,945 1,803,161 FHLB stock, FRB stock, and other investments 25,221 — — — N/A Accrued interest receivable 9,014 876 2,229 6,785 9,890 I/O strips receivables 571 — 571 — 571 Liabilities: Time deposits $ 148,969 $ — $ 149,347 $ — $ 149,347 Other deposits 2,491,275 — 2,491,275 — 2,491,275 Subordinated debt 39,414 — 39,064 — 39,064 Accrued interest payable 1,135 — 1,135 — 1,135 The carrying amounts and estimated fair values of the Company’s financial instruments at December 31, 2018: Estimated Fair Value Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Carrying Identical Assets Inputs Inputs Amounts (Level 1) (Level 2) (Level 3) Total (Dollars in thousands) Assets: Cash and cash equivalents $ 164,568 $ 164,568 $ — $ — $ 164,568 Securities available-for-sale 459,043 148,753 310,290 — 459,043 Securities held-to-maturity 377,198 — 366,175 — 366,175 Loans (including loans held-for-sale), net 1,861,206 — 2,649 1,826,654 1,829,303 FHLB stock, FRB stock, and other investments 25,216 — — — N/A Accrued interest receivable 9,577 597 2,274 6,706 9,577 I/O strips receivables 568 — 568 — 568 Liabilities: Time deposits $ 147,560 $ — $ 147,916 $ — $ 147,916 Other deposits 2,489,972 — 2,489,972 — 2,489,972 Subordinated debt 39,369 — 38,969 — 38,969 Accrued interest payable 497 — 497 — 497 |
Equity Plan (Tables)
Equity Plan (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Equity Plan | |
Schedule of stock option activity under the equity plans | Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic Total Stock Options of Shares Price Life (Years) Value Outstanding at January 1, 2019 1,570,603 $ 10.76 Exercised (35,003) $ 7.66 Forfeited or expired (9,086) $ 15.02 Outstanding at March 31, 2019 1,526,514 $ 10.81 6.29 $ 3,932,974 Vested or expected to vest 1,434,923 6.29 $ 3,696,996 Exercisable at March 31, 2019 1,083,415 5.37 $ 3,806,137 |
Schedule of information related to the equity Plan | Three Months Ended March 31, 2019 2018 Intrinsic value of options exercised $ 197,994 $ 560,332 Cash received from option exercise $ 268,691 $ 449,294 Tax benefit realized from option exercises $ 26,578 $ 164,978 Weighted average fair value of options granted $ 3.24 $ 3.00 |
Schedule of assumptions used to estimate the fair value of each option grant on the date of grant | Three Months Ended March 31, 2019 2018 Expected life in months(1) N/A 72 Volatility(1) N/A 22 % Weighted average risk-free interest rate(2) N/A 2.58 % Expected dividends(3) N/A 2.51 % (1) The expected life of employee stock options represents the weighted average period the stock options are expected to remain outstanding based on historical experience. Volatility is based on the historical volatility of the stock price over the same period of the expected life of the option. (2) Based on the U.S. Treasury constant maturity interest rate with a term consistent with the expected life of the option granted. (3) Each grant’s dividend yield is calculated by annualizing the most recent quarterly cash dividend and dividing that amount by the market price of the Company’s common stock as of the grant date |
Schedule of restricted stock activity under the equity plans | Weighted Average Grant Number Date Fair Total Restricted Stock Award of Shares Value Nonvested shares at January 1, 2019 193,298 $ 11.04 Vested (1,250) $ 14.01 Nonvested shares at March 31, 2019 192,048 $ 11.04 |
Capital Requirements (Tables)
Capital Requirements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Capital Requirements | |
Schedule of actual capital and required amounts and ratios | Required For Capital Adequacy Purposes Actual Under Basel III Amount Ratio Amount Ratio (1) (Dollars in thousands) As of March 31, 2019 Total Capital $ 352,830 15.6 % $ 237,991 10.5 % (to risk-weighted assets) Tier 1 Capital $ 285,417 12.6 % $ 192,660 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 285,417 12.6 % $ 158,661 7.0 % (to risk-weighted assets) Tier 1 Capital $ 285,417 9.5 % $ 120,576 4.0 % (to average assets) (1) Includes 2.5% capital conservation buffer, effective January 1, 2019, except the Tier 1 Capital to average assets ratio. Required For Capital Adequacy Purposes Actual Under Basel III Amount Ratio Amount Ratio (1) (Dollars in thousands) As of December 31, 2018 Total Capital $ 344,597 15.0 % $ 227,514 9.875 % (to risk-weighted assets) Tier 1 Capital $ 276,675 12.0 % $ 181,435 7.875 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 276,675 12.0 % $ 146,876 6.375 % (to risk-weighted assets) Tier 1 Capital $ 276,675 8.9 % $ 124,726 4.000 % (to average assets) (1) Includes 1.875% capital conservation buffer, effective January 1, 2018 except the Tier 1 Capital to average assets ratio. |
HBC (Wholly-owned Subsidiary) | |
Capital Requirements | |
Schedule of actual capital and required amounts and ratios | Required For Capital To Be Well-Capitalized Adequacy Under Basel III PCA Regulatory Purposes Actual Requirements Under Basel III Amount Ratio Amount Ratio Amount Ratio (1) (Dollars in thousands) As of March 31, 2019 Total Capital $ 330,915 14.6 % $ 226,530 10.0 % $ 237,856 10.5 % (to risk-weighted assets) Tier 1 Capital $ 302,917 13.4 % $ 181,224 8.0 % $ 192,550 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 302,917 13.4 % $ 147,244 6.5 % $ 158,571 7.0 % (to risk-weighted assets) Tier 1 Capital $ 302,917 10.1 % $ 150,656 5.0 % $ 120,525 4.0 % (to average assets) (1) Includes 2.5% capital conservation buffer, effective January 1, 2018, except the Tier 1 Capital to average assets ratio. Required For Capital To Be Well-Capitalized Adequacy Under Basel III PCA Regulatory Purposes Actual Requirements Under Basel III Amount Ratio Amount Ratio Amount Ratio (1) (Dollars in thousands) As of December 31, 2018 Total Capital $ 322,283 14.0 % $ 230,275 10.0 % $ 227,397 9.875 % (to risk-weighted assets) Tier 1 Capital $ 293,730 12.8 % $ 184,220 8.0 % $ 181,342 7.875 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 293,730 12.8 % $ 149,679 6.5 % $ 146,800 6.375 % (to risk-weighted assets) Tier 1 Capital $ 293,730 9.4 % $ 155,832 5.0 % $ 124,666 4.000 % (to average assets) (1) Includes 1.875% capital conservation buffer, effective January 1, 2018, except the Tier 1 Capital to average assets ratio. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue Recognition | |
Schedule of noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606 | Three Months Ended March 31, 2019 2018 (Dollars in thousands) Noninterest Income In-scope of Topic 606: Service charges and fees on deposit accounts $ 1,161 $ 902 Noninterest Income Out-of-scope of Topic 606 1,307 1,293 Total noninterest income $ 2,468 $ 2,195 |
Noninterest Expense (Tables)
Noninterest Expense (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Noninterest Expense | |
Schedule of noninterest expense | Three Months Ended March 31, 2019 2018 Salaries and employee benefits $ 10,770 $ 9,777 Occupancy and equipment 1,506 1,106 Professional fees 818 684 Data processing 679 353 Software subscriptions 589 593 Amortization of intangible assets 553 241 Insurance expense 436 407 Other acquisition and integration related costs — 615 Other 2,567 2,214 Total $ 17,918 $ 15,990 |
Lease (Tables)
Lease (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases | |
Schedule of leases | March 31, 2019 (Dollars in thousands) Operating Lease Cost (Cost resulting from lease payments) $ 1,050 Operating Lease - Operating Cash Flows (Fixed Payments) $ 1,013 Operating Lease - ROU assets $ 8,630 Operating Lease - Liabilities $ 8,630 Weighted Average Lease Term - Operating Leases 3.50 years Weighted Average Discount Rate - Operating Leases |
Schedule of maturity analysis shows the undiscounted cash flows due on the Company’s operating lease liabilities | (Dollars in thousands) 2019 $ 3,040 2020 2,666 2021 1,351 2022 1,144 2023 605 Thereafter 691 Total undiscounted cash flows 9,497 Discount on cash flows (867) Total lease liability $ 8,630 |
Business Segment Information (T
Business Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Business Segment Information | |
Schedule of information by operating segment | Three Months Ended March 31, 2019 Banking(1) Factoring Consolidated (Dollars in thousands) Interest income $ 30,496 2,953 $ 33,449 Intersegment interest allocations 314 (314) — Total interest expense 2,407 — 2,407 Net interest income 28,403 2,639 31,042 Provision (credit) for loan losses (892) (169) (1,061) Net interest income after provision 29,295 2,808 32,103 Noninterest income 2,232 236 2,468 Noninterest expense 16,201 1,717 17,918 Intersegment expense allocations 121 (121) — Income before income taxes 15,447 1,206 16,653 Income tax (benefit) expense 4,151 356 4,507 Net income $ 11,296 $ 850 $ 12,146 Total assets $ 3,053,116 $ 62,761 $ 3,115,877 Loans, net of deferred fees $ 1,800,064 $ 48,254 $ 1,848,318 Goodwill $ 70,709 $ 13,044 $ 83,753 (1) Includes the holding company’s results of operations Three Months Ended March 31, 2018 Banking(1) Factoring Consolidated (Dollars in thousands) Interest income $ 24,731 $ 3,146 $ 27,877 Intersegment interest allocations 327 (327) — Total interest expense 1,529 — 1,529 Net interest income 23,529 2,819 26,348 Provision for loan losses 488 18 506 Net interest income after provision 23,041 2,801 25,842 Noninterest income 2,086 109 2,195 Noninterest expense 14,467 1,523 15,990 Intersegment expense allocations 175 (175) — Income before income taxes 10,835 1,212 12,047 Income tax expense 2,880 358 3,238 Net income $ 7,955 $ 854 $ 8,809 Total assets $ 2,722,472 $ 63,076 $ 2,785,548 Loans, net of deferred fees $ 1,541,466 $ 49,735 $ 1,591,201 Goodwill $ 32,620 $ 13,044 $ 45,664 (1) Includes the holding company’s results of operations |
Basis of Presentation (Details)
Basis of Presentation (Details) $ in Thousands | May 04, 2018 | Apr. 06, 2018 | May 31, 2018 | Apr. 30, 2018 | Mar. 31, 2019USD ($)segmentcustomer | Jan. 01, 2019USD ($) |
Segment Reporting | ||||||
Number of customers accounting for more than 10 percent of revenue for HBC or the Company | customer | 0 | |||||
Number of operating segments | segment | 2 | |||||
Operating lease, right-of-use asset | $ 8,630 | |||||
Operating lease liability | $ 8,630 | |||||
Tri Valley Bank and United American Bank | Core deposit | ||||||
Segment Reporting | ||||||
Finite-Lived Intangible Asset, Useful Life | 10 years | |||||
Tri Valley Bank | ||||||
Segment Reporting | ||||||
Finite-Lived Intangible Asset, Useful Life | 11 years | |||||
Tri Valley Bank | Core deposit | ||||||
Segment Reporting | ||||||
Finite-Lived Intangible Asset, Useful Life | 10 years | |||||
Tri Valley Bank | Below market-value lease | ||||||
Segment Reporting | ||||||
Finite-Lived Intangible Asset, Useful Life | 11 years | 11 years | ||||
United American Bank | ||||||
Segment Reporting | ||||||
Finite-Lived Intangible Asset, Useful Life | 3 years | |||||
United American Bank | Core deposit | ||||||
Segment Reporting | ||||||
Finite-Lived Intangible Asset, Useful Life | 10 years | |||||
United American Bank | Below market-value lease | ||||||
Segment Reporting | ||||||
Finite-Lived Intangible Asset, Useful Life | 3 years | 3 years | ||||
ASU 2016-02 | ||||||
Segment Reporting | ||||||
Operating lease, right-of-use asset | $ 9,600 | |||||
Operating lease liability | $ 9,600 |
Shareholders' Equity and Earn_3
Shareholders' Equity and Earnings Per Share - Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Reconciliation of factors used in computing basic and diluted earnings per common share | ||
Net income | $ 12,146 | $ 8,809 |
Weighted average common shares outstanding for basic earnings per common share (in shares) | 43,108,208 | 38,240,495 |
Dilutive potential common shares | 562,133 | 574,227 |
Shares used in computing diluted earnings per common share (in shares) | 43,670,341 | 38,814,722 |
Basic earnings per share (in dollars per share) | $ 0.28 | $ 0.23 |
Diluted earnings per share (in dollars per share) | $ 0.28 | $ 0.23 |
Number of shares not in computing diluted earnings per common share | 539,000 | 275,000 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (''AOCI'') - Changes in AOCI by Component (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Changes in AOCI by Component | ||
Balance at the beginning of the period, net of taxes | $ (12,381) | |
Net current period other comprehensive income (loss), net of taxes | 3,394 | $ (5,704) |
Balance at the end of the period, net of taxes | (8,987) | |
Accumulated Other Comprehensive Income / (Loss) | ||
Changes in AOCI by Component | ||
Balance at the beginning of the period, net of taxes | (12,381) | (9,252) |
Other comprehensive income (loss) before reclassification, net of taxes | 3,397 | (5,675) |
Amounts reclassified from other comprehensive income (loss), net of taxes | (3) | (29) |
Net current period other comprehensive income (loss), net of taxes | 3,394 | (5,704) |
Balance at the end of the period, net of taxes | (8,987) | (14,956) |
Unrealized Gains (Losses) on Available-for-Sale Securities and I/O Strips | ||
Changes in AOCI by Component | ||
Balance at the beginning of the period, net of taxes | (5,007) | (362) |
Other comprehensive income (loss) before reclassification, net of taxes | 3,404 | (5,670) |
Amounts reclassified from other comprehensive income (loss), net of taxes | (61) | |
Net current period other comprehensive income (loss), net of taxes | 3,404 | (5,731) |
Balance at the end of the period, net of taxes | (1,603) | (6,093) |
Unamortized Unrealized Gain on Available-for-Sale Securities Reclassified to Held-to-Maturity | ||
Changes in AOCI by Component | ||
Balance at the beginning of the period, net of taxes | 344 | 375 |
Amounts reclassified from other comprehensive income (loss), net of taxes | (18) | (8) |
Net current period other comprehensive income (loss), net of taxes | (18) | (8) |
Balance at the end of the period, net of taxes | 326 | 367 |
Defined Benefit Pension Plan Items | ||
Changes in AOCI by Component | ||
Balance at the beginning of the period, net of taxes | (7,718) | (9,265) |
Other comprehensive income (loss) before reclassification, net of taxes | (7) | (5) |
Amounts reclassified from other comprehensive income (loss), net of taxes | 15 | 40 |
Net current period other comprehensive income (loss), net of taxes | 8 | 35 |
Balance at the end of the period, net of taxes | $ (7,710) | $ (9,230) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Loss) (''AOCI'') - Amount Reclassified from AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Amount Reclassified from AOCI | ||
Gain on sales of securities | $ 87 | |
Interest income on taxable securities | $ 4,509 | 3,862 |
Income tax expense | (4,507) | (3,238) |
Net income | 12,146 | 8,809 |
Income before income tax | 16,653 | 12,047 |
Unrealized Gains (Losses) on Available-for-Sale Securities and I/O Strips | ||
Amount Reclassified from AOCI | ||
Net of tax | 61 | |
Unrealized Gains (Losses) on Available-for-Sale Securities and I/O Strips | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Gain on sales of securities | 87 | |
Income tax expense | (26) | |
Net of tax | 61 | |
Unamortized Unrealized Gain on Available-for-Sale Securities Reclassified to Held-to-Maturity | ||
Amount Reclassified from AOCI | ||
Net of tax | 18 | 8 |
Unamortized Unrealized Gain on Available-for-Sale Securities Reclassified to Held-to-Maturity | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Interest income on taxable securities | 26 | 11 |
Income tax expense | (8) | (3) |
Net of tax | 18 | 8 |
Defined Benefit Pension Plan Items | ||
Amount Reclassified from AOCI | ||
Net of tax | (15) | (40) |
Defined Benefit Pension Plan Items | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Salaries and employee benefits | (21) | (57) |
Income tax benefit | 6 | 17 |
Net of tax | (15) | (40) |
Prior transition obligation | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Salaries and employee benefits | 25 | 16 |
Actuarial losses | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Salaries and employee benefits | (46) | (73) |
Accumulated Other Comprehensive Income / (Loss) | ||
Amount Reclassified from AOCI | ||
Net of tax | 3 | 29 |
Accumulated Other Comprehensive Income / (Loss) | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Net of tax | $ 3 | $ 29 |
Securities - Amortized Cost and
Securities - Amortized Cost and Estimated Fair Value of Securities - Securities Available-for-sale (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Securities available-for-sale: | ||
Amortized Cost | $ 455,389 | $ 466,779 |
Gross Unrealized Gains | 1,744 | 1,032 |
Gross Unrealized (Losses) | (4,612) | (8,768) |
Total | 452,521 | 459,043 |
Agency mortgage-backed securities | ||
Securities available-for-sale: | ||
Amortized Cost | 299,847 | 311,523 |
Gross Unrealized Gains | 343 | 98 |
Gross Unrealized (Losses) | (4,612) | (8,767) |
Total | 295,578 | 302,854 |
U.S. Treasury | ||
Securities available-for-sale: | ||
Amortized Cost | 148,095 | 147,823 |
Gross Unrealized Gains | 1,387 | 930 |
Total | 149,482 | 148,753 |
U.S. Government sponsored entities | ||
Securities available-for-sale: | ||
Amortized Cost | 7,447 | 7,433 |
Gross Unrealized Gains | 14 | 4 |
Gross Unrealized (Losses) | (1) | |
Total | $ 7,461 | $ 7,436 |
Securities - Amortized Cost a_2
Securities - Amortized Cost and Estimated Fair Value of Securities - Securities Held-to-maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Securities held-to-maturity: | ||
Amortized Cost | $ 367,023 | $ 377,198 |
Gross Unrealized Gains | 964 | 371 |
Gross Unrealized (Losses) | (5,406) | (11,394) |
Estimated Fair Value | 362,581 | 366,175 |
Agency mortgage-backed securities | ||
Securities held-to-maturity: | ||
Amortized Cost | 281,102 | 291,241 |
Gross Unrealized Gains | 281 | 59 |
Gross Unrealized (Losses) | (4,758) | (9,153) |
Estimated Fair Value | 276,625 | 282,147 |
Municipals - exempt from Federal tax | ||
Securities held-to-maturity: | ||
Amortized Cost | 85,921 | 85,957 |
Gross Unrealized Gains | 683 | 312 |
Gross Unrealized (Losses) | (648) | (2,241) |
Estimated Fair Value | $ 85,956 | $ 84,028 |
Securities - Securities with Un
Securities - Securities with Unrealized Losses - Securities Available-for-sale (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Available-for-sale, Fair Value | ||
Less Than 12 Months | $ 7,842 | |
12 Months or More | $ 269,629 | 281,082 |
Total | 269,629 | 288,924 |
Available-for-sale, Unrealized (Losses) | ||
Less Than 12 Months | (22) | |
12 Months or More | (4,612) | (8,746) |
Total | (4,612) | (8,768) |
Agency mortgage-backed securities | ||
Available-for-sale, Fair Value | ||
Less Than 12 Months | 3,868 | |
12 Months or More | 269,629 | 281,082 |
Total | 269,629 | 284,950 |
Available-for-sale, Unrealized (Losses) | ||
Less Than 12 Months | (21) | |
12 Months or More | (4,612) | (8,746) |
Total | $ (4,612) | (8,767) |
U.S. Government sponsored entities | ||
Available-for-sale, Fair Value | ||
Less Than 12 Months | 3,974 | |
Total | 3,974 | |
Available-for-sale, Unrealized (Losses) | ||
Less Than 12 Months | (1) | |
Total | $ (1) |
Securities - Securities with _2
Securities - Securities with Unrealized Losses - Securities Held-to-maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Held-to-maturity, Fair Value | ||
Less Than 12 Months | $ 21,107 | |
12 Months or More | $ 282,956 | 313,218 |
Total | 282,956 | 334,325 |
Held-to-maturity, Unrealized (Losses) | ||
Less Than 12 Months | (130) | |
12 Months or More | (5,406) | (11,264) |
Total | (5,406) | (11,394) |
Agency mortgage-backed securities | ||
Held-to-maturity, Fair Value | ||
Less Than 12 Months | 16,088 | |
12 Months or More | 250,516 | 255,917 |
Total | 250,516 | 272,005 |
Held-to-maturity, Unrealized (Losses) | ||
Less Than 12 Months | (103) | |
12 Months or More | (4,758) | (9,050) |
Total | (4,758) | (9,153) |
Municipals - exempt from Federal tax | ||
Held-to-maturity, Fair Value | ||
Less Than 12 Months | 5,019 | |
12 Months or More | 32,440 | 57,301 |
Total | 32,440 | 62,320 |
Held-to-maturity, Unrealized (Losses) | ||
Less Than 12 Months | (27) | |
12 Months or More | (648) | (2,214) |
Total | $ (648) | $ (2,241) |
Securities - Additional Informa
Securities - Additional Information (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($)securityitem | Dec. 31, 2018USD ($) | |
Additional Information | ||
The number of holdings of securities of any one issuer other than the U.S. Government and its sponsored entities | security | 0 | |
Holdings of securities as percentage of shareholders' equity, considered as threshold for disclosure purpose | 10.00% | |
Number of securities held | 525 | |
Number of available for sale securities held | 202 | |
Number of held to maturity securities held | 323 | |
Number of securities with fair values below amortized cost | 288 | |
Total unrealized loss for securities 12 months or more | $ | $ 10,018 | |
12 Months or More | $ | 282,956 | $ 313,218 |
Municipals - exempt from Federal tax | ||
Additional Information | ||
12 Months or More | $ | $ 32,440 | $ 57,301 |
Securities - Proceeds from Sale
Securities - Proceeds from Sales of Securities and the Resulting Gains and Losses (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Proceeds from Sales of Securities and the Resulting Gains and Losses | |
Proceeds | $ 38,754 |
Gross gains | 1,050 |
Gross losses | $ (963) |
Securities - Amortized Cost a_3
Securities - Amortized Cost and Fair Value of Debt Securities by Contractual Maturity – Securities Available-for-sale (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Available-for-sale, Amortized Cost | ||
Due after 3 months through one year | $ 5,468 | |
Due after one year through five years | 150,074 | |
Agency mortgage-backed securities | 299,847 | |
Total | 455,389 | $ 466,779 |
Available-for-sale, Estimated Fair Value | ||
Due after 3 months through one year | 5,475 | |
Due after one year through five years | 151,468 | |
Agency mortgage-backed securities | 295,578 | |
Total | $ 452,521 | $ 459,043 |
Securities - Amortized Cost a_4
Securities - Amortized Cost and Fair Value of Debt Securities by Contractual Maturity – Securities Held-to-maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Held-to-maturity, Amortized Cost | ||
Due after 3 months through one year | $ 770 | |
Due after one year through five years | 4,941 | |
Due after five years through ten years | 27,670 | |
Due after ten years | 52,540 | |
Agency mortgage-backed securities | 281,102 | |
Total | 367,023 | $ 377,198 |
Held-to-maturity, Estimated Fair Value | ||
Due after 3 months through one year | 771 | |
Due after one year through five years | 5,038 | |
Due after five years through ten years | 27,988 | |
Due after ten years | 52,159 | |
Agency mortgage-backed securities | 276,625 | |
Total | $ 362,581 | $ 366,175 |
Securities - Securities Pledged
Securities - Securities Pledged to Secure Public Deposits and for Other Purposes (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Securities Pledged to Secure Public Deposits and for Other Purposes | ||
Amortized cost of securities pledged to secure public deposits and for other purposes as required or permitted by law or contract | $ 34,806 | $ 36,229 |
Loans -Loans Balance (Details)
Loans -Loans Balance (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Loans held-for-investment: | ||||
Total loan balance | $ 1,848,505 | $ 1,886,732 | ||
Deferred loan fees, net | (187) | (327) | ||
Loans, net of deferred fees | 1,848,318 | 1,886,405 | $ 1,591,201 | |
Allowance for loan losses | (27,318) | (27,848) | (20,139) | $ (19,658) |
Loans, net | 1,821,000 | 1,858,557 | ||
Commercial | ||||
Loans held-for-investment: | ||||
Total loan balance | 559,718 | 597,763 | ||
Allowance for loan losses | (15,557) | (17,061) | (11,165) | (10,608) |
Real estate | ||||
Loans held-for-investment: | ||||
Total loan balance | 1,279,097 | 1,276,516 | ||
Allowance for loan losses | (11,671) | (10,671) | (8,858) | (8,950) |
Real estate | CRE | ||||
Loans held-for-investment: | ||||
Total loan balance | 1,012,641 | 994,067 | ||
Real estate | Land and construction | ||||
Loans held-for-investment: | ||||
Total loan balance | 98,222 | 122,358 | ||
Real estate | Home equity | ||||
Loans held-for-investment: | ||||
Total loan balance | 118,448 | 109,112 | ||
Real estate | Residential mortgages | ||||
Loans held-for-investment: | ||||
Total loan balance | 49,786 | 50,979 | ||
Consumer | ||||
Loans held-for-investment: | ||||
Total loan balance | 9,690 | 12,453 | ||
Allowance for loan losses | (90) | (116) | $ (116) | $ (100) |
Focus | ||||
Loans held-for-investment: | ||||
Non-PCI loans acquired | 34,433 | 36,958 | ||
Tri Valley Bank | ||||
Loans held-for-investment: | ||||
Non-PCI loans acquired | 103,540 | 111,952 | ||
United American Bank | ||||
Loans held-for-investment: | ||||
Non-PCI loans acquired | $ 174,328 | $ 181,453 |
Loans - Additional Information
Loans - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Loans | |||
Nonaccrual loans - held-for-investment | $ 15,958 | $ 3,637 | $ 13,699 |
Provision (credit) for loan losses | (1,061) | 506 | |
Net (charge-offs) recoveries | $ 531 | $ (25) |
Loans - Changes in the Allowanc
Loans - Changes in the Allowance for Loan Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Changes in the Allowance for Loan Losses | ||
Beginning of period balance | $ 27,848 | $ 19,658 |
Charge-offs | (226) | (245) |
Recoveries | 757 | 220 |
Net (charge-offs) recoveries | 531 | (25) |
Provision (credit) for loan losses | (1,061) | 506 |
End of year balance | 27,318 | 20,139 |
Commercial | ||
Changes in the Allowance for Loan Losses | ||
Beginning of period balance | 17,061 | 10,608 |
Charge-offs | (226) | (245) |
Recoveries | 715 | 157 |
Net (charge-offs) recoveries | 489 | (88) |
Provision (credit) for loan losses | (1,993) | 645 |
End of year balance | 15,557 | 11,165 |
Real estate | ||
Changes in the Allowance for Loan Losses | ||
Beginning of period balance | 10,671 | 8,950 |
Recoveries | 42 | 63 |
Net (charge-offs) recoveries | 42 | 63 |
Provision (credit) for loan losses | 958 | (155) |
End of year balance | 11,671 | 8,858 |
Consumer | ||
Changes in the Allowance for Loan Losses | ||
Beginning of period balance | 116 | 100 |
Provision (credit) for loan losses | (26) | 16 |
End of year balance | $ 90 | $ 116 |
Loans - Balance in the Allowanc
Loans - Balance in the Allowance for Loan Losses and the Recorded Investment in Loans by Portfolio Segment, Based on the Impairment Method (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Balance in the Allowance for Loan Losses and the Recorded Investment in Loans by Portfolio Segment, Based on the Impairment Method | ||||
Allowance for loan losses, Individually evaluated for impairment | $ 7,364 | $ 6,944 | ||
Allowance for loan losses, Collectively evaluated for impairment | 19,954 | 20,904 | ||
Total allowance balance | 27,318 | 27,848 | $ 20,139 | $ 19,658 |
Loans, Individually evaluated for impairment | 17,516 | 15,140 | ||
Loans, Collectively evaluated for impairment | 1,830,989 | 1,871,592 | ||
Total loan balance | 1,848,505 | 1,886,732 | ||
Commercial | ||||
Balance in the Allowance for Loan Losses and the Recorded Investment in Loans by Portfolio Segment, Based on the Impairment Method | ||||
Allowance for loan losses, Individually evaluated for impairment | 6,467 | 6,944 | ||
Allowance for loan losses, Collectively evaluated for impairment | 9,090 | 10,117 | ||
Total allowance balance | 15,557 | 17,061 | 11,165 | 10,608 |
Loans, Individually evaluated for impairment | 8,536 | 9,495 | ||
Loans, Collectively evaluated for impairment | 551,182 | 588,268 | ||
Total loan balance | 559,718 | 597,763 | ||
Real estate | ||||
Balance in the Allowance for Loan Losses and the Recorded Investment in Loans by Portfolio Segment, Based on the Impairment Method | ||||
Allowance for loan losses, Individually evaluated for impairment | 897 | |||
Allowance for loan losses, Collectively evaluated for impairment | 10,774 | 10,671 | ||
Total allowance balance | 11,671 | 10,671 | 8,858 | 8,950 |
Loans, Individually evaluated for impairment | 8,980 | 5,645 | ||
Loans, Collectively evaluated for impairment | 1,270,117 | 1,270,871 | ||
Total loan balance | 1,279,097 | 1,276,516 | ||
Consumer | ||||
Balance in the Allowance for Loan Losses and the Recorded Investment in Loans by Portfolio Segment, Based on the Impairment Method | ||||
Allowance for loan losses, Collectively evaluated for impairment | 90 | 116 | ||
Total allowance balance | 90 | 116 | $ 116 | $ 100 |
Loans, Collectively evaluated for impairment | 9,690 | 12,453 | ||
Total loan balance | $ 9,690 | $ 12,453 |
Loans - Loans Held for Investme
Loans - Loans Held for Investment Individually Evaluated for Impairment by Class of Loans (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 |
Unpaid Principal Balance | |||
Total with no related allowance recorded | $ 2,153 | $ 7,494 | |
Total with an allowance recorded | 15,363 | 7,646 | |
Total | 17,516 | 15,140 | |
Recorded Investment | |||
Total with no related allowance recorded | 2,153 | 7,494 | |
Total with an allowance recorded | 15,363 | 7,646 | |
Total | 17,516 | 15,140 | $ 4,036 |
Total with an allowance recorded, Allowance for Loan Losses Allocated | 7,364 | 6,944 | |
Commercial | |||
Unpaid Principal Balance | |||
Total with no related allowance recorded | 1,615 | 1,849 | |
Total with an allowance recorded | 6,921 | 7,646 | |
Recorded Investment | |||
Total with no related allowance recorded | 1,615 | 1,849 | |
Total with an allowance recorded | 6,921 | 7,646 | |
Total with an allowance recorded, Allowance for Loan Losses Allocated | 6,467 | 6,944 | |
Commercial | Real estate | |||
Unpaid Principal Balance | |||
Total with an allowance recorded | 8,442 | ||
Recorded Investment | |||
Total with an allowance recorded | 8,442 | ||
Total with an allowance recorded, Allowance for Loan Losses Allocated | 897 | ||
Home equity | Real estate | |||
Unpaid Principal Balance | |||
Total with no related allowance recorded | 538 | 551 | |
Recorded Investment | |||
Total with no related allowance recorded | $ 538 | 551 | |
CRE | Real estate | |||
Unpaid Principal Balance | |||
Total with no related allowance recorded | 5,094 | ||
Recorded Investment | |||
Total with no related allowance recorded | $ 5,094 |
Loans - Interest Recognized and
Loans - Interest Recognized and Cash Basis Interest Earned on Impaired Loans (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Interest Recognized and Cash Basis Interest Earned on Impaired Loans | ||
Average of impaired loans during the period | $ 16,328 | $ 3,406 |
Commercial | ||
Interest Recognized and Cash Basis Interest Earned on Impaired Loans | ||
Average of impaired loans during the period | 9,016 | 2,474 |
Consumer | ||
Interest Recognized and Cash Basis Interest Earned on Impaired Loans | ||
Average of impaired loans during the period | 1 | |
CRE | Real estate | ||
Interest Recognized and Cash Basis Interest Earned on Impaired Loans | ||
Average of impaired loans during the period | 6,768 | 501 |
Land and construction | Real estate | ||
Interest Recognized and Cash Basis Interest Earned on Impaired Loans | ||
Average of impaired loans during the period | 59 | |
Home equity | Real estate | ||
Interest Recognized and Cash Basis Interest Earned on Impaired Loans | ||
Average of impaired loans during the period | $ 544 | $ 371 |
Loans - Nonperforming Loans (De
Loans - Nonperforming Loans (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 |
Nonaccrual loans - held-for-investment | $ 15,958 | $ 13,699 | $ 3,637 |
Restructured and loans over 90 days past due and still accruing | 1,357 | 1,188 | 158 |
Total nonperforming loans | 17,315 | 14,887 | 3,795 |
Other restructured loans | 201 | 253 | 241 |
Total | $ 17,516 | $ 15,140 | $ 4,036 |
Loans - Nonperforming Loans by
Loans - Nonperforming Loans by Class (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 |
Nonperforming Loans by Class | |||
Nonaccrual loans - held-for-investment | $ 15,958 | $ 13,699 | $ 3,637 |
Restructured and Loans Over 90 Days Past Due and Still Accruing | 1,357 | 1,188 | 158 |
Total | 17,315 | 14,887 | $ 3,795 |
Commercial | |||
Nonperforming Loans by Class | |||
Nonaccrual loans - held-for-investment | 7,203 | 8,279 | |
Restructured and Loans Over 90 Days Past Due and Still Accruing | 1,132 | 963 | |
Total | 8,335 | 9,242 | |
CRE | Real estate | |||
Nonperforming Loans by Class | |||
Nonaccrual loans - held-for-investment | 8,442 | 5,094 | |
Total | 8,442 | 5,094 | |
Home equity | Real estate | |||
Nonperforming Loans by Class | |||
Nonaccrual loans - held-for-investment | 313 | 326 | |
Restructured and Loans Over 90 Days Past Due and Still Accruing | 225 | 225 | |
Total | $ 538 | $ 551 |
Loans - Aging of Past Due Loans
Loans - Aging of Past Due Loans by Class of Loans - Tabular Disclosure (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | $ 21,780 | $ 8,873 |
Loans Not Past Due | 1,826,725 | 1,877,859 |
Total loan balance | 1,848,505 | 1,886,732 |
30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 4,375 | 5,699 |
60-89 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 13,140 | 1,916 |
90 Days or Greater Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 4,265 | 1,258 |
Commercial | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 13,169 | 8,872 |
Loans Not Past Due | 546,549 | 588,891 |
Total loan balance | 559,718 | 597,763 |
Commercial | 30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 4,207 | 5,698 |
Commercial | 60-89 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 6,948 | 1,916 |
Commercial | 90 Days or Greater Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 2,014 | 1,258 |
Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 1,279,097 | 1,276,516 |
Consumer | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 1 | |
Loans Not Past Due | 9,690 | 12,452 |
Total loan balance | 9,690 | 12,453 |
Consumer | 30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 1 | |
CRE | Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 8,443 | |
Loans Not Past Due | 1,004,198 | 994,067 |
Total loan balance | 1,012,641 | 994,067 |
CRE | Real estate | 60-89 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 6,192 | |
CRE | Real estate | 90 Days or Greater Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 2,251 | |
Land and construction | Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Loans Not Past Due | 98,222 | 122,358 |
Total loan balance | 98,222 | 122,358 |
Home equity | Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 168 | |
Loans Not Past Due | 118,280 | 109,112 |
Total loan balance | 118,448 | 109,112 |
Home equity | Real estate | 30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 168 | |
Residential mortgages | Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Loans Not Past Due | 49,786 | 50,979 |
Total loan balance | $ 49,786 | $ 50,979 |
Loans - Aging of Past Due Loa_2
Loans - Aging of Past Due Loans by Class of Loans - Additional Information (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 |
Aging of Past Due Loans by Class of Loans | |||
Past due loans 30 day or greater | $ 21,780 | $ 8,873 | |
Nonaccrual loans - held-for-investment | 15,958 | 13,699 | $ 3,637 |
30 days or greater past due | |||
Aging of Past Due Loans by Class of Loans | |||
Nonaccrual loans - held-for-investment | 15,089 | 430 | |
Less than 30 days past due | |||
Aging of Past Due Loans by Class of Loans | |||
Nonaccrual loans - held-for-investment | $ 869 | ||
Less than 30 days past due nonaccrual loans held-for-investment | $ 13,269 |
Loans - Credit Quality Indicato
Loans - Credit Quality Indicators (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Loans | ||
Balance to report | $ 1,821,000 | $ 1,858,557 |
Loan classified as loss | ||
Loans | ||
Balance to report | $ 0 | $ 0 |
Loans - Summary of the Loan Por
Loans - Summary of the Loan Portfolio by Loan Type and Credit Quality Classification (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Loans | |||
Total | $ 1,848,505 | $ 1,886,732 | |
Nonclassified | |||
Loans | |||
Total | 1,823,329 | 1,863,323 | |
Classified | |||
Loans | |||
Total | $ 25,176 | $ 30,800 | $ 23,409 |
Percentage of financing receivable balance over total assets | 0.81% | 1.07% | 0.76% |
Commercial | |||
Loans | |||
Total | $ 559,718 | $ 597,763 | |
Commercial | Nonclassified | |||
Loans | |||
Total | 545,151 | 584,845 | |
Commercial | Classified | |||
Loans | |||
Total | 14,567 | 12,918 | |
Real estate | |||
Loans | |||
Total | 1,279,097 | 1,276,516 | |
Real estate | CRE | |||
Loans | |||
Total | 1,012,641 | 994,067 | |
Real estate | CRE | Nonclassified | |||
Loans | |||
Total | 1,003,770 | 985,193 | |
Real estate | CRE | Classified | |||
Loans | |||
Total | 8,871 | 8,874 | |
Real estate | Land and construction | |||
Loans | |||
Total | 98,222 | 122,358 | |
Real estate | Land and construction | Nonclassified | |||
Loans | |||
Total | 98,222 | 122,358 | |
Real estate | Home equity | |||
Loans | |||
Total | 118,448 | 109,112 | |
Real estate | Home equity | Nonclassified | |||
Loans | |||
Total | 116,710 | 107,495 | |
Real estate | Home equity | Classified | |||
Loans | |||
Total | 1,738 | 1,617 | |
Real estate | Residential mortgages | |||
Loans | |||
Total | 49,786 | 50,979 | |
Real estate | Residential mortgages | Nonclassified | |||
Loans | |||
Total | 49,786 | 50,979 | |
Consumer | |||
Loans | |||
Total | 9,690 | 12,453 | |
Consumer | Nonclassified | |||
Loans | |||
Total | $ 9,690 | $ 12,453 |
Loans - Troubled Debt Restructu
Loans - Troubled Debt Restructurings (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Loans | ||
Recorded investment of troubled debt restructurings | $ 580,000 | $ 649,000 |
Allowance for Credit Losses, Change in Method of Calculating Impairment | 1,000 | |
Troubled debt restructurings, nonaccrual loans | 36,000 | |
Troubled debt restructurings, accruing loans | 613,000 | |
Specific reserves | $ 1,000 | $ 38,000 |
Loans - Troubled Debt Restruc_2
Loans - Troubled Debt Restructurings by Class (Details) - loan | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Loans | ||
Number of loans modified as troubled debt restructurings during the period | 0 | 0 |
Loans - Defaults on Troubled De
Loans - Defaults on Troubled Debt Restructurings (Details) | 3 Months Ended | |
Mar. 31, 2019loanitem | Mar. 31, 2018loanitem | |
Loans | ||
Number of troubled debt restructurings in which the amount of principal or accrued interest owed from the borrower was forgiven | 0 | |
Number of loans modified as troubled debt restructurings during the period | 0 | 0 |
Default period contractually past due under modified terms (in days) | 30 days | |
Number of defaults on troubled debt restructurings | item | 0 | 0 |
Period of consecutive payments (in months) | 6 months |
Business Combinations - Tri-Val
Business Combinations - Tri-Valley (Details) | Apr. 06, 2018USD ($)$ / sharesshares | Mar. 31, 2018USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | May 04, 2018$ / shares |
Business Combinations | |||||
Gain on sales of securities | $ 87,000 | ||||
Stock price at Closing (in dollars per share) | $ / shares | $ 16.73 | ||||
Liabilities assumed: | |||||
Goodwill recorded in the merger | $ 45,664,000 | $ 83,753,000 | $ 83,753,000 | ||
Tri Valley Bank | |||||
Business Combinations | |||||
Disposition of other real estate owned | $ 1,132,000 | ||||
Gain on sales of securities | 53,000 | ||||
Cash paid for invoices after closing for services prior to closing | 29,000 | ||||
Cash paid for fractional shares | 3,000 | ||||
Cash paid for transaction adjustment to prepaid assets included in other assets | 1,592,000 | ||||
Aggregate transaction value | $ 32,320,000 | ||||
Shares issued in acquisition | shares | 1,889,613 | ||||
Fixed exchange ratio of company's common stock | 0.0489 | ||||
Stock price at Closing (in dollars per share) | $ / shares | $ 16.26 | ||||
Total cash paid | $ 1,595,000 | ||||
Issuance of 1,889,613 shares of common stock to Tri-Valley shareholders at $16.26 per share at Closing | 30,725,000 | ||||
Total Consideration Paid | $ 32,320,000 | ||||
Amortized intangible assets | 11 years | ||||
Assets acquired: | |||||
Cash and cash equivalents | $ 22,910,000 | ||||
Loans | 120,969,000 | ||||
Other intangible assets | 1,978,000 | ||||
Other assets, net | 7,045,000 | ||||
Total assets acquired | 152,902,000 | ||||
Liabilities assumed: | |||||
Deposits | 135,388,000 | ||||
Other liabilities | 608,000 | ||||
Total liabilities assumed | 135,996,000 | ||||
Net assets acquired | 16,906,000 | ||||
Purchase price | 30,725,000 | ||||
Goodwill recorded in the merger | 13,819,000 | ||||
Tri Valley Bank | As Recorded | |||||
Assets acquired: | |||||
Cash and cash equivalents | 21,757,000 | ||||
Loans | 123,532,000 | ||||
Allowance for loan losses | (1,969,000) | ||||
Other assets, net | 9,939,000 | ||||
Total assets acquired | 153,259,000 | ||||
Liabilities assumed: | |||||
Deposits | 135,351,000 | ||||
Other liabilities | 608,000 | ||||
Total liabilities assumed | 135,959,000 | ||||
Tri Valley Bank | Fair Value Adjustments | |||||
Assets acquired: | |||||
Cash and cash equivalents | 1,153,000 | ||||
Loans | (2,563,000) | ||||
Allowance for loan losses | 1,969,000 | ||||
Other intangible assets | 1,978,000 | ||||
Other assets, net | (2,894,000) | ||||
Total assets acquired | (357,000) | ||||
Liabilities assumed: | |||||
Deposits | 37,000 | ||||
Total liabilities assumed | 37,000 | ||||
Warrant | Tri Valley Bank | |||||
Business Combinations | |||||
Total cash paid | 889,000 | ||||
Options | Tri Valley Bank | |||||
Business Combinations | |||||
Total cash paid | 615,000 | ||||
Other | Tri Valley Bank | |||||
Business Combinations | |||||
Total cash paid | $ 91,000 |
Business Combinations - United
Business Combinations - United American (Details) | May 04, 2018USD ($)$ / sharesshares | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Mar. 31, 2018USD ($) |
Business Combinations | ||||
Stock price at Closing (in dollars per share) | $ / shares | $ 16.73 | |||
Liabilities assumed: | ||||
Goodwill recorded in the merger | $ 83,753,000 | $ 83,753,000 | $ 45,664,000 | |
United American Bank | ||||
Business Combinations | ||||
Aggregate transaction value | $ 56,417,000 | |||
Fixed exchange ratio of company's common stock | 2.1644 | |||
Shares issued in acquisition | shares | 2,826,032 | |||
Total cash paid | $ 9,137,000 | |||
Issuance of 2,826,032 shares of common stock to United American shareholders at $16.73 per share at Closing | 47,280,000 | |||
Total Consideration Paid | 56,417,000 | |||
Loan participations repurchase | 23,732,000 | |||
Cash paid for invoices after closing for services prior to closing | 51,000 | |||
Tax refund | $ 400,000 | |||
Amortized intangible assets | 3 years | |||
Assets acquired: | ||||
Cash and cash equivalents | $ 13,118,000 | |||
Securities available-for-sale | 63,723,000 | |||
Net loans | 215,477,000 | |||
Other intangible assets | 6,383,000 | |||
Other assets, net | 8,041,000 | |||
Total assets acquired | 306,742,000 | |||
Liabilities assumed: | ||||
Deposits | 281,240,000 | |||
Other borrowings | 62,000 | |||
Other liabilities | 2,430,000 | |||
Total liabilities assumed | 283,732,000 | |||
Net assets acquired | 23,010,000 | |||
Purchase price | 47,280,000 | |||
Goodwill recorded in the merger | 24,270,000 | |||
Fair value adjustments: | ||||
Loans receivable fair value adjustment | 4,680,000 | |||
Charge-off | 269,000 | |||
United American Bank | As Recorded | ||||
Assets acquired: | ||||
Cash and cash equivalents | 45,638,000 | |||
Securities available-for-sale | 64,144,000 | |||
Net loans | 196,694,000 | |||
Allowance for loan losses | (2,952,000) | |||
Other assets, net | 9,119,000 | |||
Total assets acquired | 312,643,000 | |||
Liabilities assumed: | ||||
Deposits | 281,189,000 | |||
Other borrowings | 62,000 | |||
Other liabilities | 2,617,000 | |||
Total liabilities assumed | 283,868,000 | |||
Series A Preferred Stock | United American Bank | ||||
Business Combinations | ||||
Total cash paid | 8,700,000 | |||
Series B Preferred Stock | United American Bank | ||||
Business Combinations | ||||
Total cash paid | $ 435,000 | |||
Series A and Series B Preferred Stock | United American Bank | ||||
Business Combinations | ||||
Cash issued per share | $ / shares | $ 1,000 | |||
Other | United American Bank | ||||
Business Combinations | ||||
Total cash paid | $ 2,000 | |||
Fair Value Adjustments | United American Bank | ||||
Assets acquired: | ||||
Cash and cash equivalents | (32,520,000) | |||
Securities available-for-sale | (421,000) | |||
Net loans | 18,783,000 | |||
Allowance for loan losses | 2,952,000 | |||
Other intangible assets | 6,383,000 | |||
Other assets, net | (1,078,000) | |||
Total assets acquired | (5,901,000) | |||
Liabilities assumed: | ||||
Deposits | 51,000 | |||
Other liabilities | (187,000) | |||
Total liabilities assumed | $ (136,000) |
Business Combinations (Details)
Business Combinations (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018USD ($) | Mar. 31, 2019USD ($)companyloan | Dec. 31, 2018companyloan | |
Business Combinations | |||
Number of business banking franchises acquired | company | 3 | 3 | |
Combined business value after business combination | $ 3,100,000 | ||
Other acquisition and integration related costs | $ 615 | ||
Number of loan classified as PCI loan | loan | 0 | 0 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2019 | Dec. 31, 2018 | May 04, 2018 | Apr. 06, 2018 | Mar. 31, 2018 | |
Goodwill | |||||
Goodwill | $ 83,753 | $ 83,753 | $ 45,664 | ||
BVF/CSNK | |||||
Goodwill | |||||
Goodwill acquired | 13,044 | ||||
Focus | |||||
Goodwill | |||||
Goodwill acquired | 32,620 | ||||
Tri Valley Bank | |||||
Goodwill | |||||
Goodwill | $ 13,819 | ||||
Goodwill acquired | 13,819 | ||||
United American Bank | |||||
Goodwill | |||||
Goodwill | $ 24,270 | ||||
Goodwill acquired | $ 24,270 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Other Intangible Assets (Details) - USD ($) $ in Thousands | May 04, 2018 | Apr. 06, 2018 | May 31, 2018 | Apr. 30, 2018 | Aug. 31, 2015 | Nov. 30, 2014 | Mar. 31, 2019 | Dec. 31, 2018 |
Other Intangible Assets | ||||||||
Accumulated amortization | $ 2,953 | $ 2,770 | ||||||
United American Bank | ||||||||
Other Intangible Assets | ||||||||
Accumulated amortization | $ 1,014 | 756 | ||||||
Useful life, amortization period | 3 years | |||||||
United American Bank | Core deposit | ||||||||
Other Intangible Assets | ||||||||
Intangible assets acquired | $ 5,723 | |||||||
Useful life, amortization period | 10 years | |||||||
United American Bank | Below market-value lease | ||||||||
Other Intangible Assets | ||||||||
Intangible assets acquired | $ 660 | |||||||
Useful life, amortization period | 3 years | 3 years | ||||||
Tri Valley Bank | ||||||||
Other Intangible Assets | ||||||||
Accumulated amortization | $ 287 | 222 | ||||||
Useful life, amortization period | 11 years | |||||||
Tri Valley Bank | Core deposit | ||||||||
Other Intangible Assets | ||||||||
Intangible assets acquired | $ 1,768 | |||||||
Useful life, amortization period | 10 years | |||||||
Tri Valley Bank | Below market-value lease | ||||||||
Other Intangible Assets | ||||||||
Intangible assets acquired | $ 210 | |||||||
Useful life, amortization period | 11 years | 11 years | ||||||
Focus | Core deposit | ||||||||
Other Intangible Assets | ||||||||
Intangible assets acquired | $ 6,285 | |||||||
Useful life, amortization period | 10 years | |||||||
BVF/CSNK | ||||||||
Other Intangible Assets | ||||||||
Accumulated amortization | $ 838 | $ 791 | ||||||
BVF/CSNK | Below market-value lease | ||||||||
Other Intangible Assets | ||||||||
Intangible assets acquired | $ 109 | |||||||
BVF/CSNK | Non-compete agreement | ||||||||
Other Intangible Assets | ||||||||
Intangible assets acquired | 250 | |||||||
BVF/CSNK | Customer relationship and brokered relationship | ||||||||
Other Intangible Assets | ||||||||
Intangible assets acquired | $ 1,900 | |||||||
Useful life, amortization period | 10 years |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Estimated Amortization Expense (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Estimated Amortization Expense | |
2019 | $ 2,214 |
2020 | 2,032 |
2021 | 1,590 |
2022 | 1,430 |
2023 | 1,307 |
2024 | 1,174 |
Thereafter | 2,260 |
Total | 12,007 |
United American Bank | Core deposit | |
Estimated Amortization Expense | |
2019 | 777 |
2020 | 665 |
2021 | 602 |
2022 | 553 |
2023 | 521 |
2024 | 499 |
Thereafter | 1,520 |
Total | 5,137 |
United American Bank | Below market-value lease | |
Estimated Amortization Expense | |
2019 | 255 |
2020 | 235 |
Total | 490 |
Tri Valley Bank | Core deposit | |
Estimated Amortization Expense | |
2019 | 240 |
2020 | 208 |
2021 | 184 |
2022 | 167 |
2023 | 158 |
2024 | 152 |
Thereafter | 451 |
Total | 1,560 |
Tri Valley Bank | Below market-value lease | |
Estimated Amortization Expense | |
2019 | 18 |
2020 | 18 |
2021 | 18 |
2022 | 18 |
2023 | 18 |
2024 | 18 |
Thereafter | 88 |
Total | 196 |
Focus | Core deposit | |
Estimated Amortization Expense | |
2019 | 734 |
2020 | 716 |
2021 | 596 |
2022 | 502 |
2023 | 420 |
2024 | 346 |
Thereafter | 201 |
Total | 3,515 |
BVF/CSNK | Customer relationship and brokered relationship | |
Estimated Amortization Expense | |
2019 | 190 |
2020 | 190 |
2021 | 190 |
2022 | 190 |
2023 | 190 |
2024 | 159 |
Total | $ 1,109 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Impairment of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Impairment of Intangible Assets | ||
Impairment of intangible assets | $ 0 | $ 0 |
Income Taxes - Net Deferred Tax
Income Taxes - Net Deferred Tax Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Net deferred tax assets | ||
Net deferred tax assets | $ 24,263 | $ 27,089 |
Valuation allowance for deferred tax assets | $ 0 | $ 0 |
Income Taxes - Carry Amounts of
Income Taxes - Carry Amounts of the Low Income Housing Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Income Taxes | ||
Low income housing investments | $ 3,253 | $ 3,172 |
Future commitments | $ 273 | $ 273 |
Income Taxes - Future Commitmen
Income Taxes - Future Commitments of the Low Income Housing Investments (Details) - Low income housing investments $ in Thousands | Mar. 31, 2019USD ($) |
Future Commitments | |
2019 | $ 14 |
2020 | 14 |
2021 through 2023 | $ 245 |
Income Taxes - Components of Lo
Income Taxes - Components of Low Income Housing Investment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Taxes | ||
Low income housing tax credits | $ 106 | |
Low income housing investment expense | $ 109 | $ 119 |
Benefit Plans - Defined Benefit
Benefit Plans - Defined Benefit Plans - Nonqualified Defined Benefit Pension Plan (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Supplemental Retirement Plan | |
Supplemental Retirement Plan | |
Plan assets associated with the plan | $ 0 |
Benefit Plans - Defined Benef_2
Benefit Plans - Defined Benefit Plans - Components of Pension Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Supplemental Retirement Plan | |||
Components of net periodic benefit cost: | |||
Service cost | $ 55 | $ 62 | |
Interest cost | 264 | 237 | |
Amortization of net actuarial loss | 46 | 73 | |
Net periodic benefit cost | 365 | 372 | |
Split-Dollar Life Insurance Benefit Plan | |||
Components of net periodic benefit cost: | |||
Interest cost | 70 | 57 | $ 227 |
Amortization of prior transition obligation | (25) | (16) | |
Net periodic benefit cost | $ 45 | $ 41 |
Benefit Plans - Defined Benef_3
Benefit Plans - Defined Benefit Plans - Change in Projected Benefit Obligation (Details) - Split-Dollar Life Insurance Benefit Plan - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Change in projected benefit obligation: | |||
Projected benefit obligation at beginning of year | $ 6,903 | $ 6,711 | $ 6,711 |
Interest cost | 70 | $ 57 | 227 |
Actuarial loss (gain) | (35) | ||
Projected benefit obligation at end of period | $ 6,973 | $ 6,903 |
Benefit Plans - Defined Benef_4
Benefit Plans - Defined Benefit Plans - Amounts Recognized in Accumulated Other Comprehensive Loss (Details) - Split-Dollar Life Insurance Benefit Plan - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Amounts Recognized in Accumulated Other Comprehensive Loss | ||
Net actuarial loss | $ 2,620 | $ 2,573 |
Prior transition obligation | 1,126 | 1,149 |
Accumulated other comprehensive loss | $ 3,746 | $ 3,722 |
Fair Value - Financial Assets a
Fair Value - Financial Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | $ 452,521 | $ 459,043 |
I/O strip receivables | 571 | 568 |
Agency mortgage-backed securities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 295,578 | 302,854 |
U.S. Treasury | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 149,482 | 148,753 |
U.S. Government sponsored entities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 7,461 | 7,436 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasury | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 149,482 | 148,753 |
Significant Other Observable Inputs (Level 2) | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
I/O strip receivables | 571 | 568 |
Significant Other Observable Inputs (Level 2) | Agency mortgage-backed securities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 295,578 | 302,854 |
Significant Other Observable Inputs (Level 2) | U.S. Government sponsored entities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 7,461 | 7,436 |
Recurring basis | ||
Transfers between Level 1 and Level 2 | ||
Transfers between Level 1 and Level 2 | 0 | 0 |
Transfers between Level 2 and Level 1 | $ 0 | $ 0 |
Fair Value - Financial Assets_2
Fair Value - Financial Assets and Liabilities Measured on a Non-Recurring Basis (Details) - Non-recurring basis - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Financial Assets and Liabilities Measured on a Non-Recurring Basis | ||
Impaired loans - held-for-investment: | $ 8,000 | $ 702 |
Significant Unobservable Inputs (Level 3) | ||
Financial Assets and Liabilities Measured on a Non-Recurring Basis | ||
Impaired loans - held-for-investment: | 8,000 | 702 |
Commercial | Commercial | ||
Financial Assets and Liabilities Measured on a Non-Recurring Basis | ||
Impaired loans - held-for-investment: | 454 | 702 |
Commercial | Commercial | Significant Unobservable Inputs (Level 3) | ||
Financial Assets and Liabilities Measured on a Non-Recurring Basis | ||
Impaired loans - held-for-investment: | 454 | $ 702 |
CRE | Real estate | ||
Financial Assets and Liabilities Measured on a Non-Recurring Basis | ||
Impaired loans - held-for-investment: | 7,546 | |
CRE | Real estate | Significant Unobservable Inputs (Level 3) | ||
Financial Assets and Liabilities Measured on a Non-Recurring Basis | ||
Impaired loans - held-for-investment: | $ 7,546 |
Fair Value - Impaired Loans Hel
Fair Value - Impaired Loans Held-for-investment - Tabular Disclosure (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Impaired Loans Held-for-investment | ||
Impaired loans held-for-investment | $ 17,516 | $ 15,140 |
Carried at fair value | ||
Impaired Loans Held-for-investment | ||
Impaired loans held-for-investment | 15,364 | 7,646 |
Specific valuation allowance | (7,364) | (6,944) |
Impaired loans held-for-investment carried at fair value, net | 8,000 | 702 |
Portion carried at cost | ||
Impaired Loans Held-for-investment | ||
Impaired loans held-for-investment | $ 2,152 | $ 7,494 |
Fair Value - Impaired Loans H_2
Fair Value - Impaired Loans Held-for-investment - Additional Disclosures (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Impaired Loans Held-for-investment | ||
Impaired loans held-for-investment | $ 17,516 | $ 15,140 |
Additional provision (credit) for loan losses | 288 | 7,042 |
Carrying amount | ||
Impaired Loans Held-for-investment | ||
Foreclosed assets | 0 | |
Carried at fair value | ||
Impaired Loans Held-for-investment | ||
Impaired loans held-for-investment | 15,364 | 7,646 |
Specific valuation allowance | 7,364 | 6,944 |
Portion carried at cost | ||
Impaired Loans Held-for-investment | ||
Impaired loans held-for-investment | $ 2,152 | $ 7,494 |
Fair Value - Quantitative Infor
Fair Value - Quantitative Information about Level 3 Fair Value Measurements (Details) - Non-recurring basis $ in Thousands | Mar. 31, 2019USD ($)item | Dec. 31, 2018USD ($)item |
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Impaired loans - held-for-investment, Fair Value | $ | $ 8,000 | $ 702 |
Significant Unobservable Inputs (Level 3) | ||
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Impaired loans - held-for-investment, Fair Value | $ | 8,000 | 702 |
Commercial | Commercial | ||
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Impaired loans - held-for-investment, Fair Value | $ | 454 | 702 |
Commercial | Commercial | Significant Unobservable Inputs (Level 3) | ||
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Impaired loans - held-for-investment, Fair Value | $ | $ 454 | $ 702 |
Commercial | Commercial | Significant Unobservable Inputs (Level 3) | Minimum | ||
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Discount adjustment for differences between comparable sales - Impaired loan held for investment (as a percent) | item | 0 | 0 |
Commercial | Commercial | Significant Unobservable Inputs (Level 3) | Maximum | ||
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Discount adjustment for differences between comparable sales - Impaired loan held for investment (as a percent) | item | 0.01 | 0.01 |
Commercial | Commercial | Significant Unobservable Inputs (Level 3) | Weighted average | ||
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Discount adjustment for differences between comparable sales - Impaired loan held for investment (as a percent) | item | 0.01 | |
CRE | Real estate | ||
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Impaired loans - held-for-investment, Fair Value | $ | $ 7,546 | |
CRE | Real estate | Significant Unobservable Inputs (Level 3) | ||
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Impaired loans - held-for-investment, Fair Value | $ | $ 7,546 | |
CRE | Real estate | Significant Unobservable Inputs (Level 3) | Minimum | ||
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Discount adjustment for differences between comparable sales - Real Estate (as a percent) | item | 0 | |
CRE | Real estate | Significant Unobservable Inputs (Level 3) | Maximum | ||
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Discount adjustment for differences between comparable sales - Real Estate (as a percent) | item | 0.13 | |
CRE | Real estate | Significant Unobservable Inputs (Level 3) | Weighted average | ||
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis | ||
Discount adjustment for differences between comparable sales - Real Estate (as a percent) | item | 0.05 |
Fair Value - Carrying Amounts a
Fair Value - Carrying Amounts and Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Assets | ||
Securities available-for-sale | $ 452,521 | $ 459,043 |
Securities held-to-maturity | 362,581 | 366,175 |
Federal Home Loan Bank and Federal Reserve Bank stock and other investments, at cost | 25,221 | 25,216 |
I/O strips receivables | 571 | 568 |
Liabilities | ||
Subordinated Debt. | 39,414 | 39,369 |
Significant Other Observable Inputs (Level 2) | ||
Assets | ||
I/O strips receivables | 571 | 568 |
Carrying amount | ||
Assets | ||
Cash and cash equivalents | 234,977 | 164,568 |
Securities available-for-sale | 452,521 | 459,043 |
Securities held-to-maturity | 367,023 | 377,198 |
Loans (including loans held-for-sale), net | 1,824,216 | 1,861,206 |
Federal Home Loan Bank and Federal Reserve Bank stock and other investments, at cost | 25,221 | 25,216 |
Accrued interest receivable | 9,014 | 9,577 |
I/O strips receivables | 571 | 568 |
Liabilities | ||
Time deposits | 148,969 | 147,560 |
Other deposits | 2,491,275 | 2,489,972 |
Subordinated Debt. | 39,414 | 39,369 |
Accrued interest payable | 1,135 | 497 |
Carried at fair value | ||
Assets | ||
Cash and cash equivalents | 234,977 | 164,568 |
Securities available-for-sale | 452,521 | 459,043 |
Securities held-to-maturity | 362,581 | 366,175 |
Loans (including loans held-for-sale), net | 1,803,161 | 1,829,303 |
Accrued interest receivable | 9,890 | 9,577 |
I/O strips receivables | 571 | 568 |
Liabilities | ||
Time deposits | 149,347 | 147,916 |
Other deposits | 2,491,275 | 2,489,972 |
Subordinated Debt. | 39,064 | 38,969 |
Accrued interest payable | 1,135 | 497 |
Carried at fair value | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets | ||
Cash and cash equivalents | 234,977 | 164,568 |
Securities available-for-sale | 149,482 | 148,753 |
Accrued interest receivable | 876 | 597 |
Carried at fair value | Significant Other Observable Inputs (Level 2) | ||
Assets | ||
Securities available-for-sale | 303,039 | 310,290 |
Securities held-to-maturity | 362,581 | 366,175 |
Loans (including loans held-for-sale), net | 3,216 | 2,649 |
Accrued interest receivable | 2,229 | 2,274 |
I/O strips receivables | 571 | 568 |
Liabilities | ||
Time deposits | 149,347 | 147,916 |
Other deposits | 2,491,275 | 2,489,972 |
Subordinated Debt. | 39,064 | 38,969 |
Accrued interest payable | 1,135 | 497 |
Carried at fair value | Significant Unobservable Inputs (Level 3) | ||
Assets | ||
Loans (including loans held-for-sale), net | 1,799,945 | 1,826,654 |
Accrued interest receivable | $ 6,785 | $ 6,706 |
Equity Plan - General Disclosur
Equity Plan - General Disclosures (Details) - shares | 3 Months Ended | ||
Mar. 31, 2019 | May 25, 2017 | May 24, 2017 | |
2013 Plan | |||
Equity Plan | |||
Number of shares authorized for equity plan | 3,000,000 | 1,750,000 | |
Number of shares available for future grants | 1,172,592 | ||
Options | |||
Equity Plan | |||
Vesting period | 4 years | ||
Options | Maximum | |||
Equity Plan | |||
Expiration term | 10 years |
Equity Plan - Stock Option Acti
Equity Plan - Stock Option Activity (Details) - Options | 3 Months Ended |
Mar. 31, 2019USD ($)$ / sharesshares | |
Number of Shares | |
Outstanding at the beginning of the period (in shares) | 1,570,603 |
Exercised (in shares) | (35,003) |
Forfeited or expired (in shares) | (9,086) |
Outstanding at the end of the period (in shares) | 1,526,514 |
Vested or expected to vest (in shares) | 1,434,923 |
Exercisable at the end of the period (in shares) | 1,083,415 |
Weighted Average Exercise Price | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 10.76 |
Exercised (in dollars per share) | $ / shares | 7.66 |
Forfeited or expired (in dollars per share) | $ / shares | 15.02 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 10.81 |
Additional Information | |
Weighted Average Remaining Contractual Life - Outstanding at the end of the period (in years) | 6 years 3 months 15 days |
Weighted Average Remaining Contractual Life - Vested or expected to vest (in years) | 6 years 3 months 15 days |
Weighted Average Remaining Contractual Life - Exercisable at the end of the period (in years) | 5 years 4 months 13 days |
Aggregate Intrinsic Value - Outstanding at the end of the period (in dollars) | $ | $ 3,932,974 |
Aggregate Intrinsic Value - Vested or expected to vest (in dollars) | $ | 3,696,996 |
Aggregate Intrinsic Value - Exercisable at the end of the period (in dollars) | $ | $ 3,806,137 |
Equity Plan - Information Relat
Equity Plan - Information Related to the Equity Plans for each of the Last Three Years (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Information Related to the Equity Plans | ||
Cash received from option exercise | $ 269 | $ 449 |
Options | ||
Information Related to the Equity Plans | ||
Intrinsic value of options exercised | 197,994 | 560,332 |
Cash received from option exercise | 268,691 | 449,294 |
Tax benefit realized from option exercises | $ 26,578 | $ 164,978 |
Weighted average fair value of options granted (in dollars per share) | $ 3.24 | $ 3 |
Equity Plan - Unrecognized Comp
Equity Plan - Unrecognized Compensation Cost - Nonvested Stock Options (Details) - Options $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Unrecognized Compensation Cost | |
Total unrecognized compensation cost related to nonvested stock options granted | $ 1,199 |
Expected weighted-average period for recognition of compensation costs related to nonvested stock options | 2 years 6 months 11 days |
Equity Plan - Assumptions Used
Equity Plan - Assumptions Used to Estimate Fair Value (Details) | 3 Months Ended |
Mar. 31, 2018 | |
Assumptions Used to Estimate Fair Value | |
Expected life in months | 72 months |
Options | |
Assumptions Used to Estimate Fair Value | |
Volatility (as a percent) | 22.00% |
Weighted average risk-free interest rate (as a percent) | 2.58% |
Expected dividends (as a percent) | 2.51% |
Equity Plan - Restricted Stock
Equity Plan - Restricted Stock Activity (Details) - Restricted stock | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Number of Shares | |
Nonvested shares at the beginning of the period (in shares) | shares | 193,298 |
Vested (in shares) | shares | (1,250) |
Nonvested shares at the end of the period (in shares) | shares | 192,048 |
Weighted Average Grant Date Fair Value | |
Nonvested shares at the beginning of the period (in dollars per share) | $ / shares | $ 11.04 |
Vested (in dollars per share) | $ / shares | 14.01 |
Nonvested shares at the end of the period (in dollars per share) | $ / shares | $ 11.04 |
Equity Plan - Unrecognized Co_2
Equity Plan - Unrecognized Compensation Cost - Nonvested Restricted Stock Awards (Details) - Restricted stock $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Unrecognized Compensation Cost | |
Total unrecognized compensation cost related to nonvested restricted stock awards | $ 1,817 |
Expected weighted-average period for recognition of compensation costs related to nonvested restricted stock awards | 2 years 5 months 16 days |
Subordinate Debt (Details)
Subordinate Debt (Details) - USD ($) | Jun. 01, 2022 | Mar. 31, 2019 | May 26, 2017 |
Debt Instrument [Line Items] | |||
Principal amount | $ 40,000,000 | ||
Fixed interest rate (as a percent) | 5.25% | ||
LIBOR | |||
Debt Instrument [Line Items] | |||
Base rate | three-month LIBOR | ||
Rate of interest added to base rate | 3.365% |
Capital Requirements - General
Capital Requirements - General Information (Details) | Jan. 01, 2016 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Capital Requirements | ||||||
Phase-in period (in years) | 4 years | |||||
Capital conservation buffer (as a percent) | 2.50% | 1.875% | 0.625% | |||
Forecast | ||||||
Capital Requirements | ||||||
Capital conservation buffer (as a percent) | 2.50% | |||||
HBC (Wholly-owned Subsidiary) | ||||||
Capital Requirements | ||||||
Capital conservation buffer (as a percent) | 2.50% | 1.875% | 1.25% |
Capital Requirements - Tabular
Capital Requirements - Tabular Disclosure (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Total Capital (to risk-weighted assets) | ||
Actual, Amount | $ 352,830 | $ 344,597 |
Required For Capital Adequacy Purposes, Amount | $ 237,991 | $ 227,514 |
Actual, Ratio (as a percent) | 15.60% | 15.00% |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 10.50% | 9.875% |
Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 285,417 | $ 276,675 |
Required For Capital Adequacy Purposes, Amount | $ 192,660 | $ 181,435 |
Actual, Ratio (as a percent) | 12.60% | 12.00% |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 8.50% | 7.875% |
Common Equity Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 285,417 | $ 276,675 |
Required For Capital Adequacy Purposes, Amount | $ 158,661 | $ 146,876 |
Actual, Ratio (as a percent) | 12.60% | 12.00% |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 7.00% | 6.375% |
Tier 1 Capital (to average assets) | ||
Actual, Amount | $ 285,417 | $ 276,675 |
Required For Capital Adequacy Purposes, Amount | $ 120,576 | $ 124,726 |
Actual, Ratio (as a percent) | 9.50% | 8.90% |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 4.00% | 4.00% |
HBC (Wholly-owned Subsidiary) | ||
Total Capital (to risk-weighted assets) | ||
Actual, Amount | $ 330,915 | $ 322,283 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 226,530 | 230,275 |
Required For Capital Adequacy Purposes, Amount | $ 237,856 | $ 227,397 |
Actual, Ratio (as a percent) | 14.60% | 14.00% |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 10.00% | 10.00% |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 10.50% | 9.875% |
Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 302,917 | $ 293,730 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 181,224 | 184,220 |
Required For Capital Adequacy Purposes, Amount | $ 192,550 | $ 181,342 |
Actual, Ratio (as a percent) | 13.40% | 12.80% |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 8.00% | 8.00% |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 8.50% | 7.875% |
Common Equity Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 302,917 | $ 293,730 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 147,244 | 149,679 |
Required For Capital Adequacy Purposes, Amount | $ 158,571 | $ 146,800 |
Actual, Ratio (as a percent) | 13.40% | 12.80% |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 6.50% | 6.50% |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 7.00% | 6.375% |
Tier 1 Capital (to average assets) | ||
Actual, Amount | $ 302,917 | $ 293,730 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 150,656 | 155,832 |
Required For Capital Adequacy Purposes, Amount | $ 120,525 | $ 124,666 |
Actual, Ratio (as a percent) | 10.10% | 9.40% |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 5.00% | 5.00% |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 4.00% | 4.00% |
Capital Requirements - Dividend
Capital Requirements - Dividends to Parent (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Cash dividend | ||
Subordinated Debt. | $ 39,414,000 | $ 39,369,000 |
HBC (Wholly-owned Subsidiary) | ||
Cash dividend | ||
Cash dividend available | 38,136,000 | |
Dividends paid to parent company | $ 5,000,000 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue Recognition | ||
Non-interest Income In-scope of Topic 606 | $ 1,161 | $ 902 |
Non-interest Income Out-of-scope of Topic 606 | 1,307 | 1,293 |
Total noninterest income | $ 2,468 | $ 2,195 |
Noninterest Expense (Details)
Noninterest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Noninterest Expense | ||
Salaries and employee benefits | $ 10,770 | $ 9,777 |
Occupancy and equipment | 1,506 | 1,106 |
Professional fees | 818 | 684 |
Data processing | 679 | 353 |
Software subscriptions | 589 | 593 |
Amortization of intangible assets | 553 | 241 |
Insurance expense | 436 | 407 |
Other acquisition and integration related costs | 615 | |
Other | 2,567 | 2,214 |
Total noninterest expense | $ 17,918 | $ 15,990 |
Lease (Details)
Lease (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Option to renew | true |
Operating Lease Cost (Cost resulting from lease payments) | $ 1,050 |
Operating Lease - Operating Cash Flows (Fixed Payments) | 1,013 |
Operating Lease - Liabilities | 8,630 |
Operating Lease - ROU assets | 8,630 |
New ROU Assets - Finance Leases | $ 9,566 |
Weighted Average Lease Term - Operating Leases | 3 years 6 months |
Weighted Average Discount Rate - Operating Leases | 5.25% |
ASU 2018-11 | |
Lessee, Lease, Description [Line Items] | |
Operating Lease - Liabilities | $ 8,600 |
Operating Lease - ROU assets | $ 8,600 |
Lease - Maturity Analysis (Deta
Lease - Maturity Analysis (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Operating Lease Payments Due | |
2019 | $ 3,040 |
2020 | 2,666 |
2021 | 1,351 |
2022 | 1,144 |
2023 | 605 |
Thereafter | 691 |
Total undiscounted cash flows | 9,497 |
Discount on cash flows | (867) |
Total lease liability | $ 8,630 |
Business Segment Information -
Business Segment Information - Business Segments (Details) | 3 Months Ended |
Mar. 31, 2019segmentitem | |
Business Segment Information | |
Number of business segments | segment | 2 |
Focus | |
Business Segment Information | |
Number of business segments | item | 2 |
Business Segment Information _2
Business Segment Information - Operating Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Operating Income | |||
Interest income | $ 33,449 | $ 27,877 | |
Total interest expense | 2,407 | 1,529 | |
Net interest income | 31,042 | 26,348 | |
Provision (credit) for loan losses | (1,061) | 506 | |
Net interest income after provision | 32,103 | 25,842 | |
Noninterest income | 2,468 | 2,195 | |
Noninterest expense | 17,918 | 15,990 | |
Income before income taxes | 16,653 | 12,047 | |
Income tax (benefit) expense | 4,507 | 3,238 | |
Net income | 12,146 | 8,809 | |
Total assets | 3,115,877 | 2,785,548 | $ 3,096,562 |
Loans, net of deferred fees | 1,848,318 | 1,591,201 | 1,886,405 |
Goodwill | 83,753 | 45,664 | $ 83,753 |
Banking | |||
Operating Income | |||
Interest income | 30,496 | 24,731 | |
Intersegment interest allocations | 314 | 327 | |
Total interest expense | 2,407 | 1,529 | |
Net interest income | 28,403 | 23,529 | |
Provision (credit) for loan losses | (892) | 488 | |
Net interest income after provision | 29,295 | 23,041 | |
Noninterest income | 2,232 | 2,086 | |
Noninterest expense | 16,201 | 14,467 | |
Intersegment expense allocations | 121 | 175 | |
Income before income taxes | 15,447 | 10,835 | |
Income tax (benefit) expense | 4,151 | 2,880 | |
Net income | 11,296 | 7,955 | |
Total assets | 3,053,116 | 2,722,472 | |
Loans, net of deferred fees | 1,800,064 | 1,541,466 | |
Goodwill | 70,709 | 32,620 | |
Factoring | |||
Operating Income | |||
Interest income | 2,953 | 3,146 | |
Intersegment interest allocations | (314) | (327) | |
Net interest income | 2,639 | 2,819 | |
Provision (credit) for loan losses | (169) | 18 | |
Net interest income after provision | 2,808 | 2,801 | |
Noninterest income | 236 | 109 | |
Noninterest expense | 1,717 | 1,523 | |
Intersegment expense allocations | (121) | (175) | |
Income before income taxes | 1,206 | 1,212 | |
Income tax (benefit) expense | 356 | 358 | |
Net income | 850 | 854 | |
Total assets | 62,761 | 63,076 | |
Loans, net of deferred fees | 48,254 | 49,735 | |
Goodwill | $ 13,044 | $ 13,044 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Apr. 25, 2019 | Mar. 31, 2019 | Mar. 31, 2018 |
Subsequent Event [Line Items] | |||
Quarterly cash dividends declared to holders of common stock | $ 0.12 | $ 0.11 | |
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Quarterly cash dividends declared to holders of common stock | $ 0.12 |