Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Jul. 30, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 000-23877 | |
Entity Registrant Name | HERITAGE COMMERCE CORP | |
Entity Incorporation, State or Country Code | CA | |
Entity Tax Identification Number | 77-0469558 | |
Entity Address, Address Line One | 224 Airport Parkway | |
Entity Address, City or Town | San Jose | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 95110 | |
City Area Code | 408 | |
Local Phone Number | 947-6900 | |
Title of 12(b) Security | Common Stock, No Par Value | |
Trading Symbol | HTBK | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 60,206,566 | |
Document Fiscal Year Focus | 2021 | |
Entity Central Index Key | 0001053352 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Assets | ||
Cash and due from banks | $ 41,904,000 | $ 30,598,000 |
Other investments and interest-bearing deposits in other financial institutions | 1,286,418,000 | 1,100,475,000 |
Total cash and cash equivalents | 1,328,322,000 | 1,131,073,000 |
Securities available-for-sale, at fair value | 145,955,000 | 235,774,000 |
Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $51 at June 30, 2021 and $54 at December 31, 2020 (fair value of $426,755 at June 30, 2021 and $304,927 at December 31, 2020) | 421,286,000 | 297,389,000 |
Loans held-for-sale - SBA, at lower of cost or fair value, including deferred costs | 4,344,000 | 1,699,000 |
Loans, net of deferred fees | 2,824,796,000 | 2,619,261,000 |
Allowance for credit losses on loans | (43,956,000) | (44,400,000) |
Loans, net | 2,780,840,000 | 2,574,861,000 |
Federal Home Loan Bank, Federal Reserve Bank stock and other investments, at cost | 32,495,000 | 33,522,000 |
Company-owned life insurance | 77,393,000 | 77,523,000 |
Premises and equipment, net | 10,040,000 | 10,459,000 |
Goodwill | 167,631,000 | 167,631,000 |
Other intangible assets | 15,177,000 | 16,664,000 |
Accrued interest receivable and other assets | 89,392,000 | 87,519,000 |
Total assets | 5,072,875,000 | 4,634,114,000 |
Deposits: | ||
Demand, noninterest-bearing | 1,840,516,000 | 1,661,655,000 |
Demand, interest-bearing | 1,140,867,000 | 960,179,000 |
Savings and money market | 1,174,587,000 | 1,119,968,000 |
Time deposits - under $250 | 42,118,000 | 45,027,000 |
Time deposits - $250 and over | 110,111,000 | 103,746,000 |
CDARS - interest-bearing demand, money market and time deposits | 36,273,000 | 23,911,000 |
Total deposits | 4,344,472,000 | 3,914,486,000 |
Subordinated debt, net of issuance costs | 39,832,000 | 39,740,000 |
Accrued interest payable and other liabilities | 105,127,000 | 101,999,000 |
Total liabilities | 4,489,431,000 | 4,056,225,000 |
Shareholders' equity: | ||
Preferred stock, no par value; 10,000,000 shares authorized; none issued and outstanding at June 30, 2021 and December 31, 2020 | ||
Common stock, no par value; 100,000,000 shares authorized; 60,202,766 shares issued and outstanding at June 30, 2021 and 59,917,457 shares issued and outstanding at December 31, 2020 | 495,665,000 | 493,707,000 |
Retained earnings | 99,311,000 | 94,899,000 |
Accumulated other comprehensive loss | (11,532,000) | (10,717,000) |
Total shareholders' equity | 583,444,000 | 577,889,000 |
Total liabilities and shareholders' equity | $ 5,072,875,000 | $ 4,634,114,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Securities held-to-maturity | ||
Allowance for credit losses | $ 51 | $ 54 |
Securities held-to-maturity, fair value (in dollars) | $ 426,755 | $ 304,927 |
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 | 100,000,000 | 100,000,000 |
Common stock, shares issued | 60,202,766 | 59,917,457 |
Common stock, shares outstanding | 60,202,766 | 59,917,457 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Interest income: | ||||
Loans, including fees | $ 33,439 | $ 32,845 | $ 67,275 | $ 67,627 |
Securities, taxable | 1,944 | 3,155 | 3,672 | 7,103 |
Securities, exempt from Federal tax | 404 | 484 | 833 | 995 |
Other investments, interest-bearing deposits in other financial institutions and Federal funds sold | 845 | 648 | 1,613 | 2,349 |
Total interest income | 36,632 | 37,132 | 73,393 | 78,074 |
Interest expense: | ||||
Deposits | 1,179 | 1,615 | 2,411 | 3,400 |
Subordinated debt | 577 | 577 | 1,148 | 1,154 |
Total interest expense | 1,756 | 2,192 | 3,559 | 4,554 |
Net interest income before provision for credit losses on loans | 34,876 | 34,940 | 69,834 | 73,520 |
Provision for (recapture of) credit losses on loans | (493) | 1,114 | (2,005) | 14,384 |
Net interest income after provision for credit losses on loans | 35,369 | 33,826 | 71,839 | 59,136 |
Noninterest income: | ||||
Increase in cash surrender value of life insurance | 458 | 458 | 914 | 916 |
Gain on proceeds from company owned life insurance | 396 | 462 | ||
Servicing income | 104 | 205 | 286 | 388 |
Gain on sales of SBA loans | 83 | 633 | 67 | |
Gain on sales of securities | 170 | 270 | ||
Other | 469 | 595 | 915 | 1,220 |
Total noninterest income | 2,169 | 2,078 | 4,470 | 5,271 |
Noninterest expense: | ||||
Salaries and employee benefits | 12,572 | 12,300 | 26,530 | 26,503 |
Occupancy and equipment | 2,247 | 1,766 | 4,521 | 3,538 |
Professional fees | 1,771 | 1,155 | 3,490 | 2,590 |
Other | 9,185 | 5,791 | 14,478 | 14,155 |
Total noninterest expense | 25,775 | 21,012 | 49,019 | 46,786 |
Income before income taxes | 11,763 | 14,892 | 27,290 | 17,621 |
Income tax expense | 2,950 | 4,274 | 7,273 | 5,142 |
Net income | $ 8,813 | $ 10,618 | $ 20,017 | $ 12,479 |
Earnings per common share: | ||||
Basic (in dollars per share) | $ 0.15 | $ 0.18 | $ 0.33 | $ 0.21 |
Diluted (in dollars per share) | $ 0.15 | $ 0.18 | $ 0.33 | $ 0.21 |
Service charges and fees on deposit accounts | ||||
Noninterest income: | ||||
Non-interest income | $ 659 | $ 650 | $ 1,260 | $ 1,619 |
Revenue, Product and Service [Extensible List] | Service charges and fees on deposit accounts | Service charges and fees on deposit accounts | Service charges and fees on deposit accounts | Service charges and fees on deposit accounts |
Gain on the disposition of foreclosed assets | ||||
Noninterest income: | ||||
Non-interest income | $ 791 | |||
Revenue, Product and Service [Extensible List] | Gain on the disposition of foreclosed assets | Gain on the disposition of foreclosed assets | Gain on the disposition of foreclosed assets | Gain on the disposition of foreclosed assets |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 8,813 | $ 10,618 | $ 20,017 | $ 12,479 |
Other comprehensive income (loss): | ||||
Change in net unrealized holding (losses) gains on available-for-sale securities and I/O strips | (640) | (556) | (1,489) | 6,621 |
Deferred income taxes | 186 | 161 | 433 | (1,920) |
Change in net unamortized unrealized gain on securities available-for-sale that were reclassified to securities held-to-maturity | (13) | (13) | (26) | (26) |
Deferred income taxes | 4 | 4 | 8 | 8 |
Reclassification adjustment for gains realized in income | (170) | (270) | ||
Deferred income taxes | 50 | 79 | ||
Change in unrealized (losses) gains on securities and I/O strips, net of deferred income taxes | (463) | (524) | (1,074) | 4,492 |
Change in net pension and other benefit plan liability adjustment | 283 | 75 | 372 | 150 |
Deferred income taxes | (84) | (22) | (113) | (44) |
Change in pension and other benefit plan liability, net of deferred income taxes | 199 | 53 | 259 | 106 |
Other comprehensive (loss) income | (264) | (471) | (815) | 4,598 |
Total comprehensive income | $ 8,549 | $ 10,147 | $ 19,202 | $ 17,077 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common StockAdjusted Balance | Common Stock | Retained EarningsAdjusted Balance | Retained EarningsAdjustment | Retained Earnings | Accumulated Other Comprehensive LossAdjusted Balance | Accumulated Other Comprehensive Loss | Adjusted Balance | Adjustment | Total |
Balance at Dec. 31, 2019 | $ 489,745 | $ 489,745 | $ 90,679 | $ (6,062) | $ 96,741 | $ (9,778) | $ (9,778) | $ 570,646 | $ (6,062) | $ 576,708 |
Balance (in shares) at Dec. 31, 2019 | 59,368,156 | 59,368,156 | ||||||||
Increase (Decrease) in Shareholders' Equity | ||||||||||
Net income | 1,861 | 1,861 | ||||||||
Other comprehensive income (loss) | 5,069 | 5,069 | ||||||||
Amortization of restricted stock awards, net of forfeitures and taxes | $ 348 | 348 | ||||||||
Cash dividend declared | (7,737) | (7,737) | ||||||||
Stock option expense, net of forfeitures and taxes | 148 | 148 | ||||||||
Stock options exercised | $ 1,106 | 1,106 | ||||||||
Stock options exercised (in shares) | 200,063 | |||||||||
Balance at Mar. 31, 2020 | $ 491,347 | 84,803 | (4,709) | 571,441 | ||||||
Balance (in shares) at Mar. 31, 2020 | 59,568,219 | |||||||||
Balance at Dec. 31, 2019 | $ 489,745 | $ 489,745 | $ 90,679 | $ (6,062) | 96,741 | $ (9,778) | (9,778) | $ 570,646 | $ (6,062) | 576,708 |
Balance (in shares) at Dec. 31, 2019 | 59,368,156 | 59,368,156 | ||||||||
Increase (Decrease) in Shareholders' Equity | ||||||||||
Net income | 12,479 | |||||||||
Other comprehensive income (loss) | 4,598 | 4,598 | ||||||||
Balance at Jun. 30, 2020 | $ 492,333 | 87,654 | (5,180) | 574,807 | ||||||
Balance (in shares) at Jun. 30, 2020 | 59,856,767 | |||||||||
Balance at Mar. 31, 2020 | $ 491,347 | 84,803 | (4,709) | 571,441 | ||||||
Balance (in shares) at Mar. 31, 2020 | 59,568,219 | |||||||||
Increase (Decrease) in Shareholders' Equity | ||||||||||
Net income | 10,618 | 10,618 | ||||||||
Other comprehensive income (loss) | (471) | (471) | ||||||||
Issuance (forfeitures) of restricted stock awards, net (in shares) | 168,117 | |||||||||
Amortization of restricted stock awards, net of forfeitures and taxes | $ 463 | 463 | ||||||||
Cash dividend declared | (7,767) | (7,767) | ||||||||
Stock option expense, net of forfeitures and taxes | 139 | 139 | ||||||||
Stock options exercised | $ 384 | 384 | ||||||||
Stock options exercised (in shares) | 120,431 | |||||||||
Balance at Jun. 30, 2020 | $ 492,333 | 87,654 | (5,180) | 574,807 | ||||||
Balance (in shares) at Jun. 30, 2020 | 59,856,767 | |||||||||
Balance at Dec. 31, 2020 | $ 493,707 | 94,899 | (10,717) | 577,889 | ||||||
Balance (in shares) at Dec. 31, 2020 | 59,917,457 | |||||||||
Increase (Decrease) in Shareholders' Equity | ||||||||||
Net income | 11,204 | 11,204 | ||||||||
Other comprehensive income (loss) | (551) | (551) | ||||||||
Issuance (forfeitures) of restricted stock awards, net (in shares) | (34,358) | |||||||||
Amortization of restricted stock awards, net of forfeitures and taxes | $ 458 | 458 | ||||||||
Cash dividend declared | (7,789) | (7,789) | ||||||||
Stock option expense, net of forfeitures and taxes | 132 | 132 | ||||||||
Stock options exercised | $ 320 | 320 | ||||||||
Stock options exercised (in shares) | 49,235 | |||||||||
Balance at Mar. 31, 2021 | $ 494,617 | 98,314 | (11,268) | 581,663 | ||||||
Balance (in shares) at Mar. 31, 2021 | 59,932,334 | |||||||||
Balance at Dec. 31, 2020 | $ 493,707 | 94,899 | (10,717) | 577,889 | ||||||
Balance (in shares) at Dec. 31, 2020 | 59,917,457 | |||||||||
Increase (Decrease) in Shareholders' Equity | ||||||||||
Net income | 20,017 | |||||||||
Other comprehensive income (loss) | (815) | (815) | ||||||||
Balance at Jun. 30, 2021 | $ 495,665 | 99,311 | (11,532) | 583,444 | ||||||
Balance (in shares) at Jun. 30, 2021 | 60,202,766 | |||||||||
Balance at Mar. 31, 2021 | $ 494,617 | 98,314 | (11,268) | 581,663 | ||||||
Balance (in shares) at Mar. 31, 2021 | 59,932,334 | |||||||||
Increase (Decrease) in Shareholders' Equity | ||||||||||
Net income | 8,813 | 8,813 | ||||||||
Other comprehensive income (loss) | (264) | (264) | ||||||||
Issuance (forfeitures) of restricted stock awards, net (in shares) | 187,325 | |||||||||
Amortization of restricted stock awards, net of forfeitures and taxes | $ 438 | 438 | ||||||||
Cash dividend declared | (7,816) | (7,816) | ||||||||
Stock option expense, net of forfeitures and taxes | 146 | 146 | ||||||||
Stock options exercised | $ 464 | 464 | ||||||||
Stock options exercised (in shares) | 83,107 | |||||||||
Balance at Jun. 30, 2021 | $ 495,665 | $ 99,311 | $ (11,532) | $ 583,444 | ||||||
Balance (in shares) at Jun. 30, 2021 | 60,202,766 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | ||||
Cash dividend declared per share (in dollars per share) | $ 0.13 | $ 0.13 | $ 0.13 | $ 0.13 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 20,017 | $ 12,479 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of discounts and premiums on securities | 1,969 | 1,453 |
Gain on sale of securities available-for-sale | (270) | |
Gain on sale of SBA loans | (633) | (67) |
Proceeds from sale of SBA loans originated for sale | 6,676 | 916 |
SBA loans originated for sale | (8,688) | (4,121) |
Provision for (recapture of) credit losses on loans | (2,005) | 14,384 |
Increase in cash surrender value of life insurance | (914) | (916) |
Depreciation and amortization | 508 | 475 |
Amortization of other intangible assets | 1,487 | 1,822 |
Stock option expense, net | 278 | 287 |
Amortization of restricted stock awards, net | 896 | 811 |
Amortization of subordinated debt issuance costs | 92 | 92 |
Gain on proceeds from company-owned life insurance | (462) | |
Effect of changes in: | ||
Accrued interest receivable and other assets | (1,574) | (23,437) |
Accrued interest payable and other liabilities | 3,472 | 21,963 |
Net cash provided by operating activities | 21,119 | 25,871 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of securities held-to-maturity | (181,805) | |
Maturities/paydowns/calls of securities available-for-sale | 87,503 | 30,810 |
Maturities/paydowns/calls of securities held-to-maturity | 56,797 | 42,408 |
Proceeds from sales of securities available-for-sale | 56,598 | |
Purchase of mortgage loans | (140,030) | |
Net change in loans | (63,944) | (152,881) |
Changes in Federal Home Loan Bank stock and other investments | 1,027 | (3,667) |
Purchase of premises and equipment | (89) | (1,725) |
Proceeds from redemption of company-owned life insurance | 1,506 | |
Net cash (used in) investing activities | (239,035) | (28,457) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net change in deposits | 429,986 | 485,458 |
Net change in short-term borrowings | (328) | |
Exercise of stock options | 784 | 1,490 |
Payment of cash dividends | (15,605) | (15,504) |
Net cash provided by financing activities | 415,165 | 471,116 |
Net increase in cash and cash equivalents | 197,249 | 468,530 |
Cash and cash equivalents, beginning of period | 1,131,073 | 457,370 |
Cash and cash equivalents, end of period | 1,328,322 | 925,900 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 3,464 | 4,584 |
Income taxes paid (refunds), net | $ 9,192 | $ (524) |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2021 | |
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 (the “Bank” or “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, 2020. HBC is a commercial bank serving customers primarily located in Alameda, Contra Costa, Marin, San Benito, San Francisco, San Mateo, and Santa Clara 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. Material estimates that are particularly susceptible to significant change include the determination of the allowance for credit losses and any impairment of goodwill or intangible assets. It is reasonably possible the Company’s estimate of the allowance for credit losses and evaluation of impairment of goodwill or intangible assets could change as a result of the continued impact of the COVID-19 pandemic on the economy. The resulting change in these estimates could be material to the Company’s consolidated financial statements. The results for the three and six months ended June 30, 2021 are not necessarily indicative of the results expected for any subsequent period or for the entire year ending December 31, 2021. COVID-19 Capital and Liquidity While the Company believes that it has sufficient capital to withstand an extended economic recession brought about by COVID-19, its reported and regulatory capital ratios could be adversely impacted by credit losses. The Company relies on cash on hand as well as dividends from its subsidiary bank to service its debt. If the Company’s capital deteriorates such that its subsidiary bank is unable to pay dividends to it for an extended period of time, the Company may not be able to service its debt. The Company maintains access to multiple sources of liquidity. Wholesale funding markets have remained open to us. If funding costs are elevated for an extended period of time, it could have an adverse effect on the Company’s net interest margin. If an extended recession caused large numbers of the Company’s deposit customers to withdraw their funds, the Company might become more reliant on volatile or more expensive sources of funding. Asset Valuation The extent to which the COVID-19 pandemic will impact our business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict. Those developments and factors include the duration and spread of the pandemic, its severity, the actions to contain the pandemic or address its impact, and how quickly and to what extent normal economic and operating conditions can resume. We do not yet know the full extent of the impact. However, the effects could have a material adverse impact on our business, asset valuations, financial condition and results of operations. Material adverse impacts may include all or a combination of valuation impairments on our intangible assets, investments, loans, or deferred tax assets. 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 December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes to simplify various aspects of the current guidance to promote consistent application of the standard among reporting entities by moving certain exceptions to the general principles. The amendments are effective as of January 1, 2021 and had no material impact on the consolidated financial statements. Accounting Guidance Issued But Not Yet Adopted In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary, optional guidance to ease the potential burden in accounting for, or recognizing the effects of, the transition away from the LIBOR or other interbank offered rate on financial reporting. To help with the transition to new reference rates, the ASU provides optional expedients and exceptions for applying GAAP to affected contract modifications and hedge accounting relationships. The main provisions include: ● A change in a contract’s reference interest rate would be accounted for as a continuation of that contract rather than as the creation of a new one for contracts, including loans, debt, leases, and other arrangements, that meet specific criteria. ● When updating its hedging strategies in response to reference rate reform, an entity would be allowed to preserve its hedge accounting. The guidance is applicable only to contracts or hedge accounting relationships that reference LIBOR or another reference rate expected to be discontinued. Because the guidance is meant to help entities through the transition period, it will be in effect for a limited time and will not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, for which an entity has elected certain optional expedients that are retained through the end of the hedging relationship. The amendments in this ASU are effective March 12, 2020 through December 31, 2022. ASU 2020-04 permits relief solely for reference rate reform actions and permits different elections over the effective date for legacy and new activity. Accordingly, the Company is evaluating and reassessing the elections on a quarterly basis. For current elections in effect regarding the assertion of the probability of forecasted transactions, the Company elects the expedient to assert the probability of the hedged interest payments and receipts regardless of any expected modification in terms related to reference rate reform. The Company believes the adoption of this guidance on activities subsequent to December 31, 2020 through December 31, 2022 will not have a material impact on the consolidated financial statements. London Inter-Bank Offered Rate (“LIBOR”) Transition and Phase-Out We have loans and borrowings that are tied to LIBOR benchmark interest rates. It is anticipated that the LIBOR index will be phased-out by the end of 2021 and the Federal Reserve Bank of New York has established the Secured Overnight Financing Rate (“SOFR”) as its recommended alternative to LIBOR. We have created a sub-committee of our Asset Liability Management Committee to address LIBOR transition and phase-out issues. We are currently reviewing loan documentation, technology systems and procedures we will need to implement for the transition. We do not expect the transition to have a material impact to the financial statements. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2021 | |
Shareholders' Equity and Earnings Per Share | |
Earnings Per Share | 2) 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 1,057,945 and 1,722,342 weighted average stock options outstanding for the three months ended June 30, 2021 and 2020, and 1,072,945 and 1,490,688 for the six months ended June 30, 2021 and 2020, 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 Six Months Ended June 30, June 30, 2021 2020 2021 2020 (Dollars in thousands, except per share amounts) Net income $ 8,813 $ 10,618 $ 20,017 $ 12,479 Weighted average common shares outstanding for basic earnings per common share 60,089,327 59,420,592 60,008,071 59,353,759 Dilutive potential common shares 640,814 691,831 564,386 798,728 Shares used in computing diluted earnings per common share 60,730,141 60,112,423 60,572,457 60,152,487 Basic earnings per share $ 0.15 $ 0.18 $ 0.33 $ 0.21 Diluted earnings per share $ 0.15 $ 0.18 $ 0.33 $ 0.21 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) ("AOCI") | 6 Months Ended |
Jun. 30, 2021 | |
Accumulated Other Comprehensive Income ("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 June 30, 2021 and 2020 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 Maturity Items(1) Total (Dollars in thousands) Beginning balance April 1, 2021, net of taxes $ 3,327 $ 252 $ (14,847) $ (11,268) Other comprehensive income (loss) before reclassification, net of taxes (454) — 51 (403) Amounts reclassified from other comprehensive income (loss), net of taxes — (9) 148 139 Net current period other comprehensive income (loss), net of taxes (454) (9) 199 (264) Ending balance June 30, 2021, net of taxes $ 2,873 $ 243 $ (14,648) $ (11,532) Beginning balance April 1, 2020, net of taxes $ 6,627 $ 289 $ (11,625) $ (4,709) Other comprehensive loss before reclassification, net of taxes (395) — (10) (405) Amounts reclassified from other comprehensive income (loss), net of taxes (120) (9) 63 (66) Net current period other comprehensive income (loss), net of taxes (515) (9) 53 (471) Ending balance June 30, 2020, net of taxes $ 6,112 $ 280 $ (11,572) $ (5,180) (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 8—Benefit Plans) and includes split-dollar life insurance benefit plan. Six Months Ended June 30, 2021 and 2020 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 Maturity Items(1) Total (Dollars in thousands) Beginning balance January 1, 2021, net of taxes $ 3,929 $ 261 $ (14,907) $ (10,717) Other comprehensive loss before reclassification, net of taxes (1,056) — (2) (1,058) Amounts reclassified from other comprehensive income (loss), net of taxes — (18) 261 243 Net current period other comprehensive income (loss), net of taxes (1,056) (18) 259 (815) Ending balance June 30, 2021, net of taxes $ 2,873 $ 243 $ (14,648) $ (11,532) Beginning balance January 1, 2020, net of taxes $ 1,602 $ 298 $ (11,678) $ (9,778) Other comprehensive income (loss) before reclassification, net of taxes 4,701 — (6) 4,695 Amounts reclassified from other comprehensive income (loss), net of taxes (191) (18) 112 (97) Net current period other comprehensive income (loss), net of taxes 4,510 (18) 106 4,598 Ending balance June 30, 2020, net of taxes $ 6,112 $ 280 $ (11,572) $ (5,180) (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 8—Benefit Plans) and includes split-dollar life insurance benefit plan. Amounts Reclassified from AOCI Three Months Ended June 30, Affected Line Item Where Details About AOCI Components 2021 2020 Net Income is Presented (Dollars in thousands) Unrealized gains on available-for-sale securities and I/O strips $ — $ 170 Gain on sales of securities — (50) Income tax expense — 120 Net of tax Amortization of unrealized gain on securities available- for-sale that were reclassified to securities held-to-maturity 13 13 Interest income on taxable securities (4) (4) Income tax expense 9 9 Net of tax Amortization of defined benefit pension plan items (1) Prior transition obligation and acturial losses (2) 1 15 Prior service cost and actuarial losses (3) (211) (105) (210) (90) Other noninterest expense 62 27 Income tax benefit (148) (63) Net of tax Total reclassification for the period $ (139) $ 66 Amounts Reclassified from AOCI Six Months Ended June 30, Affected Line Item Where Details About AOCI Components 2021 2020 Net Income is Presented (Dollars in thousands) Unrealized gains on available-for-sale securities and I/O strips $ — $ 270 Gain on sales of securities — (79) Income tax expense — 191 Net of tax Amortization of unrealized gain on securities available-for-sale that were reclassified to securities held-to-maturity 26 26 Interest income on taxable securities (8) (8) Income tax expense 18 18 Net of tax Amortization of defined benefit pension plan items (1) Prior transition obligation and actuarial losses (2) 2 30 Actuarial losses (3) (372) (190) (370) (160) Other noninterest expense 109 48 Income tax benefit (261) (112) Net of tax Total reclassification from AOCI for the period $ (243) $ 97 (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 8—Benefit Plans). (2) This is related to the split dollar life insurance benefit plan. (3) This is related to the supplemental executive retirement plan. |
Securities
Securities | 6 Months Ended |
Jun. 30, 2021 | |
Securities | |
Securities | 4) Securities The amortized cost and estimated fair value of securities were as follows for the periods indicated: Gross Gross Allowance Estimated Amortized Unrealized Unrealized for Credit Fair June 30, 2021 Cost Gains (Losses) Losses Value (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 126,682 $ 4,210 $ — $ — $ 130,892 U.S. Treasury 14,969 94 — — 15,063 Total $ 141,651 $ 4,304 $ — $ — $ 145,955 Gross Gross Estimated Allowance Amortized Unrecognized Unrecognized Fair for Credit June 30, 2021 Cost Gains (Losses) Value Losses (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 361,184 $ 5,330 $ (1,121) $ 365,393 $ — Municipals - exempt from Federal tax 60,153 1,209 — 61,362 (51) Total $ 421,337 $ 6,539 $ (1,121) $ 426,755 $ (51) Gross Gross Allowance Estimated Amortized Unrealized Unrealized for Credit Fair December 31, 2020 Cost Gains (Losses) Losses Value (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 170,215 $ 5,111 $ — $ — $ 175,326 U.S. Treasury 59,797 651 — — 60,448 Total $ 230,012 $ 5,762 $ — $ — $ 235,774 Gross Gross Estimated Allowance Amortized Unrecognized Unrecognized Fair for Credit December 31, 2020 Cost Gains (Losses) Value Losses (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 228,652 $ 6,075 $ (230) $ 234,497 $ — Municipals - exempt from Federal tax 68,791 1,639 — 70,430 (54) Total $ 297,443 $ 7,714 $ (230) $ 304,927 $ (54) Securities with unrealized losses at June 30, 2021 and December 31, 2020, 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 June 30, 2021 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 67,111 $ (1,121) $ — $ — $ 67,111 $ (1,121) Total $ 67,111 $ (1,121) $ — $ — $ 67,111 $ (1,121) Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2020 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 30,930 $ (230) $ — $ — $ 30,930 $ (230) Total $ 30,930 $ (230) $ — $ — $ 30,930 $ (230) 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 June 30, 2021, the Company held 398 securities ( 107 available-for-sale and 291 held-to-maturity), of which twelve had fair value below amortized cost. At June 30, 2021, there were $67,111,000 of agency mortgage-backed securities held-to-maturity, carried with an unrealized loss for less than 12 months. The total unrealized loss for securities less than 12 months was ($1,121,000) at June 30, 2021. The unrealized loss was due to higher interest rates in comparison to when the security was purchased. The issuer is 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. Therefore, the Company does not consider these debt securities to have credit-related losses as of The proceeds from sales of securities and the resulting gains and losses were as follows for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (Dollars in thousands) Proceeds $ — $ 30,085 $ — $ 56,598 Gross gains — 170 — 270 Gross losses — — — — The amortized cost and estimated fair values of securities as of June 30, 2021 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 3 months or less $ 9,997 $ 10,044 Due after 3 months through one year 4,972 5,019 Agency mortgage-backed securities 126,682 130,892 Total $ 141,651 $ 145,955 Held-to-maturity Amortized Estimated Cost Fair Value (Dollars in thousands) Due after 3 months through one year $ 499 $ 500 Due after one through five years 10,605 10,865 Due after five through ten years 31,284 31,824 Due after ten years 17,765 18,173 Agency mortgage-backed securities 361,184 365,393 Total $ 421,337 $ 426,755 Securities with amortized cost of $39,825,000 and $40,238,000 as of June 30, 2021 and December 31, 2020 were pledged to secure public deposits and for other purposes as required or permitted by law or contract. The table below presents a rollforward by major security type for the six months ended June 30, 2021 of the allowance for credit losses on debt securities held-to-maturity held at period end: Municipals (Dollars in thousands) Beginning balance January 1, 2021 $ 54 Provision for (recapture of) credit losses (3) Ending balance June 30, 2021 $ 51 For the six months ended June 30, 2021, there was a reduction of $3,000 to the allowance for credit losses on the Company’s held-to-maturity municipal investment securities portfolio. This reduction was the result of a reduction in municipal securities amortized balances resulting from regular payments. The bond ratings for the Company’s municipal investment securities at June 30, 2021 were consistent with the ratings at December 31, 2020. |
Loans and Allowance for Credit
Loans and Allowance for Credit Losses on Loans | 6 Months Ended |
Jun. 30, 2021 | |
Loans and Allowance for Credit Losses on Loans | |
Loans and Allowance for Credit Losses on Loans | 5) Loans and Allowance for Credit Losses on Loans The allowance for credit losses on loans was calculated by pooling loans of similar credit risk characteristics and credit monitoring procedures. The loan portfolio is classified into eight segments of loans - commercial, commercial real estate – owner occupied, commercial real estate – non-owner occupied, land and construction, home equity, multifamily, residential mortgages and consumer and other. The risk characteristics of each loan portfolio segment are as follows: Commercial Commercial loans primarily rely on the identified cash flows of the borrower for repayment and secondarily on the underlying collateral provided by the borrower. However, the cash flows of the borrowers may not be as expected and the collateral securing these loans may vary in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable, inventory or equipment and may incorporate a personal guarantee; however, some loans may be unsecured. Included in commercial loans are $286,461,000 of PPP loans at June 30, 2021 and $290,679,000 at December 31, 2020. No allowance for credit losses has been recorded for PPP loans as they are fully guaranteed by the SBA. Commercial Real Estate (“CRE”) CRE loans rely primarily on the cash flows of the properties securing the loan and secondarily on the value of the property that is securing the loan. CRE loans comprise two segments differentiated by owner occupied CRE and non-owner CRE. Owner occupied CRE loans are secured by commercial properties that are at least 50% occupied by the borrower or borrower affiliate. Non-owner occupied CRE loans are secured by commercial properties that are less than 50% occupied by the borrower or borrower affiliate. CRE loans may be adversely affected by conditions in the real estate markets or in the general economy. Land and Construction Land and construction loans are generally based on estimates of costs and value associated with the complete project. Construction loans usually involve the disbursement of funds with repayment substantially dependent on the success of the completion of the project. Sources of repayment for these loans may be permanent loans from HBC or other lenders, or proceeds from the sales of the completed project. These loans are monitored by on-site inspections and are considered to have higher risk than other real estate loans due to the final repayment dependent on numerous factors including general economic conditions. Home Equity Home equity loans are secured by 1-4 family residences that are generally owner occupied. Repayment of these loans depends primarily on the personal income of the borrower and secondarily by the value of the property securing the loan which can be impacted by changes in economic conditions such as the unemployment rate and property values. Multifamily Multifamily loans are loans on residential properties with five or more units. These loans rely primarily on the cash flows of the properties securing the loan for repayment and secondarily on the value of the properties securing the loan. The cash flows of these borrowers can fluctuate along with the values of the underlying property depending on general economic conditions. Residential Mortgages Residential mortgage loans are secured by 1-4 family residences which are generally owner-occupied. Repayment of these loans depends primarily on the personal income of the borrower and secondarily by the value of the property securing the loan which can be impacted by changes in economic conditions such as the unemployment rate and property values. During the second quarter of 2021, the Company purchased two single family residential mortgage loan portfolios totaling $140,030,000, all of which are domiciled in California, with an average principal balance of $585,000, and a weighted average yield of approximately 3.39% (excluding servicing costs, which are netted against interest income contributing to a lower overall average yield). Consumer and Other Consumer and other loans are secured by personal property or are unsecured and rely primarily on the income of the borrower for repayment and secondarily on the collateral value for secured loans. Borrower income and collateral value can vary dependent on economic conditions. Loans by portfolio segment and the allowance for credit losses on loans were as follows for the periods indicated: June 30, December 31, 2021 2020 (Dollars in thousands) Loans held-for-investment: Commercial $ 844,147 $ 846,386 Real estate: CRE - owner occupied 583,091 560,362 CRE - non-owner occupied 742,135 693,103 Land and construction 129,426 144,594 Home equity 107,873 111,885 Multifamily 198,771 166,425 Residential mortgages 205,904 85,116 Consumer and other 21,519 18,116 Loans 2,832,866 2,625,987 Deferred loan fees, net (8,070) (6,726) Loans, net of deferred fees 2,824,796 2,619,261 Allowance for credit losses on loans (43,956) (44,400) Loans, net $ 2,780,840 $ 2,574,861 Changes in the allowance for credit losses on loans were as follows for the periods indicated: Three Months Ended June 30, 2021 CRE CRE Owner Non-owner Land & Home Multi- Residential Consumer Commercial Occupied Occupied Construction Equity Family Mortgage and Other Total (Dollars in thousands) Beginning of period balance $ 11,600 $ 8,368 $ 16,431 $ 2,754 $ 1,171 $ 2,751 $ 918 $ 303 $ 44,296 Charge-offs (105) — — — — — — — (105) Recoveries 115 4 — 68 16 — — 55 258 Net recoveries 10 4 — 68 16 — — 55 153 Provision for (recapture of) credit losses on loans (753) (166) 54 (686) (118) 199 1,050 (73) (493) End of period balance $ 10,857 $ 8,206 $ 16,485 $ 2,136 $ 1,069 $ 2,950 $ 1,968 $ 285 $ 43,956 Three Months Ended June 30, 2020 CRE CRE Owner Non-owner Land & Home Multi- Residential Consumer Commercial Occupied Occupied Construction Equity Family Mortgage and Other Total (Dollars in thousands) Beginning of period balance $ 12,801 $ 7,737 $ 15,645 $ 2,603 $ 1,746 $ 1,622 $ 708 $ 1,841 $ 44,703 Charge-offs (465) - - - - - - - (465) Recoveries 46 1 - 13 31 - - 1 92 Net (charge-offs) recoveries (419) 1 - 13 31 - - 1 (373) Provision for (recapture of) credit losses on loans 797 809 (196) (64) 74 206 117 (629) 1,114 End of period balance $ 13,179 $ 8,547 $ 15,449 $ 2,552 $ 1,851 $ 1,828 $ 825 $ 1,213 $ 45,444 Six Months Ended June 30, 2021 CRE CRE Owner Non-owner Land & Home Multi- Residential Consumer Commercial Occupied Occupied Construction Equity Family Mortgage and Other Total (Dollars in thousands) Beginning of period balance $ 11,587 $ 8,560 $ 16,416 $ 2,509 $ 1,297 $ 2,804 $ 943 $ 284 $ 44,400 Charge-offs (368) — — — — — — — (368) Recoveries 928 8 — 884 39 — — 70 1,929 Net recoveries 560 8 — 884 39 — — 70 1,561 Provision for (recapture of) credit losses on loans (1,290) (362) 69 (1,257) (267) 146 1,025 (69) (2,005) End of period balance $ 10,857 $ 8,206 $ 16,485 $ 2,136 $ 1,069 $ 2,950 $ 1,968 $ 285 $ 43,956 Six Months Ended June 30, 2020 Owner Non-owner Land & Home Multi- Residential Consumer Commercial Occupied Occupied Construction Equity Family Mortgage and Other Total (Dollars in thousands) Beginning of period balance $ 10,453 $ 3,825 $ 3,760 $ 2,621 $ 2,244 $ 57 $ 243 $ 82 $ 23,285 Adoption of Topic 326 (3,663) 3,169 7,912 (1,163) (923) 1,196 435 1,607 8,570 Balance at adoption on January 1, 2020 6,790 6,994 11,672 1,458 1,321 1,253 678 1,689 31,855 Charge-offs (1,135) — — — — — — (3) (1,138) Recoveries 255 1 — 32 54 — — 1 343 Net (charge-offs) recoveries (880) 1 — 32 54 — — (2) (795) Provision for (recapture of) credit losses on loans 7,269 1,552 3,777 1,062 476 575 147 (474) 14,384 End of period balance $ 13,179 $ 8,547 $ 15,449 $ 2,552 $ 1,851 $ 1,828 $ 825 $ 1,213 $ 45,444 Management’s methodology for estimating the allowance balance consists of several key elements, which include pooling loans with similar characteristics into segments and using a discounted cash flow calculation to estimate losses. The discounted cash flow model inputs include loan level cash flow estimates for each loan segment based on peer and bank historic loss correlations with certain economic factors. Management uses a four quarter forecast of each economic factor that is used for each loan segment and the economic factors are assumed to revert to the historic mean over an eight quarter period after the forecast period. The economic factors management has selected include the California unemployment rate, California gross domestic product, California home price index, and a national CRE value index. These factors are evaluated and updated occasionally and as economic conditions change. Additionally, management uses qualitative adjustments to the discounted cash flow quantitative loss estimates in certain cases when management has assessed an adjustment is necessary. These qualitative adjustments are applied by pooled loan segment and have been made for increased risk due to loan quality trends, collateral risk, or other risks management determines are not adequately captured in the discounted cash flow loss estimation. Specific allowances on individually evaluated loans are combined to the allowance on pools of loans with similar risk characteristics to derive to total allowance for credit losses on loans. The decrease in the allowance for credit losses on loans and related recapture of provision for the six months ended June 30, 2021, was primarily attributed to a net decrease of ($56,000) in the reserve for pooled loans, driven by improvements in forecasted macroeconomic conditions offset by changes in the portfolio, and a ($388,000) decrease in specific reserves for individually evaluated loans compared to December 31, 2020. The decrease in the allowance for credit losses for pooled loans from December 31, 2020 is largely the result of improvements in the economic factors used in our methodology and reductions in qualitative adjustments for risks such as collateral values, concentrations of credit risk (geographic, large borrower, and industry), economic conditions, changes in underwriting standards, experience and depth of lending staff, trends in delinquencies, and the level of criticized loans to address asset-specific risks and current conditions that were not fully considered by the macroeconomic variables driving the quantitative estimate. The following tables presents the amortized cost basis of nonperforming loans and loans past due over 90 days and still accruing for the periods indicated: June 30, 2021 Restructured Nonaccrual Nonaccrual and Loans with no Specific with Specific over 90 Days Allowance for Allowance for Past Due Credit Credit and Still Losses Losses Accruing Total (Dollars in thousands) Commercial $ 415 $ 1,378 $ 164 $ 1,957 Real estate: CRE - Owner Occupied 1,774 — — 1,774 CRE - Non-Owner Occupied — — 725 725 Home equity 168 — — 168 Multifamily 1,149 — — 1,149 Consumer and other 407 — — 407 Total $ 3,913 $ 1,378 $ 889 $ 6,180 December 31, 2020 Restructured Nonaccrual Nonaccrual and Loans with no Specific with no Specific over 90 Days Allowance for Allowance for Past Due Credit Credit and Still Losses Losses Accruing Total (Dollars in thousands) Commercial $ 752 $ 1,974 $ 81 $ 2,807 Real estate: CRE - Owner Occupied 3,706 — — 3,706 Home equity 949 — — 949 Consumer and other 407 — — 407 Total $ 5,814 $ 1,974 $ 81 $ 7,869 The following tables presents the aging of past due loans by class for the periods indicated: June 30, 2021 30 - 59 60 - 89 90 Days or Days Days Greater Total Past Due Past Due Past Due Past Due Current Total (Dollars in thousands) Commercial $ 4,467 $ 1,187 $ 261 $ 5,915 $ 838,232 $ 844,147 Real estate: CRE - Owner Occupied 1,172 9 1,143 2,324 580,767 583,091 CRE - Non-Owner Occupied 145 — 725 870 741,265 742,135 Land and construction — — — — 129,426 129,426 Home equity — — — — 107,873 107,873 Multifamily — — — — 198,771 198,771 Residential mortgages — — — — 205,904 205,904 Consumer and other — — 407 407 21,112 21,519 Total $ 5,784 $ 1,196 $ 2,536 $ 9,516 $ 2,823,350 $ 2,832,866 December 31, 2020 30 - 59 60 - 89 90 Days or Days Days Greater Total Past Due Past Due Past Due Past Due Current Total (Dollars in thousands) Commercial $ 3,524 $ 259 $ 392 $ 4,175 $ 842,211 $ 846,386 Real estate: CRE - Owner Occupied 1,133 — 29 1,162 559,200 560,362 CRE - Non-Owner Occupied — 485 — 485 692,618 693,103 Land and construction — — — — 144,594 144,594 Home equity — — — 111,885 111,885 Multifamily — — — — 166,425 166,425 Residential mortgages — — — — 85,116 85,116 Consumer and other — — 407 407 17,709 18,116 Total $ 4,657 $ 744 $ 828 $ 6,229 $ 2,619,758 $ 2,625,987 Past due loans 30 days or greater totaled $9,516,000 and $6,229,000 at June 30, 2021 and December 31, 2020, respectively, of which $1,658,000 and $1,918,000 were on nonaccrual, at June 30, 2021 and December 31, 2020, respectively. At June 30, 2021, there were also $3,633,000 of loans less than 30 days past due included in nonaccrual loans held-for-investment. At December 31, 2020, there were also $5,870,000 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. 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, and 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 their contractual loan terms. Loans categorized as special mention have potential weaknesses that may, if not checked or corrected, weaken the credit or inadequately protect the Company’s position at some future date. These loans pose elevated risk, but their weaknesses do not yet justify a substandard classification. Classified loans are those loans that are assigned a substandard, substandard-nonaccrual, or doubtful risk rating using the following definitions: Special Mention. A Special Mention asset has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in a deterioration of the repayment prospects for the asset or in the credit position at some future date. Special Mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. 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 will 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 credit losses on loans. Therefore, there is no balance to report as of June 30, 2021 and December 31, 2020. Loans may be reviewed at any time throughout a loan’s duration. If new information is provided, a new risk assessment may be performed if warranted. The following tables present term loans amortized cost by vintage and loan grade classification, and revolving loans amortized cost by loan grade classification at June 30, 2021 and December 31, 2020. The loan grade classifications are based on the Bank’s internal loan grading methodology. Loan grade categories for doubtful and loss rated loans are not included on the tables below as there are no loans with those grades at June 30, 2021 and December 31, 2020. The vintage year represents the period the loan was originated or in the case of renewed loans, the period last renewed. The amortized balance is the loan balance less any purchase discounts, and plus any loan purchase premiums. The loan categories are based on the loan segmentation in the Company's CECL reserve methodology based on loan purpose and type. Revolving Loans Term Loans Amortized Cost Basis by Originated Period Amortized 2016 and Cost 6/30/2021 12/31/2020 12/31/2019 12/31/2018 12/31/2017 Prior Basis Total (Dollars in thousands) Commercial: Pass $ 302,753 $ 163,815 $ 19,144 $ 15,904 $ 9,543 $ 8,699 $ 307,122 $ 826,980 Special Mention 323 733 - 1,082 447 270 978 3,833 Substandard 1,349 3,337 - 16 452 30 6,357 11,541 Substandard-Nonaccrual 30 1,143 - - - 106 514 1,793 Total 304,455 169,028 19,144 17,002 10,442 9,105 314,971 844,147 CRE - Owner Occupied: Pass 78,046 154,477 74,843 66,269 37,006 135,709 24,038 570,388 Special Mention 531 2,648 680 1,495 770 1,089 - 7,213 Substandard 2,547 - 394 735 40 - 3,716 Substandard-Nonaccrual - 1,774 - - - - - 1,774 Total 78,577 161,446 75,523 68,158 38,511 136,838 24,038 583,091 CRE - Non-Owner Occupied: Pass 131,832 148,179 121,987 55,878 75,126 165,195 22,377 720,574 Special Mention - 2,808 - 2,527 606 6,338 2,165 14,444 Substandard - 5,240 - 1,392 - 485 - 7,117 Substandard-Nonaccrual - - - - - - - - Total 131,832 156,227 121,987 59,797 75,732 172,018 24,542 742,135 Land and construction: Pass 58,297 56,553 4,443 - - 1,321 7,453 128,067 Special Mention - - - - - - - - Substandard 1,359 - - - - - - 1,359 Substandard-Nonaccrual - - - - - - - - Total 59,656 56,553 4,443 - - 1,321 7,453 129,426 Home equity: Pass - - - 61 - - 104,746 104,807 Special Mention - - - - - - 1,932 1,932 Substandard - - - - - 143 823 966 Substandard-Nonaccrual - 107 - - - - 61 168 Total - 107 - 61 - 143 107,562 107,873 Multifamily: Pass 42,576 32,568 37,612 16,321 21,215 35,092 915 186,299 Special Mention - - - - - 10,444 - 10,444 Substandard - 879 - - - - - 879 Substandard-Nonaccrual 1,149 - - - - - - 1,149 Total 43,725 33,447 37,612 16,321 21,215 45,536 915 198,771 Residential mortgage: Pass 137,195 18,204 9,379 3,157 5,129 30,567 960 204,591 Special Mention - - - - - - - - Substandard - - - - - 1,313 - 1,313 Substandard-Nonaccrual - - - - - - - - Total 137,195 18,204 9,379 3,157 5,129 31,880 960 205,904 Consumer and other: Pass - 6 409 1,456 17 1,051 17,953 20,892 Special Mention - - - - - - - - Substandard 20 - - - - - 200 220 Substandard-Nonaccrual - - 407 - - - 407 Total 20 6 409 1,863 17 1,051 18,153 21,519 Total loans $ 755,460 $ 595,018 $ 268,497 $ 166,359 $ 151,046 $ 397,892 $ 498,594 $ 2,832,866 Risk Grades: Pass $ 750,699 $ 573,802 $ 267,817 $ 159,046 $ 148,036 $ 377,634 $ 485,564 $ 2,762,598 Special Mention 854 6,189 680 5,104 1,823 18,141 5,075 37,866 Substandard 2,728 12,003 - 1,802 1,187 2,011 7,380 27,111 Substandard-Nonaccrual 1,179 3,024 - 407 - 106 575 5,291 Grand Total $ 755,460 $ 595,018 $ 268,497 $ 166,359 $ 151,046 $ 397,892 $ 498,594 $ 2,832,866 Revolving Loans Term Loans Amortized Cost Basis by Originated Period Amortized 2015 and Cost 2020 2019 2018 2017 2016 Prior Basis Total (Dollars in thousands) Commercial: Pass $ 431,369 $ 33,350 $ 21,154 $ 13,840 $ 7,341 $ 8,292 $ 296,286 $ 811,632 Special Mention 15,720 716 1,301 953 713 170 1,937 21,510 Substandard 4,036 - 19 758 2,396 73 3,236 10,518 Substandard-Nonaccrual 2,106 56 36 - 115 26 387 2,726 Total 453,231 34,122 22,510 15,551 10,565 8,561 301,846 846,386 CRE - Owner Occupied: Pass 168,224 73,064 68,068 51,705 50,716 109,350 15,964 537,091 Special Mention 3,151 2,568 4,128 783 - 2,569 - 13,199 Substandard 2,561 - 400 2,954 - 451 - 6,366 Substandard-Nonaccrual 3,678 - - - - 28 - 3,706 Total 177,614 75,632 72,596 55,442 50,716 112,398 15,964 560,362 CRE - Non-Owner Occupied: Pass 166,550 128,361 68,796 99,816 57,422 150,683 1,926 673,554 Special Mention 11,930 - 2,557 - - - - 14,487 Substandard 3,166 - 1,411 - 485 - - 5,062 Substandard-Nonaccrual - - - - - - - - Total 181,646 128,361 72,764 99,816 57,907 150,683 1,926 693,103 Land and construction: Pass 114,932 22,054 - - - 1,343 4,906 143,235 Special Mention - - - - - - - - Substandard 1,359 - - - - - - 1,359 Substandard-Nonaccrual - - - - - - - - Total 116,291 22,054 - - - 1,343 4,906 144,594 Home equity: Pass 266 - 74 - - - 109,848 110,188 Special Mention - - - - - - - - Substandard - - - - - 143 605 748 Substandard-Nonaccrual 117 - - - - - 832 949 Total 383 - 74 - - 143 111,285 111,885 Multifamily: Pass 31,481 39,183 17,248 24,572 16,235 30,751 880 160,350 Special Mention - - - - - 5,186 - 5,186 Substandard 889 - - - - - - 889 Substandard-Nonaccrual - - - - - - - - Total 32,370 39,183 17,248 24,572 16,235 35,937 880 166,425 Residential mortgage: Pass 12,798 10,048 3,246 7,324 28,115 15,568 - 77,099 Special Mention 5,089 - 1,630 - - - 6,719 Substandard - - - - - 1,298 - 1,298 Substandard-Nonaccrual - - - - - - - - Total 17,887 10,048 4,876 7,324 28,115 16,866 - 85,116 Consumer and other: Pass 10 522 1,486 20 116 987 14,568 17,709 Special Mention - - - - - - - - Substandard - - - - - - - - Substandard-Nonaccrual - - 407 - - - - 407 Total 10 522 1,893 20 116 987 14,568 18,116 Total loans $ 979,432 $ 309,922 $ 191,961 $ 202,725 $ 163,654 $ 326,918 $ 451,375 $ 2,625,987 Risk Grades:. Pass $ 925,630 $ 306,582 $ 180,072 $ 197,277 $ 159,945 $ 316,974 $ 444,378 $ 2,530,858 Special Mention 35,890 3,284 9,616 1,736 713 7,925 1,937 61,101 Substandard 12,011 - 1,830 3,712 2,881 1,965 3,841 26,240 Substandard-Nonaccrual 5,901 56 443 - 115 54 1,219 7,788 Grand Total $ 979,432 $ 309,922 $ 191,961 $ 202,725 $ 163,654 $ 326,918 $ 451,375 $ 2,625,987 The following table presents the amortized cost basis of collateral-dependent loans by loan classification at June 30, 2021: Collateral Type Real Estate Business Property Assets Unsecured Total (Dollars in thousands) Commercial $ 25 $ 1,324 $ 29 $ 1,378 Total $ 25 $ 1,324 $ 29 $ 1,378 The following table presents the amortized cost basis of collateral-dependent loans by loan classification at December 31, 2020: Collateral Type Real Estate Business Property Assets Unsecured Total (Dollars in thousands) Commercial $ 29 $ 1,815 $ 130 $ 1,974 Total $ 29 $ 1,815 $ 130 $ 1,974 When management determines that foreclosures are probable, expected credit losses for collateral-dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as app |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | 6) Goodwill and Other Intangible Assets Goodwill At June 30, 2021, the carrying value of goodwill was $167,631,000, which included $13,044,000 of goodwill related to its acquisition of Bay View Funding, $32,619,000 from its acquisition of Focus Business Bank, $13,819,000 from its acquisition of Tri-Valley Bank, $24,271,000 from its acquisition of United American Bank and $83,878,000 from Presidio Bank. 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 reporting units, including the existing goodwill and intangible assets, and estimating the fair value of each reporting unit. The Company completed its annual goodwill impairment analysis as of November 30, 2020 with the assistance of an independent valuation firm. The goodwill related to the acquisition of Bay View Funding was tested separately for impairment under this analysis. No events or circumstances since the November 30, 2020 annual impairment test were noted that would indicate it was more likely than not a goodwill impairment exists, for either the Company’s banking or factoring reporting units. The following table summarizes the carrying amount of goodwill by segment for the periods indicated: June 30, December 31, 2021 2020 (Dollars in thousands) Banking $ 154,587 $ 154,587 Factoring 13,044 13,044 Total Goodwill $ 167,631 $ 167,631 Other Intangible Assets The Company’s intangible assets are summarized as follows for the periods indicated: June 30, 2021 Gross Carrying Accumulated Amount Amortization Total (Dollars in thousands) Core deposit intangibles $ 25,023 $ (10,567) $ 14,456 Customer relationship and brokered relationship intangibles 1,900 (1,266) 634 Below market leases 770 (683) 87 Total $ 27,693 $ (12,516) $ 15,177 December 31, 2020 Gross Carrying Accumulated Amount Amortization Total (Dollars in thousands) Core deposit intangibles $ 25,023 $ (9,153) $ 15,870 Customer relationship and brokered relationship intangibles 1,900 (1,171) 729 Below market leases 770 (705) 65 Total $ 27,693 $ (11,029) $ 16,664 Estimated amortization expense for future years is as follows: Customer & Below/ Core Brokered (Above) Total Deposit Relationship Market Amortization Year Intangible Intangible Lease Expense (Dollars in thousands) 2021 remaining $ 1,415 $ 95 $ (1) $ 1,509 2022 2,447 190 (2) 2,635 2023 2,217 190 (2) 2,405 2024 2,023 159 5 2,187 2025 1,795 — 18 1,813 Thereafter 4,559 — 69 4,628 $ 14,456 $ 634 $ 87 $ 15,177 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 June 30, 2021 and December 31, 2020. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2021 | |
Income Taxes | |
Income Taxes | 7) Income Taxes Some items of income and expense are recognized in one year for tax purposes, and another when applying generally accepted accounting principles, which leads 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 $26,917,000, and $28,221,000, at June 30, 2021 and December 31, 2020, 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 June 30, 2021 and December 31, 2020 will be fully realized in future years. The following table reflects the carrying 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: June 30, December 31, 2021 2020 (Dollars in thousands) Low income housing investments $ 4,827 $ 5,246 Future commitments $ 596 $ 596 The Company expects $46,000 of the future commitments to be paid in 2021, and $550,000 in 2022 through 2025. For tax purposes, the Company had low income housing tax credits of $210,000 for the three months ended June 30, 2021 and June 30, 2020, and low income housing investment expense of $209,000 and $211,000, respectively. For tax purposes, the Company had low income housing tax credits of $420,000 for the six months ended June 30, 2021 and June 30, 2020, and low income housing investment expense of $418,000 and $420,000, respectively. The Company recognized low income housing investment expense as a component of income tax expense. |
Benefit Plans
Benefit Plans | 6 Months Ended |
Jun. 30, 2021 | |
Benefit Plans | |
Benefit Plans | 8) 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 Six Months Ended June 30, June 30, 2021 2020 2021 2020 (Dollars in thousands) Components of net periodic benefit cost: Service cost $ 120 $ 123 $ 240 $ 246 Interest cost 190 236 380 467 Amortization of prior service cost 75 — 100 — Amortization of net actuarial loss 136 105 272 190 Net periodic benefit cost $ 521 $ 464 $ 992 $ 903 The components of net periodic benefit cost other than the service cost component are included in the line item “other noninterest expense” in the Consolidated Statements of Income. Split-Dollar Life Insurance Benefit Plan The Company maintains life insurance policies for some current and 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: June 30, December 31, 2021 2020 (Dollars in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 9,689 $ 8,198 Interest cost 110 246 Actuarial loss — 1,245 Projected benefit obligation at end of period $ 9,799 $ 9,689 June 30, December 31, 2021 2020 (Dollars in thousands) Net actuarial loss $ 5,217 $ 5,170 Prior transition obligation 925 970 Accumulated other comprehensive loss $ 6,142 $ 6,140 Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (Dollars in thousands) Amortization of prior transition obligation and actuarial losses $ (1) $ (15) $ (2) $ (30) Interest cost 55 62 110 124 Net periodic benefit cost $ 54 $ 47 $ 108 $ 94 |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value | |
Fair Value | 9) 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 June 30, 2021 Available-for-sale securities: Agency mortgage-backed securities $ 130,892 $ — $ 130,892 $ — U.S. Treasury 15,063 15,063 — — I/O strip receivables 274 — 274 — Assets at December 31, 2020 Available-for-sale securities: Agency mortgage-backed securities $ 175,326 $ — $ 175,326 $ — U.S. Treasury 60,448 60,448 — — I/O strip receivables 305 — 305 — 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 collateral dependent loans individually evaluated with specific allocations of the allowance for credit losses on loans 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. There were no material collateral dependent loans carried at fair value on a non-recurring basis at June 30, 2021 or December 31, 2020. 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. At June 30, 2021 and December 31, 2020, there were no foreclosed assets on the balance sheet. The carrying amounts and estimated fair values of financial instruments at June 30, 2021 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 $ 1,328,322 $ 1,328,322 $ — $ — $ 1,328,322 Securities available-for-sale 145,955 15,063 130,892 — 145,955 Securities held-to-maturity 421,286 — 426,755 — 426,755 Loans (including loans held-for-sale), net 2,785,184 — 4,344 2,796,339 2,800,683 FHLB stock, FRB stock, and other investments 32,495 — — — N/A Accrued interest receivable 10,397 103 1,510 8,784 10,397 I/O strips receivables 274 — 274 — 274 Liabilities: Time deposits $ 158,644 $ — $ 158,843 $ — $ 158,843 Other deposits 4,185,828 — 4,185,828 — 4,185,828 Subordinated debt 39,832 — 40,432 — 40,432 Accrued interest payable 548 — 548 — 548 The carrying amounts and estimated fair values of the Company’s financial instruments at December 31, 2020: 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 $ 1,131,073 $ 1,131,073 $ — $ — $ 1,131,073 Securities available-for-sale 235,774 60,448 175,326 — 235,774 Securities held-to-maturity 297,389 — 304,927 — 304,927 Loans (including loans held-for-sale), net 2,576,560 — 1,699 2,572,993 2,574,692 FHLB stock, FRB stock, and other investments 33,522 — — — N/A Accrued interest receivable 10,546 309 1,512 8,725 10,546 I/O strips receivables 305 — 305 — 305 Liabilities: Time deposits $ 153,407 $ — $ 153,740 $ — $ 153,740 Other deposits 3,761,079 — 3,761,079 — 3,761,079 Subordinated debt 39,740 — 40,340 — 40,340 Accrued interest payable 545 — 545 — 545 |
Equity Plan
Equity Plan | 6 Months Ended |
Jun. 30, 2021 | |
Equity Plan | |
Equity Plan | 10) 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 21, 2020, the shareholders approved an amendment to the Heritage Commerce Corp 2013 Equity Incentive Plan to increase the number of shares available from 3,000,000 to 5,000,000 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. For the six months ended June 30, 2021, the Company granted 350,750 shares of nonqualified stock options and 187,325 shares of restricted stock. The fair value of restricted stock awards that vested was $1,749,000 as of June 30, 2021. There were 1,940,811 shares available for the issuance of equity awards under the 2013 Plan as of June 30, 2021. 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, 2021 2,546,821 $ 9.30 Granted 350,750 $ 12.08 Exercised (132,342) $ 5.93 Forfeited or expired (36,766) $ 12.89 Outstanding at June 30, 2021 2,728,463 $ 9.77 5.71 $ 6,286,272 Vested or expected to vest 2,564,755 5.71 $ 5,909,096 Exercisable at June 30, 2021 1,996,727 4.51 $ 5,826,621 Information related to the equity plans for the periods indicated: Six Months Ended June 30, 2021 2020 Intrinsic value of options exercised $ 679,403 $ 2,057,914 Cash received from option exercise $ 784,264 $ 1,489,991 Tax benefit (expense) realized from option exercises $ 57,215 $ 33,783 Weighted average fair value of options granted $ 2.33 $ 1.15 As of June 30, 2021, there was $1,410,000 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 2.96 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: Six Months Ended June 30, 2021 2020 Expected life in months(1) 72 72 Volatility(1) 33 % 29 % Weighted average risk-free interest rate(2) 1.10 % 0.53 % Expected dividends(3) 4.30 % 5.71 % (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, 2021 298,700 $ 10.83 Granted 187,325 $ 12.01 Vested (153,101) $ 11.42 Forfeited or expired (34,358) $ 10.23 Nonvested shares at June 30, 2021 298,566 $ 11.03 As of June 30, 2021, there was $3,201,000 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 2.03 years. |
Subordinated Debt
Subordinated Debt | 6 Months Ended |
Jun. 30, 2021 | |
Subordinated Debt | |
Subordinated Debt | 11) 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 1st and December 1st of each year through June 1, 2022 and quarterly thereafter on March 1st, June 1st, September 1st and December 1st of each year through the maturity date or early redemption date. The Subordinated Debt, net of unamortized issuance costs of LIBOR Transition and Phase–Out |
Capital Requirements
Capital Requirements | 6 Months Ended |
Jun. 30, 2021 | |
Capital Requirements | |
Capital Requirements | 12) 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 June 30, 2021, that management believes have changed the categorization of the Company or HBC as “well-capitalized.” The Company’s consolidated capital ratios and the HBC’s capital ratios exceeded the regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements at June 30, 2021. As permitted by the interim final rule issued on March 27, 2020 by our federal regulatory agency, we elected the option to delay the estimated impact of the adoption of the CECL Standard in our regulatory capital for two years. This two-year delay is in addition to the three-year transition period the agency had already made available. The adoption will delay the effects of CECL on our regulatory capital for the next two years, after which the effects will be phased-in over a three-year period from January 1, 2022 through December 31, 2024, with 75% recognized in 2022, 50% recognized in 2023, and 25% recognized in 2024. Under the interim final rule, the amount of adjustments to regulatory capital deferred until the phase-in period includes both the initial impact of adoption of the CECL Standard at January 1, 2020 and 25% of subsequent changes in our allowance for credit losses during each quarter of the two-year period ending December 31, 2021. 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 June 30, 2021 and December 31, 2020, 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 June 30, 2021 and December 31, 2020. Required For Capital Adequacy Purposes Actual Under Basel III Amount Ratio Amount Ratio (1) (Dollars in thousands) As of June 30, 2021 Total Capital $ 491,475 15.6 % $ 329,965 10.5 % (to risk-weighted assets) Tier 1 Capital $ 418,134 13.3 % $ 267,115 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 418,134 13.3 % $ 219,977 7.0 % (to risk-weighted assets) Tier 1 Capital $ 418,134 8.6 % $ 194,156 4.0 % (to average assets) (1) Includes 2.5% capital conservation buffer, 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, 2020 Total Capital $ 483,870 16.5 % $ 307,067 10.5 % (to risk-weighted assets) Tier 1 Capital $ 410,307 14.0 % $ 248,578 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 410,307 14.0 % $ 204,711 7.0 % (to risk-weighted assets) Tier 1 Capital $ 410,307 9.1 % $ 180,281 4.0 % (to average assets) (2) Includes 2.5% capital conservation buffer, 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 June 30, 2021, and December 31, 2020. 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 June 30, 2021 Total Capital $ 469,701 15.0 % $ 314,070 10.0 % $ 329,773 10.5 % (to risk-weighted assets) Tier 1 Capital $ 436,192 13.9 % $ 251,256 8.0 % $ 266,959 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 436,192 13.9 % $ 204,145 6.5 % $ 219,849 7.0 % (to risk-weighted assets) Tier 1 Capital $ 436,192 9.0 % $ 242,600 5.0 % $ 194,080 4.0 % (to average assets) (1) Includes 2.5% capital conservation buffer, 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, 2020 Total Capital $ 461,933 15.8 % $ 292,258 10.0 % $ 306,871 10.5 % (to risk-weighted assets) Tier 1 Capital $ 428,109 14.6 % $ 233,806 8.0 % $ 248,419 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 428,109 14.6 % $ 189,968 6.5 % $ 204,580 7.0 % (to risk-weighted assets) Tier 1 Capital $ 428,109 9.5 % $ 225,263 5.0 % $ 180,211 4.0 % (to average assets) (1) Includes 2.5% capital conservation buffer, except the Tier 1 Capital to average assets ratio. The Subordinated Debt, net of unamortized issuance costs, totaled $39,832,000 at June 30, 2021, 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 Financial Protection and Innovation (“DFPI”) 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 June 30, 2021, HBC would not be required to obtain regulatory approval, and the amount available for cash dividends is $35,173,000. Similar restrictions applied to the amount and sum of loan advances and other transfers of funds from HBC to the parent company. HBC distributed to HCC dividends of $8,000,000, during the second and first quarters of 2021, for a total of $16,000,000. |
Commitments and Loss Contingenc
Commitments and Loss Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Loss Contingencies | |
Commitments and Loss Contingencies | 13) Commitments and Loss Contingencies Loss Contingencies Within the ordinary course of our business, we are subject to private lawsuits, government audits, administrative proceedings and other claims. A number of these claims may exist at any given time, and some of the claims may be pled as class actions. We could be affected by adverse publicity and litigation costs resulting from such allegations, regardless of whether they are valid or whether we are legally determined to be liable. A summary of proceedings outstanding at June 30, 2021 follows: ● In January and February 2019, Double Jump, Inc. and a number of its affiliates (collectively, the “DC Solar Debtors”) each commenced bankruptcy cases in the United States Bankruptcy Court of Nevada. The chapter 7 trustee of the DC Solar Debtors had indicated that it may bring an adversary action against Heritage related to our former deposit relationships with the DC Solar Debtors and their sponsored investment funds. The Bank entered into a settlement agreement, dated July 7, 2021 with the trustee. The Bank settled all claims of the trustee against the Bank, its affiliates, past and current employees, including all direct and derivative claims arising out of the Bank’s allegedly negligent handling, supervision and management of depository accounts that were maintained for the DC Solar Debtors and related investment funds. The Bank has denied all liability. The Bank received a full and complete release of the trustee’s claims. The settlement is subject to Bankruptcy Court approval. The hearing for approval is scheduled for September 17, 2021, but is subject to change. The Bank considers the settlement to be an insured event subject to reimbursement by liability insurance. The Bank reserved $4,000,000 toward the settlement amount in the second quarter of 2021, and the Bank will pursue reimbursement from its insurance carriers. All legal fees incurred in connection with the trustee action and the settlement agreement have been expensed to date. ● In December 2020, Solar Eclipse Investment Fund III, et al v. Heritage Bank of Commerce, et al., was filed against Heritage, and others, in the Solano County Superior Court for the State of California (“Solar Eclipse”). Also in December 2020, Solarmore Management Services, Inc. v. Jeff Carpoff et al., (“Solarmore”) filed an amended complaint in the United States District Court for the Eastern District of California against Heritage and others. Both of these cases relate to our former deposit relationships with D.C. Solar and their affiliates (collectively “D.C. Solar”) and its sponsored investment funds. D.C. Solar is a former customer that allegedly perpetrated a Ponzi scheme and declared bankruptcy. These actions seek unspecified damages and are in an early phase. We intend to vigorously defend these actions. ● In November 2020, a former and a then-current bank employee purporting to represent a class of Bank employees, alleged in a lawsuit that the Bank violated the California Labor Code and California Business and Professions Code, by failing to permit required meal and rest breaks, and by failing to provide accurate wage statements, among other claims. The lawsuit seeks unspecified penalties under the California Private Attorneys General Act (“PAGA”) in addition to other monetary payments. In late December 2020 the same former and then-current bank employees filed a lawsuit asserting, as individual employees, causes of action against the Bank for gender discrimination, retaliation, constructive discharge of the former employee, and sexual harassment, among other claims. Plaintiffs allege denial of promotional opportunities, and harassment and discrimination by Bank employees and customers of the Bank. This case is in an early phase. Counsel for the plaintiffs have agreed to pause the litigation of the individual claims while the parties explore mediation. In February 2021, the Bank was notified of another set of PAGA and potential class claims alleged by letter to the California Labor and Workforce Development Agency transmitted on behalf of another former Bank employee. The notice to the California Labor and Workforce Development Agency, which is a prerequisite to a PAGA filing, alleged the same claims, class, and relief requests that are the subject of the lawsuit filed in November 2020, and disclosed no new claims. The former employee has also threatened individual claims similar to the other two former employees. Counsel for the plaintiffs have agreed to explore mediation of the threatened individual claims. We intend to vigorously defend the filed class and PAGA complaint, the action filed by the employees as individuals, any subsequent related class action and PAGA filing, and any action filed by the former employee on whose behalf the draft complaint was provided. The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. The outcomes of legal proceedings and other contingencies are, however, inherently unpredictable and subject to significant uncertainties. As a result, the Company is not able to reasonably estimate the amount or range of possible losses, including losses that could arise as a result of application of non-monetary remedies, with respect to the contingencies it faces, and the Company’s estimates may not prove to be accurate. At this time, we believe that the amount of reasonably possible losses resulting from final disposition of any pending lawsuits, audits, proceedings and claims will not have a material adverse effect individually or in the aggregate on our financial position, results of operations or liquidity. It is possible, however, that our future results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, audits, proceedings or claims. Legal costs related to such claims are expensed as incurred. Off-Balance Sheet Arrangements In the normal course of business the Company makes commitments to extend credit to its customers as long as there are no violations of any conditions established in the contractual arrangements. These commitments are obligations that represent a potential credit risk to the Company, but are not reflected on the Company’s consolidated balance sheets. Total unused commitments to extend credit were $1,168,495,000 at June 30, 2021, and $1,114,193,000 at December 31, 2020. Unused commitments represented 41% outstanding gross loans at June 30, 2021, 43% at June 30, 2020, and 42% at December 31, 2020. The effect on the Company’s revenues, expenses, cash flows and liquidity from the unused portion of the commitments to provide credit cannot be reasonably predicted because there is no certainty that lines of credit and letters of credit will ever be fully utilized. The following table presents the Company’s commitments to extend credit for the periods indicated: June 30, 2021 December 31, 2020 Fixed Variable Fixed Variable Rate Rate Total Rate Rate Total (Dollars in thousands) Unused lines of credit and commitments to make loans $ 131,878 $ 1,018,383 $ 1,150,261 $ 121,560 $ 970,614 $ 1,092,174 Standby letters of credit 2,877 15,357 18,234 3,049 18,970 22,019 $ 134,755 $ 1,033,740 $ 1,168,495 $ 124,609 $ 989,584 $ 1,114,193 For the six months ended June 30, 2021, there was an increase of $23,000 to the allowance for credit losses on the Company’s off-balance sheet credit exposures. The increase in the allowance for credit losses for off-balance sheet credit exposures in the first six months of 2021 was driven by an increase in unused loan commitments. The allowance for credit losses on the Company’s off-balance sheet credit exposures was $1,101,000 at June 30, 2021 and $1,078,000 at December 31, 2020. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2021 | |
Revenue Recognition | |
Revenue Recognition | 14) Revenue Recognition On January 1, 2018, the Company adopted ASU No. 2014-09 (Topic 606) 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 Company currently accounts for sales of foreclosed assets in accordance with Topic 360-20. In most cases the Company will seek to engage a real estate agent for the sale of foreclosed assets immediately upon foreclosure. However, in some cases, where there is clear demand for the property in question, the Company may elect to allow for a marketing period on no more than six months to attempt a direct sale of the property. We generally recognize the sale, and any associated gain or loss, of a real estate property when control of the property transfers. Any gains or losses from the sale are recorded to noninterest income/expense. 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 June 30, 2021 2020 (Dollars in thousands) Noninterest Income In-scope of Topic 606: Service charges and fees on deposit accounts $ 659 $ 650 Gain on the disposition of foreclosed assets — — Total noninterest income in-scope of Topic 606 659 650 Noninterest Income Out-of-scope of Topic 606 1,510 1,428 Total noninterest income $ 2,169 $ 2,078 Six Months Ended June 30, 2021 2020 (Dollars in thousands) Noninterest Income In-scope of Topic 606: Service charges and fees on deposit accounts $ 1,260 $ 1,619 Gain on the disposition of foreclosed assets — 791 Total noninterest income in-scope of Topic 606 1,260 2,410 Noninterest Income Out-of-scope of Topic 606 3,210 2,861 Total noninterest income $ 4,470 $ 5,271 |
Noninterest Expense
Noninterest Expense | 6 Months Ended |
Jun. 30, 2021 | |
Noninterest Expense | |
Noninterest Expense | 15) Noninterest Expense The following table sets forth the various components of the Company’s noninterest expense for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (Dollars in thousands) Salaries and employee benefits $ 12,572 $ 12,300 $ 26,530 $ 26,503 Reserve for legal settlement 4,000 — 4,000 — Occupancy and equipment 2,247 1,766 4,521 3,538 Professional fees 1,771 1,155 3,490 2,590 Amortization of intangible assets 754 964 1,487 1,822 Insurance expense 661 516 1,324 1,034 Data processing 583 779 1,117 1,755 Software subscriptions 501 746 977 1,635 Other 2,686 2,786 5,573 7,909 Total noninterest expense $ 25,775 $ 21,012 $ 49,019 $ 46,786 The following table presents the merger-related costs included in other and salaries and employee benefits by category for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (Dollars in thousands) Salaries and employee benefits $ — $ — $ — $ 356 Other (24) 59 34 2,127 Total merger-related costs $ (24) $ 59 $ 34 $ 2,483 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2021 | |
Leases | |
Leases | 16) Leases 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. The Company is impacted as a lessee of the offices and real estate used for operations. The Company's lease agreements include liabilities The following table presents the quantitative information for the Company’s leases for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (Dollars in thousands) Operating Lease Cost (Cost resulting from lease payments) $ 1,621 $ 1,733 $ 3,292 $ 3,502 Operating Lease - Operating Cash Flows (Fixed Payments) $ 1,220 $ 1,379 $ 2,406 $ 2,570 Operating Lease - ROU assets $ 36,601 $ 37,137 $ 36,601 $ 37,137 Operating Lease - Liabilities $ 36,601 $ 37,137 $ 36,601 $ 37,137 Weighted Average Lease Term - Operating Leases 7.79 yrs 8.50 years 7.79 yrs 8.50 years Weighted Average Discount Rate - Operating Leases 4.48% 4.53% 4.48% 4.53% The following maturity analysis shows the undiscounted cash flows due on the Company’s operating lease liabilities: (Dollars in thousands) 2021 remaining $ 2,998 2022 6,353 2023 5,724 2024 5,341 2025 4,929 Thereafter 19,011 Total undiscounted cash flows 44,356 Discount on cash flows (7,755) Total lease liability $ 36,601 |
Business Segment Information
Business Segment Information | 6 Months Ended |
Jun. 30, 2021 | |
Business Segment Information | |
Business Segment Information | 17) 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 credit losses on loans 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 June 30, 2021 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 33,860 $ 2,772 $ 36,632 Intersegment interest allocations 202 (202) — Total interest expense 1,756 — 1,756 Net interest income 32,306 2,570 34,876 Provision for (recapture of) credit losses on loans (486) (7) (493) Net interest income after provision 32,792 2,577 35,369 Noninterest income 2,049 120 2,169 Noninterest expense 24,331 1,444 25,775 Intersegment expense allocations 127 (127) — Income before income taxes 10,637 1,126 11,763 Income tax expense 2,617 333 2,950 Net income $ 8,020 $ 793 $ 8,813 Total assets $ 5,003,894 $ 68,981 $ 5,072,875 Loans, net of deferred fees $ 2,777,685 $ 47,111 $ 2,824,796 Goodwill $ 154,587 $ 13,044 $ 167,631 Three Months Ended June 30, 2020 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 34,570 2,562 $ 37,132 Intersegment interest allocations 218 (218) — Total interest expense 2,192 — 2,192 Net interest income 32,596 2,344 34,940 Provision for credit losses on loans 1,107 7 1,114 Net interest income after provision 31,489 2,337 33,826 Noninterest income 1,883 195 2,078 Noninterest expense 19,336 1,676 21,012 Intersegment expense allocations 106 (106) — Income before income taxes 14,142 750 14,892 Income tax expense 4,052 222 4,274 Net income $ 10,090 $ 528 $ 10,618 Total assets $ 4,546,199 $ 68,202 $ 4,614,401 Loans, net of deferred fees $ 2,644,480 $ 41,909 $ 2,686,389 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations Six Months Ended June 30, 2021 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 67,971 $ 5,422 $ 73,393 Intersegment interest allocations 413 (413) — Total interest expense 3,559 — 3,559 Net interest income 64,825 5,009 69,834 Provision for (recapture of) credit losses on loans (1,949) (56) (2,005) Net interest income after provision 66,774 5,065 71,839 Noninterest income 4,209 261 4,470 Noninterest expense 46,228 2,791 49,019 Intersegment expense allocations 233 (233) — Income before income taxes 24,988 2,302 27,290 Income tax expense 6,593 680 7,273 Net income $ 18,395 $ 1,622 $ 20,017 Total assets $ 5,003,894 $ 68,981 $ 5,072,875 Loans, net of deferred fees $ 2,777,685 $ 47,111 $ 2,824,796 Goodwill $ 154,587 $ 13,044 $ 167,631 Six Months Ended June 30, 2020 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 72,635 $ 5,439 $ 78,074 Intersegment interest allocations 502 (502) — Total interest expense 4,554 — 4,554 Net interest income 68,583 4,937 73,520 Provision for credit losses on loans 13,981 403 14,384 Net interest income after provision 54,602 4,534 59,136 Noninterest income 4,906 365 5,271 Noninterest expense 43,519 3,267 46,786 Intersegment expense allocations 235 (235) — Income before income taxes 16,224 1,397 17,621 Income tax expense 4,729 413 5,142 Net income $ 11,495 $ 984 $ 12,479 Total assets $ 4,546,199 $ 68,202 $ 4,614,401 Loans, net of deferred fees $ 2,644,480 $ 41,909 $ 2,686,389 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events | |
Subsequent Events | 18) Subsequent Events On July 22, 2021, the Company announced that its Board of Directors declared a $0.13 per share quarterly cash dividend to holders of common stock. The dividend will be payable on August 26, 2021, to shareholders of record at close of business day on August 12, 2021. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Basis of Presentation | |
Basis of Presentation | 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 (the “Bank” or “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, 2020. HBC is a commercial bank serving customers primarily located in Alameda, Contra Costa, Marin, San Benito, San Francisco, San Mateo, and Santa Clara 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. Material estimates that are particularly susceptible to significant change include the determination of the allowance for credit losses and any impairment of goodwill or intangible assets. It is reasonably possible the Company’s estimate of the allowance for credit losses and evaluation of impairment of goodwill or intangible assets could change as a result of the continued impact of the COVID-19 pandemic on the economy. The resulting change in these estimates could be material to the Company’s consolidated financial statements. The results for the three and six months ended June 30, 2021 are not necessarily indicative of the results expected for any subsequent period or for the entire year ending December 31, 2021. |
Capital and Liquidity | Capital and Liquidity While the Company believes that it has sufficient capital to withstand an extended economic recession brought about by COVID-19, its reported and regulatory capital ratios could be adversely impacted by credit losses. The Company relies on cash on hand as well as dividends from its subsidiary bank to service its debt. If the Company’s capital deteriorates such that its subsidiary bank is unable to pay dividends to it for an extended period of time, the Company may not be able to service its debt. The Company maintains access to multiple sources of liquidity. Wholesale funding markets have remained open to us. If funding costs are elevated for an extended period of time, it could have an adverse effect on the Company’s net interest margin. If an extended recession caused large numbers of the Company’s deposit customers to withdraw their funds, the Company might become more reliant on volatile or more expensive sources of funding. |
Asset Valuation | Asset Valuation The extent to which the COVID-19 pandemic will impact our business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict. Those developments and factors include the duration and spread of the pandemic, its severity, the actions to contain the pandemic or address its impact, and how quickly and to what extent normal economic and operating conditions can resume. We do not yet know the full extent of the impact. However, the effects could have a material adverse impact on our business, asset valuations, financial condition and results of operations. Material adverse impacts may include all or a combination of valuation impairments on our intangible assets, investments, loans, or deferred tax assets. |
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 December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes to simplify various aspects of the current guidance to promote consistent application of the standard among reporting entities by moving certain exceptions to the general principles. The amendments are effective as of January 1, 2021 and had no material impact on the consolidated financial statements. |
Accounting Guidance Issued But Not Yet Adopted | Accounting Guidance Issued But Not Yet Adopted In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary, optional guidance to ease the potential burden in accounting for, or recognizing the effects of, the transition away from the LIBOR or other interbank offered rate on financial reporting. To help with the transition to new reference rates, the ASU provides optional expedients and exceptions for applying GAAP to affected contract modifications and hedge accounting relationships. The main provisions include: ● A change in a contract’s reference interest rate would be accounted for as a continuation of that contract rather than as the creation of a new one for contracts, including loans, debt, leases, and other arrangements, that meet specific criteria. ● When updating its hedging strategies in response to reference rate reform, an entity would be allowed to preserve its hedge accounting. The guidance is applicable only to contracts or hedge accounting relationships that reference LIBOR or another reference rate expected to be discontinued. Because the guidance is meant to help entities through the transition period, it will be in effect for a limited time and will not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, for which an entity has elected certain optional expedients that are retained through the end of the hedging relationship. The amendments in this ASU are effective March 12, 2020 through December 31, 2022. ASU 2020-04 permits relief solely for reference rate reform actions and permits different elections over the effective date for legacy and new activity. Accordingly, the Company is evaluating and reassessing the elections on a quarterly basis. For current elections in effect regarding the assertion of the probability of forecasted transactions, the Company elects the expedient to assert the probability of the hedged interest payments and receipts regardless of any expected modification in terms related to reference rate reform. The Company believes the adoption of this guidance on activities subsequent to December 31, 2020 through December 31, 2022 will not have a material impact on the consolidated financial statements. |
London Inter-Bank Offered Rate ("LIBOR") Transition and Phase-Out | London Inter-Bank Offered Rate (“LIBOR”) Transition and Phase-Out We have loans and borrowings that are tied to LIBOR benchmark interest rates. It is anticipated that the LIBOR index will be phased-out by the end of 2021 and the Federal Reserve Bank of New York has established the Secured Overnight Financing Rate (“SOFR”) as its recommended alternative to LIBOR. We have created a sub-committee of our Asset Liability Management Committee to address LIBOR transition and phase-out issues. We are currently reviewing loan documentation, technology systems and procedures we will need to implement for the transition. We do not expect the transition to have a material impact to the financial statements. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Shareholders' Equity and Earnings Per Share | |
Schedule of reconciliation of factors used in computing basic and diluted earnings per common share | Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (Dollars in thousands, except per share amounts) Net income $ 8,813 $ 10,618 $ 20,017 $ 12,479 Weighted average common shares outstanding for basic earnings per common share 60,089,327 59,420,592 60,008,071 59,353,759 Dilutive potential common shares 640,814 691,831 564,386 798,728 Shares used in computing diluted earnings per common share 60,730,141 60,112,423 60,572,457 60,152,487 Basic earnings per share $ 0.15 $ 0.18 $ 0.33 $ 0.21 Diluted earnings per share $ 0.15 $ 0.18 $ 0.33 $ 0.21 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income ("AOCI") (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Accumulated Other Comprehensive Income ("AOCI") | |
Schedule of changes in AOCI by component | Three Months Ended June 30, 2021 and 2020 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 Maturity Items(1) Total (Dollars in thousands) Beginning balance April 1, 2021, net of taxes $ 3,327 $ 252 $ (14,847) $ (11,268) Other comprehensive income (loss) before reclassification, net of taxes (454) — 51 (403) Amounts reclassified from other comprehensive income (loss), net of taxes — (9) 148 139 Net current period other comprehensive income (loss), net of taxes (454) (9) 199 (264) Ending balance June 30, 2021, net of taxes $ 2,873 $ 243 $ (14,648) $ (11,532) Beginning balance April 1, 2020, net of taxes $ 6,627 $ 289 $ (11,625) $ (4,709) Other comprehensive loss before reclassification, net of taxes (395) — (10) (405) Amounts reclassified from other comprehensive income (loss), net of taxes (120) (9) 63 (66) Net current period other comprehensive income (loss), net of taxes (515) (9) 53 (471) Ending balance June 30, 2020, net of taxes $ 6,112 $ 280 $ (11,572) $ (5,180) (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 8—Benefit Plans) and includes split-dollar life insurance benefit plan. Six Months Ended June 30, 2021 and 2020 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 Maturity Items(1) Total (Dollars in thousands) Beginning balance January 1, 2021, net of taxes $ 3,929 $ 261 $ (14,907) $ (10,717) Other comprehensive loss before reclassification, net of taxes (1,056) — (2) (1,058) Amounts reclassified from other comprehensive income (loss), net of taxes — (18) 261 243 Net current period other comprehensive income (loss), net of taxes (1,056) (18) 259 (815) Ending balance June 30, 2021, net of taxes $ 2,873 $ 243 $ (14,648) $ (11,532) Beginning balance January 1, 2020, net of taxes $ 1,602 $ 298 $ (11,678) $ (9,778) Other comprehensive income (loss) before reclassification, net of taxes 4,701 — (6) 4,695 Amounts reclassified from other comprehensive income (loss), net of taxes (191) (18) 112 (97) Net current period other comprehensive income (loss), net of taxes 4,510 (18) 106 4,598 Ending balance June 30, 2020, net of taxes $ 6,112 $ 280 $ (11,572) $ (5,180) (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 8—Benefit Plans) and includes split-dollar life insurance benefit plan. |
Schedule of reclassifications out of AOCI into net income | Amounts Reclassified from AOCI Three Months Ended June 30, Affected Line Item Where Details About AOCI Components 2021 2020 Net Income is Presented (Dollars in thousands) Unrealized gains on available-for-sale securities and I/O strips $ — $ 170 Gain on sales of securities — (50) Income tax expense — 120 Net of tax Amortization of unrealized gain on securities available- for-sale that were reclassified to securities held-to-maturity 13 13 Interest income on taxable securities (4) (4) Income tax expense 9 9 Net of tax Amortization of defined benefit pension plan items (1) Prior transition obligation and acturial losses (2) 1 15 Prior service cost and actuarial losses (3) (211) (105) (210) (90) Other noninterest expense 62 27 Income tax benefit (148) (63) Net of tax Total reclassification for the period $ (139) $ 66 Amounts Reclassified from AOCI Six Months Ended June 30, Affected Line Item Where Details About AOCI Components 2021 2020 Net Income is Presented (Dollars in thousands) Unrealized gains on available-for-sale securities and I/O strips $ — $ 270 Gain on sales of securities — (79) Income tax expense — 191 Net of tax Amortization of unrealized gain on securities available-for-sale that were reclassified to securities held-to-maturity 26 26 Interest income on taxable securities (8) (8) Income tax expense 18 18 Net of tax Amortization of defined benefit pension plan items (1) Prior transition obligation and actuarial losses (2) 2 30 Actuarial losses (3) (372) (190) (370) (160) Other noninterest expense 109 48 Income tax benefit (261) (112) Net of tax Total reclassification from AOCI for the period $ (243) $ 97 (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 8—Benefit Plans). (2) This is related to the split dollar life insurance benefit plan. (3) This is related to the supplemental executive retirement plan. |
Securities (Tables)
Securities (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Securities | |
Schedule of amortized cost and estimated fair value of securities | Gross Gross Allowance Estimated Amortized Unrealized Unrealized for Credit Fair June 30, 2021 Cost Gains (Losses) Losses Value (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 126,682 $ 4,210 $ — $ — $ 130,892 U.S. Treasury 14,969 94 — — 15,063 Total $ 141,651 $ 4,304 $ — $ — $ 145,955 Gross Gross Estimated Allowance Amortized Unrecognized Unrecognized Fair for Credit June 30, 2021 Cost Gains (Losses) Value Losses (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 361,184 $ 5,330 $ (1,121) $ 365,393 $ — Municipals - exempt from Federal tax 60,153 1,209 — 61,362 (51) Total $ 421,337 $ 6,539 $ (1,121) $ 426,755 $ (51) Gross Gross Allowance Estimated Amortized Unrealized Unrealized for Credit Fair December 31, 2020 Cost Gains (Losses) Losses Value (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 170,215 $ 5,111 $ — $ — $ 175,326 U.S. Treasury 59,797 651 — — 60,448 Total $ 230,012 $ 5,762 $ — $ — $ 235,774 Gross Gross Estimated Allowance Amortized Unrecognized Unrecognized Fair for Credit December 31, 2020 Cost Gains (Losses) Value Losses (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 228,652 $ 6,075 $ (230) $ 234,497 $ — Municipals - exempt from Federal tax 68,791 1,639 — 70,430 (54) Total $ 297,443 $ 7,714 $ (230) $ 304,927 $ (54) |
Schedule of securities with unrealized losses | Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized June 30, 2021 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 67,111 $ (1,121) $ — $ — $ 67,111 $ (1,121) Total $ 67,111 $ (1,121) $ — $ — $ 67,111 $ (1,121) Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2020 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 30,930 $ (230) $ — $ — $ 30,930 $ (230) Total $ 30,930 $ (230) $ — $ — $ 30,930 $ (230) |
Schedule of proceeds from sales of securities and the resulting gains and losses | Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (Dollars in thousands) Proceeds $ — $ 30,085 $ — $ 56,598 Gross gains — 170 — 270 Gross losses — — — — |
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 3 months or less $ 9,997 $ 10,044 Due after 3 months through one year 4,972 5,019 Agency mortgage-backed securities 126,682 130,892 Total $ 141,651 $ 145,955 Held-to-maturity Amortized Estimated Cost Fair Value (Dollars in thousands) Due after 3 months through one year $ 499 $ 500 Due after one through five years 10,605 10,865 Due after five through ten years 31,284 31,824 Due after ten years 17,765 18,173 Agency mortgage-backed securities 361,184 365,393 Total $ 421,337 $ 426,755 |
Schedule of roll-forward by major security type of the allowance for credit losses on debt securities held-to-maturity | Municipals (Dollars in thousands) Beginning balance January 1, 2021 $ 54 Provision for (recapture of) credit losses (3) Ending balance June 30, 2021 $ 51 |
Loans and Allowance for Credi_2
Loans and Allowance for Credit Losses on Loans (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Loans and Allowance for Credit Losses on Loans | |
Schedule of loans | June 30, December 31, 2021 2020 (Dollars in thousands) Loans held-for-investment: Commercial $ 844,147 $ 846,386 Real estate: CRE - owner occupied 583,091 560,362 CRE - non-owner occupied 742,135 693,103 Land and construction 129,426 144,594 Home equity 107,873 111,885 Multifamily 198,771 166,425 Residential mortgages 205,904 85,116 Consumer and other 21,519 18,116 Loans 2,832,866 2,625,987 Deferred loan fees, net (8,070) (6,726) Loans, net of deferred fees 2,824,796 2,619,261 Allowance for credit losses on loans (43,956) (44,400) Loans, net $ 2,780,840 $ 2,574,861 |
Schedule of changes in allowance for loan (credit) losses | Changes in the allowance for credit losses on loans were as follows for the periods indicated: Three Months Ended June 30, 2021 CRE CRE Owner Non-owner Land & Home Multi- Residential Consumer Commercial Occupied Occupied Construction Equity Family Mortgage and Other Total (Dollars in thousands) Beginning of period balance $ 11,600 $ 8,368 $ 16,431 $ 2,754 $ 1,171 $ 2,751 $ 918 $ 303 $ 44,296 Charge-offs (105) — — — — — — — (105) Recoveries 115 4 — 68 16 — — 55 258 Net recoveries 10 4 — 68 16 — — 55 153 Provision for (recapture of) credit losses on loans (753) (166) 54 (686) (118) 199 1,050 (73) (493) End of period balance $ 10,857 $ 8,206 $ 16,485 $ 2,136 $ 1,069 $ 2,950 $ 1,968 $ 285 $ 43,956 Three Months Ended June 30, 2020 CRE CRE Owner Non-owner Land & Home Multi- Residential Consumer Commercial Occupied Occupied Construction Equity Family Mortgage and Other Total (Dollars in thousands) Beginning of period balance $ 12,801 $ 7,737 $ 15,645 $ 2,603 $ 1,746 $ 1,622 $ 708 $ 1,841 $ 44,703 Charge-offs (465) - - - - - - - (465) Recoveries 46 1 - 13 31 - - 1 92 Net (charge-offs) recoveries (419) 1 - 13 31 - - 1 (373) Provision for (recapture of) credit losses on loans 797 809 (196) (64) 74 206 117 (629) 1,114 End of period balance $ 13,179 $ 8,547 $ 15,449 $ 2,552 $ 1,851 $ 1,828 $ 825 $ 1,213 $ 45,444 Six Months Ended June 30, 2021 CRE CRE Owner Non-owner Land & Home Multi- Residential Consumer Commercial Occupied Occupied Construction Equity Family Mortgage and Other Total (Dollars in thousands) Beginning of period balance $ 11,587 $ 8,560 $ 16,416 $ 2,509 $ 1,297 $ 2,804 $ 943 $ 284 $ 44,400 Charge-offs (368) — — — — — — — (368) Recoveries 928 8 — 884 39 — — 70 1,929 Net recoveries 560 8 — 884 39 — — 70 1,561 Provision for (recapture of) credit losses on loans (1,290) (362) 69 (1,257) (267) 146 1,025 (69) (2,005) End of period balance $ 10,857 $ 8,206 $ 16,485 $ 2,136 $ 1,069 $ 2,950 $ 1,968 $ 285 $ 43,956 Six Months Ended June 30, 2020 Owner Non-owner Land & Home Multi- Residential Consumer Commercial Occupied Occupied Construction Equity Family Mortgage and Other Total (Dollars in thousands) Beginning of period balance $ 10,453 $ 3,825 $ 3,760 $ 2,621 $ 2,244 $ 57 $ 243 $ 82 $ 23,285 Adoption of Topic 326 (3,663) 3,169 7,912 (1,163) (923) 1,196 435 1,607 8,570 Balance at adoption on January 1, 2020 6,790 6,994 11,672 1,458 1,321 1,253 678 1,689 31,855 Charge-offs (1,135) — — — — — — (3) (1,138) Recoveries 255 1 — 32 54 — — 1 343 Net (charge-offs) recoveries (880) 1 — 32 54 — — (2) (795) Provision for (recapture of) credit losses on loans 7,269 1,552 3,777 1,062 476 575 147 (474) 14,384 End of period balance $ 13,179 $ 8,547 $ 15,449 $ 2,552 $ 1,851 $ 1,828 $ 825 $ 1,213 $ 45,444 |
Schedule of nonperforming loans by class | June 30, 2021 Restructured Nonaccrual Nonaccrual and Loans with no Specific with Specific over 90 Days Allowance for Allowance for Past Due Credit Credit and Still Losses Losses Accruing Total (Dollars in thousands) Commercial $ 415 $ 1,378 $ 164 $ 1,957 Real estate: CRE - Owner Occupied 1,774 — — 1,774 CRE - Non-Owner Occupied — — 725 725 Home equity 168 — — 168 Multifamily 1,149 — — 1,149 Consumer and other 407 — — 407 Total $ 3,913 $ 1,378 $ 889 $ 6,180 December 31, 2020 Restructured Nonaccrual Nonaccrual and Loans with no Specific with no Specific over 90 Days Allowance for Allowance for Past Due Credit Credit and Still Losses Losses Accruing Total (Dollars in thousands) Commercial $ 752 $ 1,974 $ 81 $ 2,807 Real estate: CRE - Owner Occupied 3,706 — — 3,706 Home equity 949 — — 949 Consumer and other 407 — — 407 Total $ 5,814 $ 1,974 $ 81 $ 7,869 |
Schedule of aging of past due loans by class of loans | June 30, 2021 30 - 59 60 - 89 90 Days or Days Days Greater Total Past Due Past Due Past Due Past Due Current Total (Dollars in thousands) Commercial $ 4,467 $ 1,187 $ 261 $ 5,915 $ 838,232 $ 844,147 Real estate: CRE - Owner Occupied 1,172 9 1,143 2,324 580,767 583,091 CRE - Non-Owner Occupied 145 — 725 870 741,265 742,135 Land and construction — — — — 129,426 129,426 Home equity — — — — 107,873 107,873 Multifamily — — — — 198,771 198,771 Residential mortgages — — — — 205,904 205,904 Consumer and other — — 407 407 21,112 21,519 Total $ 5,784 $ 1,196 $ 2,536 $ 9,516 $ 2,823,350 $ 2,832,866 December 31, 2020 30 - 59 60 - 89 90 Days or Days Days Greater Total Past Due Past Due Past Due Past Due Current Total (Dollars in thousands) Commercial $ 3,524 $ 259 $ 392 $ 4,175 $ 842,211 $ 846,386 Real estate: CRE - Owner Occupied 1,133 — 29 1,162 559,200 560,362 CRE - Non-Owner Occupied — 485 — 485 692,618 693,103 Land and construction — — — — 144,594 144,594 Home equity — — — 111,885 111,885 Multifamily — — — — 166,425 166,425 Residential mortgages — — — — 85,116 85,116 Consumer and other — — 407 407 17,709 18,116 Total $ 4,657 $ 744 $ 828 $ 6,229 $ 2,619,758 $ 2,625,987 |
Summary of loan portfolio by loan type and credit quality classification | Revolving Loans Term Loans Amortized Cost Basis by Originated Period Amortized 2016 and Cost 6/30/2021 12/31/2020 12/31/2019 12/31/2018 12/31/2017 Prior Basis Total (Dollars in thousands) Commercial: Pass $ 302,753 $ 163,815 $ 19,144 $ 15,904 $ 9,543 $ 8,699 $ 307,122 $ 826,980 Special Mention 323 733 - 1,082 447 270 978 3,833 Substandard 1,349 3,337 - 16 452 30 6,357 11,541 Substandard-Nonaccrual 30 1,143 - - - 106 514 1,793 Total 304,455 169,028 19,144 17,002 10,442 9,105 314,971 844,147 CRE - Owner Occupied: Pass 78,046 154,477 74,843 66,269 37,006 135,709 24,038 570,388 Special Mention 531 2,648 680 1,495 770 1,089 - 7,213 Substandard 2,547 - 394 735 40 - 3,716 Substandard-Nonaccrual - 1,774 - - - - - 1,774 Total 78,577 161,446 75,523 68,158 38,511 136,838 24,038 583,091 CRE - Non-Owner Occupied: Pass 131,832 148,179 121,987 55,878 75,126 165,195 22,377 720,574 Special Mention - 2,808 - 2,527 606 6,338 2,165 14,444 Substandard - 5,240 - 1,392 - 485 - 7,117 Substandard-Nonaccrual - - - - - - - - Total 131,832 156,227 121,987 59,797 75,732 172,018 24,542 742,135 Land and construction: Pass 58,297 56,553 4,443 - - 1,321 7,453 128,067 Special Mention - - - - - - - - Substandard 1,359 - - - - - - 1,359 Substandard-Nonaccrual - - - - - - - - Total 59,656 56,553 4,443 - - 1,321 7,453 129,426 Home equity: Pass - - - 61 - - 104,746 104,807 Special Mention - - - - - - 1,932 1,932 Substandard - - - - - 143 823 966 Substandard-Nonaccrual - 107 - - - - 61 168 Total - 107 - 61 - 143 107,562 107,873 Multifamily: Pass 42,576 32,568 37,612 16,321 21,215 35,092 915 186,299 Special Mention - - - - - 10,444 - 10,444 Substandard - 879 - - - - - 879 Substandard-Nonaccrual 1,149 - - - - - - 1,149 Total 43,725 33,447 37,612 16,321 21,215 45,536 915 198,771 Residential mortgage: Pass 137,195 18,204 9,379 3,157 5,129 30,567 960 204,591 Special Mention - - - - - - - - Substandard - - - - - 1,313 - 1,313 Substandard-Nonaccrual - - - - - - - - Total 137,195 18,204 9,379 3,157 5,129 31,880 960 205,904 Consumer and other: Pass - 6 409 1,456 17 1,051 17,953 20,892 Special Mention - - - - - - - - Substandard 20 - - - - - 200 220 Substandard-Nonaccrual - - 407 - - - 407 Total 20 6 409 1,863 17 1,051 18,153 21,519 Total loans $ 755,460 $ 595,018 $ 268,497 $ 166,359 $ 151,046 $ 397,892 $ 498,594 $ 2,832,866 Risk Grades: Pass $ 750,699 $ 573,802 $ 267,817 $ 159,046 $ 148,036 $ 377,634 $ 485,564 $ 2,762,598 Special Mention 854 6,189 680 5,104 1,823 18,141 5,075 37,866 Substandard 2,728 12,003 - 1,802 1,187 2,011 7,380 27,111 Substandard-Nonaccrual 1,179 3,024 - 407 - 106 575 5,291 Grand Total $ 755,460 $ 595,018 $ 268,497 $ 166,359 $ 151,046 $ 397,892 $ 498,594 $ 2,832,866 Revolving Loans Term Loans Amortized Cost Basis by Originated Period Amortized 2015 and Cost 2020 2019 2018 2017 2016 Prior Basis Total (Dollars in thousands) Commercial: Pass $ 431,369 $ 33,350 $ 21,154 $ 13,840 $ 7,341 $ 8,292 $ 296,286 $ 811,632 Special Mention 15,720 716 1,301 953 713 170 1,937 21,510 Substandard 4,036 - 19 758 2,396 73 3,236 10,518 Substandard-Nonaccrual 2,106 56 36 - 115 26 387 2,726 Total 453,231 34,122 22,510 15,551 10,565 8,561 301,846 846,386 CRE - Owner Occupied: Pass 168,224 73,064 68,068 51,705 50,716 109,350 15,964 537,091 Special Mention 3,151 2,568 4,128 783 - 2,569 - 13,199 Substandard 2,561 - 400 2,954 - 451 - 6,366 Substandard-Nonaccrual 3,678 - - - - 28 - 3,706 Total 177,614 75,632 72,596 55,442 50,716 112,398 15,964 560,362 CRE - Non-Owner Occupied: Pass 166,550 128,361 68,796 99,816 57,422 150,683 1,926 673,554 Special Mention 11,930 - 2,557 - - - - 14,487 Substandard 3,166 - 1,411 - 485 - - 5,062 Substandard-Nonaccrual - - - - - - - - Total 181,646 128,361 72,764 99,816 57,907 150,683 1,926 693,103 Land and construction: Pass 114,932 22,054 - - - 1,343 4,906 143,235 Special Mention - - - - - - - - Substandard 1,359 - - - - - - 1,359 Substandard-Nonaccrual - - - - - - - - Total 116,291 22,054 - - - 1,343 4,906 144,594 Home equity: Pass 266 - 74 - - - 109,848 110,188 Special Mention - - - - - - - - Substandard - - - - - 143 605 748 Substandard-Nonaccrual 117 - - - - - 832 949 Total 383 - 74 - - 143 111,285 111,885 Multifamily: Pass 31,481 39,183 17,248 24,572 16,235 30,751 880 160,350 Special Mention - - - - - 5,186 - 5,186 Substandard 889 - - - - - - 889 Substandard-Nonaccrual - - - - - - - - Total 32,370 39,183 17,248 24,572 16,235 35,937 880 166,425 Residential mortgage: Pass 12,798 10,048 3,246 7,324 28,115 15,568 - 77,099 Special Mention 5,089 - 1,630 - - - 6,719 Substandard - - - - - 1,298 - 1,298 Substandard-Nonaccrual - - - - - - - - Total 17,887 10,048 4,876 7,324 28,115 16,866 - 85,116 Consumer and other: Pass 10 522 1,486 20 116 987 14,568 17,709 Special Mention - - - - - - - - Substandard - - - - - - - - Substandard-Nonaccrual - - 407 - - - - 407 Total 10 522 1,893 20 116 987 14,568 18,116 Total loans $ 979,432 $ 309,922 $ 191,961 $ 202,725 $ 163,654 $ 326,918 $ 451,375 $ 2,625,987 Risk Grades:. Pass $ 925,630 $ 306,582 $ 180,072 $ 197,277 $ 159,945 $ 316,974 $ 444,378 $ 2,530,858 Special Mention 35,890 3,284 9,616 1,736 713 7,925 1,937 61,101 Substandard 12,011 - 1,830 3,712 2,881 1,965 3,841 26,240 Substandard-Nonaccrual 5,901 56 443 - 115 54 1,219 7,788 Grand Total $ 979,432 $ 309,922 $ 191,961 $ 202,725 $ 163,654 $ 326,918 $ 451,375 $ 2,625,987 |
Schedule of amortized cost basis of collateral-dependent loans | The following table presents the amortized cost basis of collateral-dependent loans by loan classification at June 30, 2021: Collateral Type Real Estate Business Property Assets Unsecured Total (Dollars in thousands) Commercial $ 25 $ 1,324 $ 29 $ 1,378 Total $ 25 $ 1,324 $ 29 $ 1,378 The following table presents the amortized cost basis of collateral-dependent loans by loan classification at December 31, 2020: Collateral Type Real Estate Business Property Assets Unsecured Total (Dollars in thousands) Commercial $ 29 $ 1,815 $ 130 $ 1,974 Total $ 29 $ 1,815 $ 130 $ 1,974 |
Schedule of loans by class modified as troubled debt restructurings | During the Six Months Ended June 30, 2021 Pre-modification Post-modification Number Outstanding Outstanding of Recorded Recorded Troubled Debt Restructurings: Contracts Investment Investment (Dollars in thousands) Commercial 1 $ 3 $ 3 Total 1 $ 3 $ 3 During the Six Months Ended June 30, 2020 Pre-modification Post-modification Number Outstanding Outstanding of Recorded Recorded Troubled Debt Restructurings: Contracts Investment Investment (Dollars in thousands) Commercial 3 $ 13 $ 13 Total 3 $ 13 $ 13 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Other Intangible Assets | |
Schedule of carrying amount of goodwill by segment | June 30, December 31, 2021 2020 (Dollars in thousands) Banking $ 154,587 $ 154,587 Factoring 13,044 13,044 Total Goodwill $ 167,631 $ 167,631 |
Summary of Company's intangible assets | June 30, 2021 Gross Carrying Accumulated Amount Amortization Total (Dollars in thousands) Core deposit intangibles $ 25,023 $ (10,567) $ 14,456 Customer relationship and brokered relationship intangibles 1,900 (1,266) 634 Below market leases 770 (683) 87 Total $ 27,693 $ (12,516) $ 15,177 December 31, 2020 Gross Carrying Accumulated Amount Amortization Total (Dollars in thousands) Core deposit intangibles $ 25,023 $ (9,153) $ 15,870 Customer relationship and brokered relationship intangibles 1,900 (1,171) 729 Below market leases 770 (705) 65 Total $ 27,693 $ (11,029) $ 16,664 |
Schedule of estimated amortization expense | Customer & Below/ Core Brokered (Above) Total Deposit Relationship Market Amortization Year Intangible Intangible Lease Expense (Dollars in thousands) 2021 remaining $ 1,415 $ 95 $ (1) $ 1,509 2022 2,447 190 (2) 2,635 2023 2,217 190 (2) 2,405 2024 2,023 159 5 2,187 2025 1,795 — 18 1,813 Thereafter 4,559 — 69 4,628 $ 14,456 $ 634 $ 87 $ 15,177 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Income Taxes | |
Summary of carrying amount of low income tax housing investment | June 30, December 31, 2021 2020 (Dollars in thousands) Low income housing investments $ 4,827 $ 5,246 Future commitments $ 596 $ 596 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Supplemental Retirement Plan | |
Benefit plans | |
Schedule of components of net periodic benefit cost | Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (Dollars in thousands) Components of net periodic benefit cost: Service cost $ 120 $ 123 $ 240 $ 246 Interest cost 190 236 380 467 Amortization of prior service cost 75 — 100 — Amortization of net actuarial loss 136 105 272 190 Net periodic benefit cost $ 521 $ 464 $ 992 $ 903 |
Split-Dollar Life Insurance Benefit Plan | |
Benefit plans | |
Schedule of change in projected benefit obligation | June 30, December 31, 2021 2020 (Dollars in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 9,689 $ 8,198 Interest cost 110 246 Actuarial loss — 1,245 Projected benefit obligation at end of period $ 9,799 $ 9,689 |
Schedule of amounts recognized in accumulated other comprehensive loss | June 30, December 31, 2021 2020 (Dollars in thousands) Net actuarial loss $ 5,217 $ 5,170 Prior transition obligation 925 970 Accumulated other comprehensive loss $ 6,142 $ 6,140 |
Schedule of components of net periodic benefit cost | Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (Dollars in thousands) Amortization of prior transition obligation and actuarial losses $ (1) $ (15) $ (2) $ (30) Interest cost 55 62 110 124 Net periodic benefit cost $ 54 $ 47 $ 108 $ 94 |
Fair Value (Tables)
Fair Value (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
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 June 30, 2021 Available-for-sale securities: Agency mortgage-backed securities $ 130,892 $ — $ 130,892 $ — U.S. Treasury 15,063 15,063 — — I/O strip receivables 274 — 274 — Assets at December 31, 2020 Available-for-sale securities: Agency mortgage-backed securities $ 175,326 $ — $ 175,326 $ — U.S. Treasury 60,448 60,448 — — I/O strip receivables 305 — 305 — |
Schedule of carrying amounts and estimated fair values of financial instruments | 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 $ 1,328,322 $ 1,328,322 $ — $ — $ 1,328,322 Securities available-for-sale 145,955 15,063 130,892 — 145,955 Securities held-to-maturity 421,286 — 426,755 — 426,755 Loans (including loans held-for-sale), net 2,785,184 — 4,344 2,796,339 2,800,683 FHLB stock, FRB stock, and other investments 32,495 — — — N/A Accrued interest receivable 10,397 103 1,510 8,784 10,397 I/O strips receivables 274 — 274 — 274 Liabilities: Time deposits $ 158,644 $ — $ 158,843 $ — $ 158,843 Other deposits 4,185,828 — 4,185,828 — 4,185,828 Subordinated debt 39,832 — 40,432 — 40,432 Accrued interest payable 548 — 548 — 548 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 $ 1,131,073 $ 1,131,073 $ — $ — $ 1,131,073 Securities available-for-sale 235,774 60,448 175,326 — 235,774 Securities held-to-maturity 297,389 — 304,927 — 304,927 Loans (including loans held-for-sale), net 2,576,560 — 1,699 2,572,993 2,574,692 FHLB stock, FRB stock, and other investments 33,522 — — — N/A Accrued interest receivable 10,546 309 1,512 8,725 10,546 I/O strips receivables 305 — 305 — 305 Liabilities: Time deposits $ 153,407 $ — $ 153,740 $ — $ 153,740 Other deposits 3,761,079 — 3,761,079 — 3,761,079 Subordinated debt 39,740 — 40,340 — 40,340 Accrued interest payable 545 — 545 — 545 |
Equity Plan (Tables)
Equity Plan (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
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, 2021 2,546,821 $ 9.30 Granted 350,750 $ 12.08 Exercised (132,342) $ 5.93 Forfeited or expired (36,766) $ 12.89 Outstanding at June 30, 2021 2,728,463 $ 9.77 5.71 $ 6,286,272 Vested or expected to vest 2,564,755 5.71 $ 5,909,096 Exercisable at June 30, 2021 1,996,727 4.51 $ 5,826,621 |
Schedule of information related to the equity Plan | Six Months Ended June 30, 2021 2020 Intrinsic value of options exercised $ 679,403 $ 2,057,914 Cash received from option exercise $ 784,264 $ 1,489,991 Tax benefit (expense) realized from option exercises $ 57,215 $ 33,783 Weighted average fair value of options granted $ 2.33 $ 1.15 |
Schedule of assumptions used to estimate the fair value of each option grant on the date of grant | Six Months Ended June 30, 2021 2020 Expected life in months(1) 72 72 Volatility(1) 33 % 29 % Weighted average risk-free interest rate(2) 1.10 % 0.53 % Expected dividends(3) 4.30 % 5.71 % (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, 2021 298,700 $ 10.83 Granted 187,325 $ 12.01 Vested (153,101) $ 11.42 Forfeited or expired (34,358) $ 10.23 Nonvested shares at June 30, 2021 298,566 $ 11.03 |
Capital Requirements (Tables)
Capital Requirements (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
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 June 30, 2021 Total Capital $ 491,475 15.6 % $ 329,965 10.5 % (to risk-weighted assets) Tier 1 Capital $ 418,134 13.3 % $ 267,115 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 418,134 13.3 % $ 219,977 7.0 % (to risk-weighted assets) Tier 1 Capital $ 418,134 8.6 % $ 194,156 4.0 % (to average assets) (1) Includes 2.5% capital conservation buffer, 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, 2020 Total Capital $ 483,870 16.5 % $ 307,067 10.5 % (to risk-weighted assets) Tier 1 Capital $ 410,307 14.0 % $ 248,578 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 410,307 14.0 % $ 204,711 7.0 % (to risk-weighted assets) Tier 1 Capital $ 410,307 9.1 % $ 180,281 4.0 % (to average assets) (2) Includes 2.5% capital conservation buffer, 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 June 30, 2021 Total Capital $ 469,701 15.0 % $ 314,070 10.0 % $ 329,773 10.5 % (to risk-weighted assets) Tier 1 Capital $ 436,192 13.9 % $ 251,256 8.0 % $ 266,959 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 436,192 13.9 % $ 204,145 6.5 % $ 219,849 7.0 % (to risk-weighted assets) Tier 1 Capital $ 436,192 9.0 % $ 242,600 5.0 % $ 194,080 4.0 % (to average assets) (1) Includes 2.5% capital conservation buffer, 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, 2020 Total Capital $ 461,933 15.8 % $ 292,258 10.0 % $ 306,871 10.5 % (to risk-weighted assets) Tier 1 Capital $ 428,109 14.6 % $ 233,806 8.0 % $ 248,419 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 428,109 14.6 % $ 189,968 6.5 % $ 204,580 7.0 % (to risk-weighted assets) Tier 1 Capital $ 428,109 9.5 % $ 225,263 5.0 % $ 180,211 4.0 % (to average assets) (1) Includes 2.5% capital conservation buffer, except the Tier 1 Capital to average assets ratio. |
Commitments and Loss Continge_2
Commitments and Loss Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Loss Contingencies | |
Schedule of commitments to extend credit | June 30, 2021 December 31, 2020 Fixed Variable Fixed Variable Rate Rate Total Rate Rate Total (Dollars in thousands) Unused lines of credit and commitments to make loans $ 131,878 $ 1,018,383 $ 1,150,261 $ 121,560 $ 970,614 $ 1,092,174 Standby letters of credit 2,877 15,357 18,234 3,049 18,970 22,019 $ 134,755 $ 1,033,740 $ 1,168,495 $ 124,609 $ 989,584 $ 1,114,193 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Revenue Recognition | |
Schedule of noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606 | Three Months Ended June 30, 2021 2020 (Dollars in thousands) Noninterest Income In-scope of Topic 606: Service charges and fees on deposit accounts $ 659 $ 650 Gain on the disposition of foreclosed assets — — Total noninterest income in-scope of Topic 606 659 650 Noninterest Income Out-of-scope of Topic 606 1,510 1,428 Total noninterest income $ 2,169 $ 2,078 Six Months Ended June 30, 2021 2020 (Dollars in thousands) Noninterest Income In-scope of Topic 606: Service charges and fees on deposit accounts $ 1,260 $ 1,619 Gain on the disposition of foreclosed assets — 791 Total noninterest income in-scope of Topic 606 1,260 2,410 Noninterest Income Out-of-scope of Topic 606 3,210 2,861 Total noninterest income $ 4,470 $ 5,271 |
Noninterest Expense (Tables)
Noninterest Expense (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Noninterest Expense | |
Schedule of noninterest expense | Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (Dollars in thousands) Salaries and employee benefits $ 12,572 $ 12,300 $ 26,530 $ 26,503 Reserve for legal settlement 4,000 — 4,000 — Occupancy and equipment 2,247 1,766 4,521 3,538 Professional fees 1,771 1,155 3,490 2,590 Amortization of intangible assets 754 964 1,487 1,822 Insurance expense 661 516 1,324 1,034 Data processing 583 779 1,117 1,755 Software subscriptions 501 746 977 1,635 Other 2,686 2,786 5,573 7,909 Total noninterest expense $ 25,775 $ 21,012 $ 49,019 $ 46,786 The following table presents the merger-related costs included in other and salaries and employee benefits by category for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (Dollars in thousands) Salaries and employee benefits $ — $ — $ — $ 356 Other (24) 59 34 2,127 Total merger-related costs $ (24) $ 59 $ 34 $ 2,483 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases | |
Schedule of leases | Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 (Dollars in thousands) Operating Lease Cost (Cost resulting from lease payments) $ 1,621 $ 1,733 $ 3,292 $ 3,502 Operating Lease - Operating Cash Flows (Fixed Payments) $ 1,220 $ 1,379 $ 2,406 $ 2,570 Operating Lease - ROU assets $ 36,601 $ 37,137 $ 36,601 $ 37,137 Operating Lease - Liabilities $ 36,601 $ 37,137 $ 36,601 $ 37,137 Weighted Average Lease Term - Operating Leases 7.79 yrs 8.50 years 7.79 yrs 8.50 years Weighted Average Discount Rate - Operating Leases 4.48% 4.53% 4.48% 4.53% |
Schedule of maturity analysis shows the undiscounted cash flows due on the Company's operating lease liabilities | (Dollars in thousands) 2021 remaining $ 2,998 2022 6,353 2023 5,724 2024 5,341 2025 4,929 Thereafter 19,011 Total undiscounted cash flows 44,356 Discount on cash flows (7,755) Total lease liability $ 36,601 |
Business Segment Information (T
Business Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Business Segment Information | |
Schedule of information by operating segment | Three Months Ended June 30, 2021 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 33,860 $ 2,772 $ 36,632 Intersegment interest allocations 202 (202) — Total interest expense 1,756 — 1,756 Net interest income 32,306 2,570 34,876 Provision for (recapture of) credit losses on loans (486) (7) (493) Net interest income after provision 32,792 2,577 35,369 Noninterest income 2,049 120 2,169 Noninterest expense 24,331 1,444 25,775 Intersegment expense allocations 127 (127) — Income before income taxes 10,637 1,126 11,763 Income tax expense 2,617 333 2,950 Net income $ 8,020 $ 793 $ 8,813 Total assets $ 5,003,894 $ 68,981 $ 5,072,875 Loans, net of deferred fees $ 2,777,685 $ 47,111 $ 2,824,796 Goodwill $ 154,587 $ 13,044 $ 167,631 Three Months Ended June 30, 2020 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 34,570 2,562 $ 37,132 Intersegment interest allocations 218 (218) — Total interest expense 2,192 — 2,192 Net interest income 32,596 2,344 34,940 Provision for credit losses on loans 1,107 7 1,114 Net interest income after provision 31,489 2,337 33,826 Noninterest income 1,883 195 2,078 Noninterest expense 19,336 1,676 21,012 Intersegment expense allocations 106 (106) — Income before income taxes 14,142 750 14,892 Income tax expense 4,052 222 4,274 Net income $ 10,090 $ 528 $ 10,618 Total assets $ 4,546,199 $ 68,202 $ 4,614,401 Loans, net of deferred fees $ 2,644,480 $ 41,909 $ 2,686,389 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations Six Months Ended June 30, 2021 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 67,971 $ 5,422 $ 73,393 Intersegment interest allocations 413 (413) — Total interest expense 3,559 — 3,559 Net interest income 64,825 5,009 69,834 Provision for (recapture of) credit losses on loans (1,949) (56) (2,005) Net interest income after provision 66,774 5,065 71,839 Noninterest income 4,209 261 4,470 Noninterest expense 46,228 2,791 49,019 Intersegment expense allocations 233 (233) — Income before income taxes 24,988 2,302 27,290 Income tax expense 6,593 680 7,273 Net income $ 18,395 $ 1,622 $ 20,017 Total assets $ 5,003,894 $ 68,981 $ 5,072,875 Loans, net of deferred fees $ 2,777,685 $ 47,111 $ 2,824,796 Goodwill $ 154,587 $ 13,044 $ 167,631 Six Months Ended June 30, 2020 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 72,635 $ 5,439 $ 78,074 Intersegment interest allocations 502 (502) — Total interest expense 4,554 — 4,554 Net interest income 68,583 4,937 73,520 Provision for credit losses on loans 13,981 403 14,384 Net interest income after provision 54,602 4,534 59,136 Noninterest income 4,906 365 5,271 Noninterest expense 43,519 3,267 46,786 Intersegment expense allocations 235 (235) — Income before income taxes 16,224 1,397 17,621 Income tax expense 4,729 413 5,142 Net income $ 11,495 $ 984 $ 12,479 Total assets $ 4,546,199 $ 68,202 $ 4,614,401 Loans, net of deferred fees $ 2,644,480 $ 41,909 $ 2,686,389 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations |
Basis of Presentation - Segment
Basis of Presentation - Segment Reporting (Details) | 6 Months Ended |
Jun. 30, 2021USD ($)segment | |
Segment Reporting | |
Number of customers accounting for more than 10 percent of revenue for HBC or the Company | $ | 0 |
Number of Operating Segments | segment | 2 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Reconciliation of factors used in computing basic and diluted earnings per common share | ||||||
Net income | $ 8,813 | $ 11,204 | $ 10,618 | $ 1,861 | $ 20,017 | $ 12,479 |
Weighted average common shares outstanding for basic earnings per common share (in shares) | 60,089,327 | 59,420,592 | 60,008,071 | 59,353,759 | ||
Dilutive potential common shares | 640,814 | 691,831 | 564,386 | 798,728 | ||
Shares used in computing diluted earnings per common share (in shares) | 60,730,141 | 60,112,423 | 60,572,457 | 60,152,487 | ||
Basic earnings per share (in dollars per share) | $ 0.15 | $ 0.18 | $ 0.33 | $ 0.21 | ||
Diluted earnings per share (in dollars per share) | $ 0.15 | $ 0.18 | $ 0.33 | $ 0.21 | ||
Number of shares not in computing diluted earnings per common share | 1,057,945 | 1,722,342 | 1,072,945 | 1,490,688 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (''AOCI'') - Changes in AOCI by Component (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Changes in AOCI by Component | ||||||
Balance at the beginning of the period, net of taxes | $ (10,717) | $ (10,717) | ||||
Net current period other comprehensive income (loss), net of taxes | $ (264) | (551) | $ (471) | $ 5,069 | (815) | $ 4,598 |
Balance at the end of the period, net of taxes | (11,532) | (11,532) | ||||
Accumulated Other Comprehensive Loss | ||||||
Changes in AOCI by Component | ||||||
Balance at the beginning of the period, net of taxes | (11,268) | (10,717) | (4,709) | (9,778) | (10,717) | (9,778) |
Other comprehensive income (loss) before reclassification, net of taxes | (403) | (405) | (1,058) | 4,695 | ||
Amounts reclassified from other comprehensive income (loss), net of taxes | 139 | (66) | 243 | (97) | ||
Net current period other comprehensive income (loss), net of taxes | (264) | (551) | (471) | 5,069 | (815) | 4,598 |
Balance at the end of the period, net of taxes | (11,532) | (11,268) | (5,180) | (4,709) | (11,532) | (5,180) |
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 | 3,327 | 3,929 | 6,627 | 1,602 | 3,929 | 1,602 |
Other comprehensive income (loss) before reclassification, net of taxes | (454) | (395) | (1,056) | 4,701 | ||
Amounts reclassified from other comprehensive income (loss), net of taxes | (120) | (191) | ||||
Net current period other comprehensive income (loss), net of taxes | (454) | (515) | (1,056) | 4,510 | ||
Balance at the end of the period, net of taxes | 2,873 | 3,327 | 6,112 | 6,627 | 2,873 | 6,112 |
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 | 252 | 261 | 289 | 298 | 261 | 298 |
Amounts reclassified from other comprehensive income (loss), net of taxes | (9) | (9) | (18) | (18) | ||
Net current period other comprehensive income (loss), net of taxes | (9) | (9) | (18) | (18) | ||
Balance at the end of the period, net of taxes | 243 | 252 | 280 | 289 | 243 | 280 |
Defined Benefit Pension Plan Items | ||||||
Changes in AOCI by Component | ||||||
Balance at the beginning of the period, net of taxes | (14,847) | (14,907) | (11,625) | (11,678) | (14,907) | (11,678) |
Other comprehensive income (loss) before reclassification, net of taxes | 51 | (10) | (2) | (6) | ||
Amounts reclassified from other comprehensive income (loss), net of taxes | 148 | 63 | 261 | 112 | ||
Net current period other comprehensive income (loss), net of taxes | 199 | 53 | 259 | 106 | ||
Balance at the end of the period, net of taxes | $ (14,648) | $ (14,847) | $ (11,572) | $ (11,625) | $ (14,648) | $ (11,572) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (''AOCI'') - Amount Reclassified from AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Amount Reclassified from AOCI | ||||||
Gain on sales of securities | $ 170 | $ 270 | ||||
Interest income on taxable securities | $ 1,944 | 3,155 | $ 3,672 | 7,103 | ||
Income tax expense | (2,950) | (4,274) | (7,273) | (5,142) | ||
Net income | 8,813 | $ 11,204 | 10,618 | $ 1,861 | 20,017 | 12,479 |
Unrealized Gains (Losses) on Available-for-Sale Securities and I/O Strips | ||||||
Amount Reclassified from AOCI | ||||||
Net of tax | 120 | 191 | ||||
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 | 170 | 270 | ||||
Income tax expense | (50) | (79) | ||||
Net income | 120 | 191 | ||||
Unamortized Unrealized Gain on Available-for-Sale Securities Reclassified to Held-to-Maturity | ||||||
Amount Reclassified from AOCI | ||||||
Net of tax | 9 | 9 | 18 | 18 | ||
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 | 13 | 13 | 26 | 26 | ||
Income tax expense | (4) | (4) | (8) | (8) | ||
Net income | 9 | 9 | 18 | 18 | ||
Defined Benefit Pension Plan Items | ||||||
Amount Reclassified from AOCI | ||||||
Net of tax | (148) | (63) | (261) | (112) | ||
Defined Benefit Pension Plan Items | Amount Reclassified from AOCI | ||||||
Amount Reclassified from AOCI | ||||||
Other noninterest expense | (210) | (90) | (370) | (160) | ||
Income tax benefit | 62 | 27 | 109 | 48 | ||
Net of tax | (148) | (63) | (261) | (112) | ||
Prior transition obligation | Amount Reclassified from AOCI | ||||||
Amount Reclassified from AOCI | ||||||
Other noninterest expense | 1 | 15 | 2 | 30 | ||
Prior service cost | Amount Reclassified from AOCI | ||||||
Amount Reclassified from AOCI | ||||||
Other noninterest expense | (211) | (105) | ||||
Actuarial losses | Amount Reclassified from AOCI | ||||||
Amount Reclassified from AOCI | ||||||
Other noninterest expense | (372) | (190) | ||||
Accumulated Other Comprehensive Loss | ||||||
Amount Reclassified from AOCI | ||||||
Net of tax | (139) | 66 | (243) | 97 | ||
Accumulated Other Comprehensive Loss | Amount Reclassified from AOCI | ||||||
Amount Reclassified from AOCI | ||||||
Net of tax | $ (139) | $ 66 | $ (243) | $ 97 |
Securities - Amortized Cost and
Securities - Amortized Cost and Estimated Fair Value of Securities - Securities Available-for-sale (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Securities available-for-sale: | ||
Amortized Cost | $ 141,651 | $ 230,012 |
Gross Unrealized Gains | 4,304 | 5,762 |
Estimated Fair Value | 145,955 | 235,774 |
Agency mortgage-backed securities | ||
Securities available-for-sale: | ||
Amortized Cost | 126,682 | 170,215 |
Gross Unrealized Gains | 4,210 | 5,111 |
Estimated Fair Value | 130,892 | 175,326 |
U.S. Treasury | ||
Securities available-for-sale: | ||
Amortized Cost | 14,969 | 59,797 |
Gross Unrealized Gains | 94 | 651 |
Estimated Fair Value | $ 15,063 | $ 60,448 |
Securities - Amortized Cost a_2
Securities - Amortized Cost and Estimated Fair Value of Securities - Securities Held-to-maturity (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Securities held-to-maturity: | ||
Amortized Cost | $ 421,337 | $ 297,443 |
Gross Unrealized Gains | 6,539 | 7,714 |
Gross Unrealized (Losses) | (1,121) | (230) |
Estimated Fair Value | 426,755 | 304,927 |
Allowance for credit losses | (51) | (54) |
Agency mortgage-backed securities | ||
Securities held-to-maturity: | ||
Amortized Cost | 361,184 | 228,652 |
Gross Unrealized Gains | 5,330 | 6,075 |
Gross Unrealized (Losses) | (1,121) | (230) |
Estimated Fair Value | 365,393 | 234,497 |
Municipals - exempt from Federal tax | ||
Securities held-to-maturity: | ||
Amortized Cost | 60,153 | 68,791 |
Gross Unrealized Gains | 1,209 | 1,639 |
Estimated Fair Value | 61,362 | 70,430 |
Allowance for credit losses | $ (51) | $ (54) |
Securities - Securities with Un
Securities - Securities with Unrealized Losses - Securities Held-to-maturity (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Held-to-maturity, Fair Value | ||
Less Than 12 Months | $ 67,111,000 | $ 30,930,000 |
Total | 67,111,000 | 30,930,000 |
Held-to-maturity, Unrealized (Losses) | ||
Less Than 12 Months | (1,121,000) | (230,000) |
Total | (1,121,000) | (230,000) |
Agency mortgage-backed securities | ||
Held-to-maturity, Fair Value | ||
Less Than 12 Months | 67,111,000 | 30,930,000 |
Total | 67,111,000 | 30,930,000 |
Held-to-maturity, Unrealized (Losses) | ||
Less Than 12 Months | (1,121,000) | (230,000) |
Total | $ (1,121,000) | $ (230,000) |
Securities - Additional Informa
Securities - Additional Information (Details) | 6 Months Ended | |
Jun. 30, 2021USD ($)itemsecurity | Dec. 31, 2020USD ($) | |
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 | 398 | |
Number of available for sale securities held | 107 | |
Number of held to maturity securities held | 291 | |
Number of securities with fair values below amortized cost | 12 | |
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value | $ | $ 67,111,000 | $ 30,930,000 |
Total unrealized loss for securities less than 12 months | $ | 1,121,000 | |
Agency mortgage-backed securities | ||
Additional Information | ||
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value | $ | $ 67,111,000 | $ 30,930,000 |
Securities - Proceeds from Sale
Securities - Proceeds from Sales of Securities and the Resulting Gains and Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
Proceeds from Sales of Securities and the Resulting Gains and Losses | ||
Proceeds | $ 30,085 | $ 56,598 |
Gross gains | $ 170 | $ 270 |
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 | Jun. 30, 2021 | Dec. 31, 2020 |
Available-for-sale, Amortized Cost | ||
Due 3 months or less | $ 9,997 | |
Due after 3 months through one year | 4,972 | |
Agency mortgage-backed securities | 126,682 | |
Total | 141,651 | $ 230,012 |
Available-for-sale, Estimated Fair Value | ||
Due 3 months or less | 10,044 | |
Due after 3 months through one year | 5,019 | |
Agency mortgage-backed securities | 130,892 | |
Total | $ 145,955 | $ 235,774 |
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 | Jun. 30, 2021 | Dec. 31, 2020 |
Held-to-maturity, Amortized Cost | ||
Due after 3 months through one year | $ 499 | |
Due after one year through five years | 10,605 | |
Due after five years through ten years | 31,284 | |
Due after ten years | 17,765 | |
Agency mortgage-backed securities | 361,184 | |
Total | 421,337 | |
Held-to-maturity, Estimated Fair Value | ||
Due after 3 months through one year | 500 | |
Due after one year through five years | 10,865 | |
Due after five years through ten years | 31,824 | |
Due after ten years | 18,173 | |
Agency mortgage-backed securities | 365,393 | |
Total | $ 426,755 | $ 304,927 |
Securities - Securities Pledged
Securities - Securities Pledged to Secure Public Deposits and for Other Purposes (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
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 | $ 39,825 | $ 40,238 |
Securities - Roll-forward by ma
Securities - Roll-forward by major security type (Details) | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Securities | |
Debt Securities, Held-to-maturity, Allowance for Credit Loss, Beginning Balance | $ 54,000 |
Provision for (recapture of) credit losses | (3,000) |
Debt Securities, Held-to-maturity, Allowance for Credit Loss, Ending Balance | $ 51,000 |
Loans and Allowance for Credi_3
Loans and Allowance for Credit Losses on Loans - Loans Balance (Details) | 3 Months Ended | ||||||
Jun. 30, 2021USD ($)loan | Mar. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Jan. 01, 2020USD ($) | Dec. 31, 2019USD ($) | |
Loans held-for-investment: | |||||||
Total loan balance | $ 2,832,866,000 | $ 2,625,987,000 | |||||
Deferred loan fees, net | (8,070,000) | (6,726,000) | |||||
Loans, net of deferred fees | 2,824,796,000 | 2,619,261,000 | $ 2,686,389,000 | ||||
Allowance for credit losses on loans | (43,956,000) | $ (44,296,000) | (44,400,000) | (45,444,000) | $ (44,703,000) | $ (31,855,000) | $ (23,285,000) |
Loans, net | 2,780,840,000 | 2,574,861,000 | |||||
Commercial | SBA Paycheck Protection Program ("PPP") | |||||||
Loans held-for-investment: | |||||||
Allowance for credit losses on loans | 0 | 0 | |||||
Loans, net | 286,461,000 | 290,679,000 | |||||
Commercial | |||||||
Loans held-for-investment: | |||||||
Total loan balance | 844,147,000 | 846,386,000 | |||||
Allowance for credit losses on loans | (10,857,000) | (11,600,000) | (11,587,000) | (13,179,000) | (12,801,000) | ||
Commercial | Commercial | |||||||
Loans held-for-investment: | |||||||
Total loan balance | 844,147,000 | 846,386,000 | |||||
Commercial Loans excluding SBA Paycheck Protection Program [Member] | Commercial | |||||||
Loans held-for-investment: | |||||||
Total loan balance | 844,147,000 | 846,386,000 | |||||
CRE | |||||||
Loans held-for-investment: | |||||||
Allowance for credit losses on loans | (13,179,000) | (6,790,000) | (10,453,000) | ||||
CRE - owner occupied | |||||||
Loans held-for-investment: | |||||||
Total loan balance | 583,091,000 | 560,362,000 | |||||
Allowance for credit losses on loans | (8,206,000) | (8,368,000) | (8,560,000) | (8,547,000) | (7,737,000) | (6,994,000) | (3,825,000) |
CRE - owner occupied | Real estate | |||||||
Loans held-for-investment: | |||||||
Total loan balance | 583,091,000 | 560,362,000 | |||||
CRE - non-owner occupied | |||||||
Loans held-for-investment: | |||||||
Total loan balance | 742,135,000 | 693,103,000 | |||||
Allowance for credit losses on loans | (16,485,000) | (16,431,000) | (16,416,000) | (15,449,000) | (15,645,000) | (11,672,000) | (3,760,000) |
CRE - non-owner occupied | Real estate | |||||||
Loans held-for-investment: | |||||||
Total loan balance | 742,135,000 | 693,103,000 | |||||
Land and construction | |||||||
Loans held-for-investment: | |||||||
Total loan balance | 129,426,000 | 144,594,000 | |||||
Allowance for credit losses on loans | (2,136,000) | (2,754,000) | (2,509,000) | (2,552,000) | (2,603,000) | (1,458,000) | (2,621,000) |
Land and construction | Real estate | |||||||
Loans held-for-investment: | |||||||
Total loan balance | 129,426,000 | 144,594,000 | |||||
Home equity | |||||||
Loans held-for-investment: | |||||||
Total loan balance | 107,873,000 | 111,885,000 | |||||
Allowance for credit losses on loans | (1,069,000) | (1,171,000) | (1,297,000) | (1,851,000) | (1,746,000) | (1,321,000) | (2,244,000) |
Home equity | Real estate | |||||||
Loans held-for-investment: | |||||||
Total loan balance | 107,873,000 | 111,885,000 | |||||
Multi-family | |||||||
Loans held-for-investment: | |||||||
Total loan balance | 198,771,000 | 166,425,000 | |||||
Allowance for credit losses on loans | (2,950,000) | (2,751,000) | (2,804,000) | (1,828,000) | (1,622,000) | (1,253,000) | (57,000) |
Multi-family | Real estate | |||||||
Loans held-for-investment: | |||||||
Total loan balance | 198,771,000 | 166,425,000 | |||||
Residential mortgages | |||||||
Loans held-for-investment: | |||||||
Total loan balance | 205,904,000 | 85,116,000 | |||||
Allowance for credit losses on loans | $ (1,968,000) | (918,000) | (943,000) | (825,000) | (708,000) | (678,000) | (243,000) |
Number of loan portfolios purchased | loan | 2 | ||||||
Value of loan portfolios purchased | $ 140,030,000 | ||||||
Average principal balance | $ 585,000 | ||||||
Weighted average yield | 3.39% | ||||||
Residential mortgages | Real estate | |||||||
Loans held-for-investment: | |||||||
Total loan balance | $ 205,904,000 | 85,116,000 | |||||
Consumer and other | |||||||
Loans held-for-investment: | |||||||
Total loan balance | 21,519,000 | 18,116,000 | |||||
Allowance for credit losses on loans | (285,000) | $ (303,000) | (284,000) | $ (1,213,000) | $ (1,841,000) | $ (1,689,000) | (82,000) |
Consumer and other | Consumer | |||||||
Loans held-for-investment: | |||||||
Total loan balance | $ 21,519,000 | $ 18,116,000 | |||||
ASU 2016-03 - Topic 326 | |||||||
Loans held-for-investment: | |||||||
Allowance for credit losses on loans | (8,570,000) | ||||||
ASU 2016-03 - Topic 326 | CRE | |||||||
Loans held-for-investment: | |||||||
Allowance for credit losses on loans | 3,663,000 | ||||||
ASU 2016-03 - Topic 326 | CRE - owner occupied | |||||||
Loans held-for-investment: | |||||||
Allowance for credit losses on loans | (3,169,000) | ||||||
ASU 2016-03 - Topic 326 | CRE - non-owner occupied | |||||||
Loans held-for-investment: | |||||||
Allowance for credit losses on loans | (7,912,000) | ||||||
ASU 2016-03 - Topic 326 | Land and construction | |||||||
Loans held-for-investment: | |||||||
Allowance for credit losses on loans | 1,163,000 | ||||||
ASU 2016-03 - Topic 326 | Home equity | |||||||
Loans held-for-investment: | |||||||
Allowance for credit losses on loans | 923,000 | ||||||
ASU 2016-03 - Topic 326 | Multi-family | |||||||
Loans held-for-investment: | |||||||
Allowance for credit losses on loans | (1,196,000) | ||||||
ASU 2016-03 - Topic 326 | Residential mortgages | |||||||
Loans held-for-investment: | |||||||
Allowance for credit losses on loans | (435,000) | ||||||
ASU 2016-03 - Topic 326 | Consumer and other | |||||||
Loans held-for-investment: | |||||||
Allowance for credit losses on loans | $ (1,607,000) |
Loans and Allowance for Credi_4
Loans and Allowance for Credit Losses on Loans - Changes in the Allowance for Loan Losses (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | $ 44,296,000 | $ 44,703,000 | $ 44,400,000 | $ 23,285,000 |
Charge-offs | (105,000) | (465,000) | (368,000) | (1,138,000) |
Recoveries | 258,000 | 92,000 | 1,929,000 | 343,000 |
Net (charge-offs) recoveries | 153,000 | (373,000) | 1,561,000 | (795,000) |
Provision for (recapture of) credit losses on loans | (493,000) | 1,114,000 | (2,005,000) | 14,384,000 |
End of period balance | 43,956,000 | 45,444,000 | 43,956,000 | 45,444,000 |
Decrease in the allowance of credit loss | (388,000) | |||
Decrease in reserve for pooled loans | (56,000) | |||
ASU 2016-03 - Topic 326 | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | 8,570,000 | |||
Commercial | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | 11,600,000 | 12,801,000 | 11,587,000 | |
Charge-offs | (105,000) | (465,000) | (368,000) | |
Recoveries | 115,000 | 46,000 | 928,000 | |
Net (charge-offs) recoveries | 10,000 | (419,000) | 560,000 | |
Provision for (recapture of) credit losses on loans | (753,000) | 797,000 | (1,290,000) | |
End of period balance | 10,857,000 | 13,179,000 | 10,857,000 | 13,179,000 |
CRE | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | 10,453,000 | |||
Charge-offs | (1,135,000) | |||
Recoveries | 255,000 | |||
Net (charge-offs) recoveries | (880,000) | |||
Provision for (recapture of) credit losses on loans | 7,269,000 | |||
End of period balance | 13,179,000 | 13,179,000 | ||
CRE | ASU 2016-03 - Topic 326 | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | (3,663,000) | |||
CRE - owner occupied | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | 8,368,000 | 7,737,000 | 8,560,000 | 3,825,000 |
Recoveries | 4,000 | 1,000 | 8,000 | 1,000 |
Net (charge-offs) recoveries | 4,000 | 1,000 | 8,000 | 1,000 |
Provision for (recapture of) credit losses on loans | (166,000) | 809,000 | (362,000) | 1,552,000 |
End of period balance | 8,206,000 | 8,547,000 | 8,206,000 | 8,547,000 |
CRE - owner occupied | ASU 2016-03 - Topic 326 | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | 3,169,000 | |||
CRE - non-owner occupied | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | 16,431,000 | 15,645,000 | 16,416,000 | 3,760,000 |
Provision for (recapture of) credit losses on loans | 54,000 | (196,000) | 69,000 | 3,777,000 |
End of period balance | 16,485,000 | 15,449,000 | 16,485,000 | 15,449,000 |
CRE - non-owner occupied | ASU 2016-03 - Topic 326 | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | 7,912,000 | |||
Land and construction | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | 2,754,000 | 2,603,000 | 2,509,000 | 2,621,000 |
Recoveries | 68,000 | 13,000 | 884,000 | 32,000 |
Net (charge-offs) recoveries | 68,000 | 13,000 | 884,000 | 32,000 |
Provision for (recapture of) credit losses on loans | (686,000) | (64,000) | (1,257,000) | 1,062,000 |
End of period balance | 2,136,000 | 2,552,000 | 2,136,000 | 2,552,000 |
Land and construction | ASU 2016-03 - Topic 326 | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | (1,163,000) | |||
Home equity | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | 1,171,000 | 1,746,000 | 1,297,000 | 2,244,000 |
Recoveries | 16,000 | 31,000 | 39,000 | 54,000 |
Net (charge-offs) recoveries | 16,000 | 31,000 | 39,000 | 54,000 |
Provision for (recapture of) credit losses on loans | (118,000) | 74,000 | (267,000) | 476,000 |
End of period balance | 1,069,000 | 1,851,000 | 1,069,000 | 1,851,000 |
Home equity | ASU 2016-03 - Topic 326 | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | (923,000) | |||
Multi-family | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | 2,751,000 | 1,622,000 | 2,804,000 | 57,000 |
Provision for (recapture of) credit losses on loans | 199,000 | 206,000 | 146,000 | 575,000 |
End of period balance | 2,950,000 | 1,828,000 | 2,950,000 | 1,828,000 |
Multi-family | ASU 2016-03 - Topic 326 | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | 1,196,000 | |||
Residential mortgages | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | 918,000 | 708,000 | 943,000 | 243,000 |
Provision for (recapture of) credit losses on loans | 1,050,000 | 117,000 | 1,025,000 | 147,000 |
End of period balance | 1,968,000 | 825,000 | 1,968,000 | 825,000 |
Residential mortgages | ASU 2016-03 - Topic 326 | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | 435,000 | |||
Consumer and other | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | 303,000 | 1,841,000 | 284,000 | 82,000 |
Charge-offs | (3,000) | |||
Recoveries | 55,000 | 1,000 | 70,000 | 1,000 |
Net (charge-offs) recoveries | 55,000 | 1,000 | 70,000 | (2,000) |
Provision for (recapture of) credit losses on loans | (73,000) | (629,000) | (69,000) | (474,000) |
End of period balance | $ 285,000 | $ 1,213,000 | $ 285,000 | 1,213,000 |
Consumer and other | ASU 2016-03 - Topic 326 | ||||
Changes in the Allowance for Loan Losses | ||||
Beginning of period balance | $ 1,607,000 |
Loans and Allowance for Credi_5
Loans and Allowance for Credit Losses on Loans - Nonaccrual Status and Loans Past Due Over 90 Days (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Nonperforming Loans by Class | ||
Nonaccrual Financing Receivable, no special allowance | $ 3,913 | $ 5,814 |
Nonaccrual Financing Receivable, with special allowance | 1,378 | 1,974 |
Loans Over 90 Days Past Due and Still Accruing | 889 | 81 |
Total | 6,180 | 7,869 |
Commercial | ||
Nonperforming Loans by Class | ||
Nonaccrual Financing Receivable, no special allowance | 415 | 752 |
Nonaccrual Financing Receivable, with special allowance | 1,378 | 1,974 |
Loans Over 90 Days Past Due and Still Accruing | 164 | 81 |
Total | 1,957 | 2,807 |
CRE - owner occupied | Real estate | ||
Nonperforming Loans by Class | ||
Nonaccrual Financing Receivable, no special allowance | 1,774 | 3,706 |
Total | 1,774 | 3,706 |
CRE - non-owner occupied | Real estate | ||
Nonperforming Loans by Class | ||
Loans Over 90 Days Past Due and Still Accruing | 725 | |
Total | 725 | |
Home equity | Real estate | ||
Nonperforming Loans by Class | ||
Nonaccrual Financing Receivable, no special allowance | 168 | 949 |
Total | 168 | 949 |
Multi-family | Real estate | ||
Nonperforming Loans by Class | ||
Nonaccrual Financing Receivable, no special allowance | 1,149 | |
Total | 1,149 | |
Consumer and other | Consumer | ||
Nonperforming Loans by Class | ||
Nonaccrual Financing Receivable, no special allowance | 407 | 407 |
Total | $ 407 | $ 407 |
Loans and Allowance for Credi_6
Loans and Allowance for Credit Losses on Loans - Aging of Past Due Loans by Class of Loans (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | $ 9,516,000 | $ 6,229,000 |
Current | 2,823,350,000 | 2,619,758,000 |
Total loan balance | 2,832,866,000 | 2,625,987,000 |
30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 5,784,000 | 4,657,000 |
60-89 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 1,196,000 | 744,000 |
90 Days or Greater Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 2,536,000 | 828,000 |
Commercial | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 844,147,000 | 846,386,000 |
Commercial | Commercial | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 5,915,000 | 4,175,000 |
Current | 838,232,000 | 842,211,000 |
Total loan balance | 844,147,000 | 846,386,000 |
Commercial | Commercial | 30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 4,467,000 | 3,524,000 |
Commercial | Commercial | 60-89 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 1,187,000 | 259,000 |
Commercial | Commercial | 90 Days or Greater Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 261,000 | 392,000 |
CRE - owner occupied | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 583,091,000 | 560,362,000 |
CRE - owner occupied | Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 2,324,000 | 1,162,000 |
Current | 580,767,000 | 559,200,000 |
Total loan balance | 583,091,000 | 560,362,000 |
CRE - owner occupied | Real estate | 30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 1,172,000 | 1,133,000 |
CRE - owner occupied | Real estate | 60-89 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 9,000 | |
CRE - owner occupied | Real estate | 90 Days or Greater Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 1,143,000 | 29,000 |
CRE - non-owner occupied | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 742,135,000 | 693,103,000 |
CRE - non-owner occupied | Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 870,000 | 485,000 |
Current | 741,265,000 | 692,618,000 |
Total loan balance | 742,135,000 | 693,103,000 |
CRE - non-owner occupied | Real estate | 30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 145,000 | |
CRE - non-owner occupied | Real estate | 60-89 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 485,000 | |
CRE - non-owner occupied | Real estate | 90 Days or Greater Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 725,000 | |
Land and construction | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 129,426,000 | 144,594,000 |
Land and construction | Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Current | 129,426,000 | 144,594,000 |
Total loan balance | 129,426,000 | 144,594,000 |
Home equity | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 107,873,000 | 111,885,000 |
Home equity | Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Current | 107,873,000 | 111,885,000 |
Total loan balance | 107,873,000 | 111,885,000 |
Multi-family | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 198,771,000 | 166,425,000 |
Multi-family | Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Current | 198,771,000 | 166,425,000 |
Total loan balance | 198,771,000 | 166,425,000 |
Residential mortgages | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 205,904,000 | 85,116,000 |
Residential mortgages | Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Current | 205,904,000 | 85,116,000 |
Total loan balance | 205,904,000 | 85,116,000 |
Consumer and other | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 21,519,000 | 18,116,000 |
Consumer and other | Consumer | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | 407,000 | 407,000 |
Current | 21,112,000 | 17,709,000 |
Total loan balance | 21,519,000 | 18,116,000 |
Consumer and other | Consumer | 90 Days or Greater Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total Past Due | $ 407,000 | $ 407,000 |
Loans and Allowance for Credi_7
Loans and Allowance for Credit Losses on Loans - Aging of Past Due Loans by Class of Loans - Additional Information (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Aging of Past Due Loans by Class of Loans | ||
Past due loans 30 day or greater | $ 9,516,000 | $ 6,229,000 |
30 days or greater past due | ||
Aging of Past Due Loans by Class of Loans | ||
Nonaccrual loans | 1,658,000 | 1,918,000 |
Less than 30 days past due | ||
Aging of Past Due Loans by Class of Loans | ||
Nonaccrual loans | $ 3,633,000 | |
Less than 30 days past due nonaccrual loans held-for-investment | $ 5,870,000 |
Loans and Allowance for Credi_8
Loans and Allowance for Credit Losses on Loans - Credit Quality Indicators (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Loans | ||
2021 | $ 755,460 | $ 979,432 |
2020 | 595,018 | 309,922 |
2019 | 268,497 | 191,961 |
2018 | 166,359 | 202,725 |
2017 | 151,046 | 163,654 |
2016 and Prior | 397,892 | 326,918 |
Revolving | 498,594 | 451,375 |
Total loan balance | 2,832,866 | 2,625,987 |
Balance to report | 2,780,840 | 2,574,861 |
Loan classified as loss | ||
Loans | ||
Balance to report | 0 | 0 |
Commercial | ||
Loans | ||
2021 | 304,455 | 453,231 |
2020 | 169,028 | 34,122 |
2019 | 19,144 | 22,510 |
2018 | 17,002 | 15,551 |
2017 | 10,442 | 10,565 |
2016 and Prior | 9,105 | 8,561 |
Revolving | 314,971 | 301,846 |
Total loan balance | 844,147 | 846,386 |
Commercial | Pass [Member] | ||
Loans | ||
2021 | 302,753 | 431,369 |
2020 | 163,815 | 33,350 |
2019 | 19,144 | 21,154 |
2018 | 15,904 | 13,840 |
2017 | 9,543 | 7,341 |
2016 and Prior | 8,699 | 8,292 |
Revolving | 307,122 | 296,286 |
Total loan balance | 826,980 | 811,632 |
Commercial | Special Mention [Member] | ||
Loans | ||
2021 | 323 | 15,720 |
2020 | 733 | 716 |
2019 | 1,301 | |
2018 | 1,082 | 953 |
2017 | 447 | 713 |
2016 and Prior | 270 | 170 |
Revolving | 978 | 1,937 |
Total loan balance | 3,833 | 21,510 |
Commercial | Substandard [Member] | ||
Loans | ||
2021 | 1,349 | 4,036 |
2020 | 3,337 | |
2019 | 19 | |
2018 | 16 | 758 |
2017 | 452 | 2,396 |
2016 and Prior | 30 | 73 |
Revolving | 6,357 | 3,236 |
Total loan balance | 11,541 | 10,518 |
Commercial | Substandard-Nonaccrual [Member] | ||
Loans | ||
2021 | 30 | 2,106 |
2020 | 1,143 | 56 |
2019 | 36 | |
2017 | 115 | |
2016 and Prior | 106 | 26 |
Revolving | 514 | 387 |
Total loan balance | 1,793 | 2,726 |
CRE - owner occupied | ||
Loans | ||
2021 | 78,577 | 177,614 |
2020 | 161,446 | 75,632 |
2019 | 75,523 | 72,596 |
2018 | 68,158 | 55,442 |
2017 | 38,511 | 50,716 |
2016 and Prior | 136,838 | 112,398 |
Revolving | 24,038 | 15,964 |
Total loan balance | 583,091 | 560,362 |
CRE - owner occupied | Pass [Member] | ||
Loans | ||
2021 | 78,046 | 168,224 |
2020 | 154,477 | 73,064 |
2019 | 74,843 | 68,068 |
2018 | 66,269 | 51,705 |
2017 | 37,006 | 50,716 |
2016 and Prior | 135,709 | 109,350 |
Revolving | 24,038 | 15,964 |
Total loan balance | 570,388 | 537,091 |
CRE - owner occupied | Special Mention [Member] | ||
Loans | ||
2021 | 531 | 3,151 |
2020 | 2,648 | 2,568 |
2019 | 680 | 4,128 |
2018 | 1,495 | 783 |
2017 | 770 | |
2016 and Prior | 1,089 | 2,569 |
Total loan balance | 7,213 | 13,199 |
CRE - owner occupied | Substandard [Member] | ||
Loans | ||
2021 | 2,561 | |
2020 | 2,547 | |
2019 | 400 | |
2018 | 394 | 2,954 |
2017 | 735 | |
2016 and Prior | 40 | 451 |
Total loan balance | 3,716 | 6,366 |
CRE - owner occupied | Substandard-Nonaccrual [Member] | ||
Loans | ||
2021 | 3,678 | |
2020 | 1,774 | |
2016 and Prior | 28 | |
Total loan balance | 1,774 | 3,706 |
CRE - non-owner occupied | ||
Loans | ||
2021 | 131,832 | 181,646 |
2020 | 156,227 | 128,361 |
2019 | 121,987 | 72,764 |
2018 | 59,797 | 99,816 |
2017 | 75,732 | 57,907 |
2016 and Prior | 172,018 | 150,683 |
Revolving | 24,542 | 1,926 |
Total loan balance | 742,135 | 693,103 |
CRE - non-owner occupied | Pass [Member] | ||
Loans | ||
2021 | 131,832 | 166,550 |
2020 | 148,179 | 128,361 |
2019 | 121,987 | 68,796 |
2018 | 55,878 | 99,816 |
2017 | 75,126 | 57,422 |
2016 and Prior | 165,195 | 150,683 |
Revolving | 22,377 | 1,926 |
Total loan balance | 720,574 | 673,554 |
CRE - non-owner occupied | Special Mention [Member] | ||
Loans | ||
2021 | 11,930 | |
2020 | 2,808 | |
2019 | 2,557 | |
2018 | 2,527 | |
2017 | 606 | |
2016 and Prior | 6,338 | |
Revolving | 2,165 | |
Total loan balance | 14,444 | 14,487 |
CRE - non-owner occupied | Substandard [Member] | ||
Loans | ||
2021 | 3,166 | |
2020 | 5,240 | |
2019 | 1,411 | |
2018 | 1,392 | |
2017 | 485 | |
2016 and Prior | 485 | |
Total loan balance | 7,117 | 5,062 |
Land and construction | ||
Loans | ||
2021 | 59,656 | 116,291 |
2020 | 56,553 | 22,054 |
2019 | 4,443 | |
2016 and Prior | 1,321 | 1,343 |
Revolving | 7,453 | 4,906 |
Total loan balance | 129,426 | 144,594 |
Land and construction | Pass [Member] | ||
Loans | ||
2021 | 58,297 | 114,932 |
2020 | 56,553 | 22,054 |
2019 | 4,443 | |
2016 and Prior | 1,321 | 1,343 |
Revolving | 7,453 | 4,906 |
Total loan balance | 128,067 | 143,235 |
Land and construction | Substandard [Member] | ||
Loans | ||
2021 | 1,359 | 1,359 |
Total loan balance | 1,359 | 1,359 |
Home equity | ||
Loans | ||
2021 | 383 | |
2020 | 107 | |
2019 | 74 | |
2018 | 61 | |
2016 and Prior | 143 | 143 |
Revolving | 107,562 | 111,285 |
Total loan balance | 107,873 | 111,885 |
Home equity | Pass [Member] | ||
Loans | ||
2021 | 266 | |
2019 | 74 | |
2018 | 61 | |
Revolving | 104,746 | 109,848 |
Total loan balance | 104,807 | 110,188 |
Home equity | Special Mention [Member] | ||
Loans | ||
Revolving | 1,932 | |
Total loan balance | 1,932 | |
Home equity | Substandard [Member] | ||
Loans | ||
2016 and Prior | 143 | 143 |
Revolving | 823 | 605 |
Total loan balance | 966 | 748 |
Home equity | Substandard-Nonaccrual [Member] | ||
Loans | ||
2021 | 117 | |
2020 | 107 | |
Revolving | 61 | 832 |
Total loan balance | 168 | 949 |
Multi-family | ||
Loans | ||
2021 | 43,725 | 32,370 |
2020 | 33,447 | 39,183 |
2019 | 37,612 | 17,248 |
2018 | 16,321 | 24,572 |
2017 | 21,215 | 16,235 |
2016 and Prior | 45,536 | 35,937 |
Revolving | 915 | 880 |
Total loan balance | 198,771 | 166,425 |
Multi-family | Pass [Member] | ||
Loans | ||
2021 | 42,576 | 31,481 |
2020 | 32,568 | 39,183 |
2019 | 37,612 | 17,248 |
2018 | 16,321 | 24,572 |
2017 | 21,215 | 16,235 |
2016 and Prior | 35,092 | 30,751 |
Revolving | 915 | 880 |
Total loan balance | 186,299 | 160,350 |
Multi-family | Special Mention [Member] | ||
Loans | ||
2016 and Prior | 10,444 | 5,186 |
Total loan balance | 10,444 | 5,186 |
Multi-family | Substandard [Member] | ||
Loans | ||
2021 | 889 | |
2020 | 879 | |
Total loan balance | 879 | 889 |
Multi-family | Substandard-Nonaccrual [Member] | ||
Loans | ||
2021 | 1,149 | |
Total loan balance | 1,149 | |
Residential mortgages | ||
Loans | ||
2021 | 137,195 | 17,887 |
2020 | 18,204 | 10,048 |
2019 | 9,379 | 4,876 |
2018 | 3,157 | 7,324 |
2017 | 5,129 | 28,115 |
2016 and Prior | 31,880 | 16,866 |
Revolving | 960 | |
Total loan balance | 205,904 | 85,116 |
Residential mortgages | Pass [Member] | ||
Loans | ||
2021 | 137,195 | 12,798 |
2020 | 18,204 | 10,048 |
2019 | 9,379 | 3,246 |
2018 | 3,157 | 7,324 |
2017 | 5,129 | 28,115 |
2016 and Prior | 30,567 | 15,568 |
Revolving | 960 | |
Total loan balance | 204,591 | 77,099 |
Residential mortgages | Special Mention [Member] | ||
Loans | ||
2021 | 5,089 | |
2019 | 1,630 | |
Total loan balance | 6,719 | |
Residential mortgages | Substandard [Member] | ||
Loans | ||
2016 and Prior | 1,313 | 1,298 |
Total loan balance | 1,313 | 1,298 |
Consumer and other | ||
Loans | ||
2021 | 20 | 10 |
2020 | 6 | 522 |
2019 | 409 | 1,893 |
2018 | 1,863 | 20 |
2017 | 17 | 116 |
2016 and Prior | 1,051 | 987 |
Revolving | 18,153 | 14,568 |
Total loan balance | 21,519 | 18,116 |
Consumer and other | Pass [Member] | ||
Loans | ||
2021 | 10 | |
2020 | 6 | 522 |
2019 | 409 | 1,486 |
2018 | 1,456 | 20 |
2017 | 17 | 116 |
2016 and Prior | 1,051 | 987 |
Revolving | 17,953 | 14,568 |
Total loan balance | 20,892 | 17,709 |
Consumer and other | Substandard [Member] | ||
Loans | ||
2021 | 20 | |
Revolving | 200 | |
Total loan balance | 220 | |
Consumer and other | Substandard-Nonaccrual [Member] | ||
Loans | ||
2019 | 407 | |
2018 | 407 | |
Total loan balance | 407 | 407 |
Risk Grades [Member] | ||
Loans | ||
2021 | 755,460 | 979,432 |
2020 | 595,018 | 309,922 |
2019 | 268,497 | 191,961 |
2018 | 166,359 | 202,725 |
2017 | 151,046 | 163,654 |
2016 and Prior | 397,892 | 326,918 |
Revolving | 498,594 | 451,375 |
Total loan balance | 2,832,866 | 2,625,987 |
Risk Grades [Member] | Pass [Member] | ||
Loans | ||
2021 | 750,699 | 925,630 |
2020 | 573,802 | 306,582 |
2019 | 267,817 | 180,072 |
2018 | 159,046 | 197,277 |
2017 | 148,036 | 159,945 |
2016 and Prior | 377,634 | 316,974 |
Revolving | 485,564 | 444,378 |
Total loan balance | 2,762,598 | 2,530,858 |
Risk Grades [Member] | Special Mention [Member] | ||
Loans | ||
2021 | 854 | 35,890 |
2020 | 6,189 | 3,284 |
2019 | 680 | 9,616 |
2018 | 5,104 | 1,736 |
2017 | 1,823 | 713 |
2016 and Prior | 18,141 | 7,925 |
Revolving | 5,075 | 1,937 |
Total loan balance | 37,866 | 61,101 |
Risk Grades [Member] | Substandard [Member] | ||
Loans | ||
2021 | 2,728 | 12,011 |
2020 | 12,003 | |
2019 | 1,830 | |
2018 | 1,802 | 3,712 |
2017 | 1,187 | 2,881 |
2016 and Prior | 2,011 | 1,965 |
Revolving | 7,380 | 3,841 |
Total loan balance | 27,111 | 26,240 |
Risk Grades [Member] | Substandard-Nonaccrual [Member] | ||
Loans | ||
2021 | 1,179 | 5,901 |
2020 | 3,024 | 56 |
2019 | 443 | |
2018 | 407 | |
2017 | 115 | |
2016 and Prior | 106 | 54 |
Revolving | 575 | 1,219 |
Total loan balance | $ 5,291 | $ 7,788 |
Loans and Allowance for Credi_9
Loans and Allowance for Credit Losses on Loans - Amortized Cost Basis of Collateral-dependent Loans (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Collateral dependent loans | $ 1,378 | $ 1,974 |
Real Estate | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Collateral dependent loans | 25 | 29 |
Business Assets | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Collateral dependent loans | 1,324 | 1,815 |
Unsecured | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Collateral dependent loans | 29 | 130 |
Commercial | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Collateral dependent loans | 1,378 | 1,974 |
Commercial | Real Estate | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Collateral dependent loans | 25 | 29 |
Commercial | Business Assets | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Collateral dependent loans | 1,324 | 1,815 |
Commercial | Unsecured | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Collateral dependent loans | $ 29 | $ 130 |
Loans and Allowance for Cred_10
Loans and Allowance for Credit Losses on Loans - Troubled Debt Restructurings (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Loans and Allowance for Credit Losses on Loans | ||
Recorded investment of troubled debt restructurings | $ 552 | $ 674 |
Troubled debt restructurings, nonaccrual loans | 448 | 468 |
Troubled debt restructurings, accruing loans | 104 | 206 |
Specific reserves | $ 331 | $ 352 |
Loans and Allowance for Cred_11
Loans and Allowance for Credit Losses on Loans - Troubled Debt Restructurings by Class (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021loan | Jun. 30, 2020loan | Jun. 30, 2021USD ($)loan | Jun. 30, 2020USD ($) | |
Troubled Debt Restructurings by Class | ||||
Number of loans modified as troubled debt restructurings during the period | 0 | 0 | 1 | 3,000 |
Pre-modification Outstanding Recorded Investment | $ 3,000 | $ 13,000 | ||
Post-modification Outstanding Recorded Investment | $ 3,000 | $ 13,000 | ||
Commercial | ||||
Troubled Debt Restructurings by Class | ||||
Number of loans modified as troubled debt restructurings during the period | 1,000 | 3,000 | ||
Pre-modification Outstanding Recorded Investment | $ 3,000 | $ 13,000 | ||
Post-modification Outstanding Recorded Investment | $ 3,000 | $ 13,000 |
Loans and Allowance for Cred_12
Loans and Allowance for Credit Losses on Loans - Defaults on Troubled Debt Restructurings (Details) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021loanitem | Jun. 30, 2020item | Jun. 30, 2021loan | |
Loans and Allowance for Credit Losses on Loans | |||
Number of troubled debt restructurings in which the amount of principal or accrued interest owed from the borrower was forgiven | loan | 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 |
Loans and Allowance for Cred_13
Loans and Allowance for Credit Losses on Loans - Schedule of loan deferrals by loan category (Details) | 6 Months Ended | |
Jun. 30, 2021USD ($)loanitem | Dec. 31, 2020USD ($) | |
Loans, net | $ | $ 2,780,840,000 | $ 2,574,861,000 |
Number of remaining second deferments | item | 3 | |
2nd Deferments | Collateral Pledged | ||
Loans, net | $ | $ 1,800,000 | |
2nd Deferments | Real Estate | ||
Number of remaining second deferments | loan | 2 | |
2nd Deferments | Business Assets | ||
Number of remaining second deferments | loan | 1 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | |
Goodwill | |||
Goodwill | $ 167,631 | $ 167,631 | $ 167,631 |
BVF/CSNK | |||
Goodwill | |||
Goodwill acquired | 13,044 | ||
Focus | |||
Goodwill | |||
Goodwill acquired | 32,619 | ||
Tri Valley Bank | |||
Goodwill | |||
Goodwill acquired | 13,819 | ||
United American Bank | |||
Goodwill | |||
Goodwill acquired | 24,271 | ||
Presidio bank | |||
Goodwill | |||
Goodwill acquired | 83,878 | ||
Banking | |||
Goodwill | |||
Goodwill | 154,587 | 154,587 | 154,587 |
Factoring | |||
Goodwill | |||
Goodwill | $ 13,044 | $ 13,044 | $ 13,044 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Other Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Other Intangible Assets | ||
Gross Carrying amount | $ 27,693 | $ 27,693 |
Accumulated Amortization | (12,516) | (11,029) |
Total | 15,177 | 16,664 |
Core deposit | ||
Other Intangible Assets | ||
Gross Carrying amount | 25,023 | 25,023 |
Accumulated Amortization | (10,567) | (9,153) |
Total | 14,456 | 15,870 |
Below/ (Above) market-value lease | ||
Other Intangible Assets | ||
Total | 87 | |
Below market-value lease | ||
Other Intangible Assets | ||
Gross Carrying amount | 770 | 770 |
Accumulated Amortization | (683) | (705) |
Total | 87 | 65 |
Customer relationship and brokered relationship | ||
Other Intangible Assets | ||
Gross Carrying amount | 1,900 | 1,900 |
Accumulated Amortization | (1,266) | (1,171) |
Total | $ 634 | $ 729 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Estimated Amortization Expense (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Estimated Amortization Expense | ||
2021 remaining | $ 1,509 | |
2022 | 2,635 | |
2023 | 2,405 | |
2024 | 2,187 | |
2025 | 1,813 | |
Thereafter | 4,628 | |
Total | 15,177 | $ 16,664 |
Core deposit | ||
Estimated Amortization Expense | ||
2021 remaining | 1,415 | |
2022 | 2,447 | |
2023 | 2,217 | |
2024 | 2,023 | |
2025 | 1,795 | |
Thereafter | 4,559 | |
Total | 14,456 | 15,870 |
Customer relationship and brokered relationship | ||
Estimated Amortization Expense | ||
2021 remaining | 95 | |
2022 | 190 | |
2023 | 190 | |
2024 | 159 | |
Total | 634 | $ 729 |
Below/ (Above) market-value lease | ||
Estimated Amortization Expense | ||
2021 remaining | (1) | |
2022 | (2) | |
2023 | (2) | |
2024 | 5 | |
2025 | 18 | |
Thereafter | 69 | |
Total | $ 87 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Impairment of Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
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 | Jun. 30, 2021 | Dec. 31, 2020 |
Net deferred tax assets | ||
Net deferred tax assets | $ 26,917 | $ 28,221 |
Deferred Tax Assets, Valuation Allowance | $ 0 | $ 0 |
Income Taxes - Carry Amounts of
Income Taxes - Carry Amounts of the Low Income Housing Investments (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Income Taxes | ||
Low income housing investments | $ 4,827 | $ 5,246 |
Future commitments | $ 596 | $ 596 |
Income Taxes - Future Commitmen
Income Taxes - Future Commitments of the Low Income Housing Investments (Details) - Low income housing investments $ in Thousands | Jun. 30, 2021USD ($) |
Future Commitments | |
2021 | $ 46 |
2022 through 2025 | $ 550 |
Income Taxes - Components of Lo
Income Taxes - Components of Low Income Housing Investment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Taxes | ||||
Low income housing tax credits | $ 210 | $ 210 | $ 420 | $ 420 |
Low income housing investment expense | $ 209 | $ 211 | $ 418 | $ 420 |
Benefit Plans - Defined Benefit
Benefit Plans - Defined Benefit Plans - Components of Pension Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Supplemental Retirement Plan | |||||
Components of net periodic benefit cost: | |||||
Service cost | $ 120 | $ 123 | $ 240 | $ 246 | |
Interest cost | 190 | 236 | 380 | 467 | |
Amortization of prior service cost | 75 | 100 | |||
Amortization of net actuarial loss | 136 | 105 | 272 | 190 | |
Net periodic benefit cost | 521 | 464 | 992 | 903 | |
Defined Benefit Plan, Assets for Plan Benefits | 0 | 0 | |||
Split-Dollar Life Insurance Benefit Plan | |||||
Components of net periodic benefit cost: | |||||
Interest cost | 55 | 62 | 110 | 124 | $ 246 |
Amortization of prior transition obligation | (1) | (15) | (2) | (30) | |
Net periodic benefit cost | $ 54 | $ 47 | $ 108 | $ 94 |
Benefit Plans - Defined Benef_2
Benefit Plans - Defined Benefit Plans - Change in Projected Benefit Obligation (Details) - Split-Dollar Life Insurance Benefit Plan - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Change in projected benefit obligation: | |||||
Projected benefit obligation at beginning of year | $ 9,689 | $ 8,198 | $ 8,198 | ||
Interest cost | $ 55 | $ 62 | 110 | $ 124 | 246 |
Actuarial loss | 1,245 | ||||
Projected benefit obligation at end of period | $ 9,799 | $ 9,799 | $ 9,689 |
Benefit Plans - Defined Benef_3
Benefit Plans - Defined Benefit Plans - Amounts Recognized in Accumulated Other Comprehensive Loss (Details) - Split-Dollar Life Insurance Benefit Plan - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Amounts Recognized in Accumulated Other Comprehensive Loss | ||
Net actuarial loss | $ 5,217 | $ 5,170 |
Prior transition obligation | 925 | 970 |
Accumulated other comprehensive loss | $ 6,142 | $ 6,140 |
Fair Value - Financial Assets a
Fair Value - Financial Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | $ 145,955 | $ 235,774 |
I/O strip receivables | 274 | 305 |
Agency mortgage-backed securities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 130,892 | 175,326 |
U.S. Treasury | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 15,063 | 60,448 |
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 | 15,063 | 60,448 |
Significant Other Observable Inputs (Level 2) | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
I/O strip receivables | 274 | 305 |
Significant Other Observable Inputs (Level 2) | Agency mortgage-backed securities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 130,892 | 175,326 |
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 - Impaired Loans Hel
Fair Value - Impaired Loans Held-for-investment - Additional Disclosures (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Carrying amount | ||
Impaired Loans Held-for-investment | ||
Foreclosed assets | $ 0 | $ 0 |
Fair Value - Carrying Amounts a
Fair Value - Carrying Amounts and Estimated Fair Values of Financial Instruments (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Assets | ||
Securities available-for-sale | $ 145,955,000 | $ 235,774,000 |
Securities held-to-maturity | 426,755,000 | 304,927,000 |
Federal Home Loan Bank, Federal Reserve Bank stock and other investments, at cost | 32,495,000 | 33,522,000 |
I/O strips receivables | 274,000 | 305,000 |
Liabilities | ||
Subordinated Debt. | 39,832,000 | 39,740,000 |
Significant Other Observable Inputs (Level 2) | ||
Assets | ||
I/O strips receivables | 274,000 | 305,000 |
Carrying amount | ||
Assets | ||
Cash and cash equivalents | 1,328,322,000 | 1,131,073,000 |
Securities available-for-sale | 145,955,000 | 235,774,000 |
Securities held-to-maturity | 421,286,000 | 297,389,000 |
Loans (including loans held-for-sale), net | 2,785,184,000 | 2,576,560,000 |
Federal Home Loan Bank, Federal Reserve Bank stock and other investments, at cost | 32,495,000 | 33,522,000 |
Accrued interest receivable | 10,397,000 | 10,546,000 |
I/O strips receivables | 274,000 | 305,000 |
Liabilities | ||
Time deposits | 158,644,000 | 153,407,000 |
Other deposits | 4,185,828,000 | 3,761,079,000 |
Subordinated Debt. | 39,832,000 | 39,740,000 |
Accrued interest payable | 548,000 | 545,000 |
Carried at fair value | ||
Assets | ||
Cash and cash equivalents | 1,328,322,000 | 1,131,073,000 |
Securities available-for-sale | 145,955,000 | 235,774,000 |
Securities held-to-maturity | 426,755,000 | 304,927,000 |
Loans (including loans held-for-sale), net | 2,800,683,000 | 2,574,692,000 |
Accrued interest receivable | 10,397,000 | 10,546,000 |
I/O strips receivables | 274,000 | 305,000 |
Liabilities | ||
Time deposits | 158,843,000 | 153,740,000 |
Other deposits | 4,185,828,000 | 3,761,079,000 |
Subordinated Debt. | 40,432,000 | 40,340,000 |
Accrued interest payable | 548,000 | 545,000 |
Carried at fair value | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets | ||
Cash and cash equivalents | 1,328,322,000 | 1,131,073,000 |
Securities available-for-sale | 15,063,000 | 60,448,000 |
Accrued interest receivable | 103,000 | 309,000 |
Carried at fair value | Significant Other Observable Inputs (Level 2) | ||
Assets | ||
Securities available-for-sale | 130,892,000 | 175,326,000 |
Securities held-to-maturity | 426,755,000 | 304,927,000 |
Loans (including loans held-for-sale), net | 4,344,000 | 1,699,000 |
Accrued interest receivable | 1,510,000 | 1,512,000 |
I/O strips receivables | 274,000 | 305,000 |
Liabilities | ||
Time deposits | 158,843,000 | 153,740,000 |
Other deposits | 4,185,828,000 | 3,761,079,000 |
Subordinated Debt. | 40,432,000 | 40,340,000 |
Accrued interest payable | 548,000 | 545,000 |
Carried at fair value | Significant Unobservable Inputs (Level 3) | ||
Assets | ||
Loans (including loans held-for-sale), net | 2,796,339,000 | 2,572,993,000 |
Accrued interest receivable | $ 8,784,000 | $ 8,725,000 |
Equity Plan - General Disclosur
Equity Plan - General Disclosures (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2021 | May 21, 2020 | May 20, 2020 | |
Equity Plan | |||
Number of shares available for future grants | 1,940,811 | ||
2013 Plan | |||
Equity Plan | |||
Number of shares authorized for equity plan | 5,000,000 | 3,000,000 | |
Options | |||
Equity Plan | |||
Vesting period | 4 years | ||
Expiration term | 10 years | ||
Restricted stock | |||
Equity Plan | |||
Number of equity awards issued (in shares) | 187,325 | ||
Fair value of awards vested | $ 1,749,000 | ||
Nonqualified stock options | |||
Equity Plan | |||
Number of equity awards issued (in shares) | 350,750 |
Equity Plan - Stock Option Acti
Equity Plan - Stock Option Activity (Details) - Options - USD ($) | 6 Months Ended |
Jun. 30, 2021 | |
Number of Shares | |
Outstanding at the beginning of the period (in shares) | 2,546,821 |
Granted (in shares) | 350,750 |
Exercised (in shares) | (132,342) |
Forfeited or expired (in shares) | (36,766) |
Outstanding at the end of the period (in shares) | 2,728,463 |
Vested or expected to vest (in shares) | 2,564,755 |
Exercisable at the end of the period (in shares) | 1,996,727 |
Weighted Average Exercise Price | |
Outstanding at the beginning of the period (in dollars per share) | $ 9.30 |
Granted (in dollars per share) | 12.08 |
Exercised (in dollars per share) | 5.93 |
Forfeited or expired (in dollars per share) | 12.89 |
Outstanding at the end of the period (in dollars per share) | $ 9.77 |
Additional Information | |
Weighted Average Remaining Contractual Life - Outstanding at the end of the period (in years) | 5 years 8 months 15 days |
Weighted Average Remaining Contractual Life - Vested or expected to vest (in years) | 5 years 8 months 15 days |
Weighted Average Remaining Contractual Life - Exercisable at the end of the period (in years) | 4 years 6 months 3 days |
Aggregate Intrinsic Value - Outstanding at the end of the period (in dollars) | $ 6,286,272 |
Aggregate Intrinsic Value - Vested or expected to vest (in dollars) | 5,909,096 |
Aggregate Intrinsic Value - Exercisable at the end of the period (in dollars) | $ 5,826,621 |
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 | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Information Related to the Equity Plans | ||
Cash received from option exercise | $ 784 | $ 1,490 |
Options | ||
Information Related to the Equity Plans | ||
Intrinsic value of options exercised | 679,403 | 2,057,914 |
Cash received from option exercise | 784,264 | 1,489,991 |
Tax benefit realized from option exercises | $ 57,215 | $ 33,783 |
Weighted average fair value of options granted (in dollars per share) | $ 2.33 | $ 1.15 |
Equity Plan - Unrecognized Comp
Equity Plan - Unrecognized Compensation Cost - Nonvested Stock Options (Details) - Options $ in Thousands | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Unrecognized Compensation Cost | |
Total unrecognized compensation cost related to nonvested stock options granted | $ 1,410 |
Expected weighted-average period for recognition of compensation costs related to nonvested stock options | 2 years 11 months 15 days |
Equity Plan - Assumptions Used
Equity Plan - Assumptions Used to Estimate Fair Value (Details) - Options | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Assumptions Used to Estimate Fair Value | ||
Expected life in months | 72 months | 72 months |
Volatility (as a percent) | 33.00% | 29.00% |
Weighted average risk-free interest rate (as a percent) | 1.10% | 0.53% |
Expected dividends (as a percent) | 4.30% | 5.71% |
Equity Plan - Restricted Stock
Equity Plan - Restricted Stock Activity (Details) - Restricted stock | 6 Months Ended |
Jun. 30, 2021$ / sharesshares | |
Number of Shares | |
Nonvested shares at the beginning of the period (in shares) | shares | 298,700 |
Granted (in shares) | shares | 187,325 |
Vested (in shares) | shares | (153,101) |
Forfeited or expired (in shares) | shares | (34,358) |
Nonvested shares at the end of the period (in shares) | shares | 298,566 |
Weighted Average Grant Date Fair Value | |
Nonvested shares at the beginning of the period (in dollars per share) | $ / shares | $ 10.83 |
Granted (in dollars per share) | $ / shares | 12.01 |
Vested (in dollars per share) | $ / shares | 11.42 |
Forfeited or expired (in dollars per share) | $ / shares | 10.23 |
Nonvested shares at the end of the period (in dollars per share) | $ / shares | $ 11.03 |
Equity Plan - Unrecognized Co_2
Equity Plan - Unrecognized Compensation Cost - Nonvested Restricted Stock Awards (Details) - Restricted stock $ in Thousands | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Unrecognized Compensation Cost | |
Total unrecognized compensation cost related to nonvested restricted stock awards | $ 3,201 |
Expected weighted-average period for recognition of compensation costs related to nonvested restricted stock awards | 2 years 10 days |
Subordinated Debt (Details)
Subordinated Debt (Details) - USD ($) | May 26, 2017 | Jun. 30, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | |||
Principal amount | $ 40,000,000 | ||
Fixed interest rate (as a percent) | 5.25% | ||
Subordinated debt, net of issuance costs | $ 39,832,000 | $ 39,740,000 | |
Debt Issuance Costs | $ 168,000 | ||
LIBOR | |||
Debt Instrument [Line Items] | |||
Rate of interest added to base rate | 336.50% |
Capital Requirements - General
Capital Requirements - General Information (Details) | Mar. 27, 2020 | Jun. 30, 2021 | Dec. 31, 2020 |
Capital Requirements | |||
Period to delay the estimated impact of the adoption of the CECL Standard to regulatory capital as the company elected the option | 2 years | ||
Addition period for transition | 3 years | ||
Capital conservation buffer (as a percent) | 2.50% | 2.50% | |
HBC (Wholly-owned Subsidiary) | |||
Capital Requirements | |||
Capital conservation buffer (as a percent) | 2.50% | 2.50% |
Capital Requirements - Tabular
Capital Requirements - Tabular Disclosure (Details) $ in Thousands | Jun. 30, 2021USD ($) | Dec. 31, 2020USD ($) |
Total Capital (to risk-weighted assets) | ||
Actual, Amount | $ 491,475 | $ 483,870 |
Required For Capital Adequacy Purposes, Amount | $ 329,965 | $ 307,067 |
Actual, Ratio (as a percent) | 0.156 | 0.165 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.105 | 0.105 |
Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 418,134 | $ 410,307 |
Required For Capital Adequacy Purposes, Amount | $ 267,115 | $ 248,578 |
Actual, Ratio (as a percent) | 0.133 | 0.140 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.085 | 0.085 |
Common Equity Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 418,134 | $ 410,307 |
Required For Capital Adequacy Purposes, Amount | $ 219,977 | $ 204,711 |
Actual, Ratio (as a percent) | 0.133% | 0.14% |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.07% | 0.07% |
Tier 1 Capital (to average assets) | ||
Actual, Amount | $ 418,134 | $ 410,307 |
Required For Capital Adequacy Purposes, Amount | $ 194,156 | $ 180,281 |
Actual, Ratio (as a percent) | 0.086 | 0.091 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.040 | 0.040 |
HBC (Wholly-owned Subsidiary) | ||
Total Capital (to risk-weighted assets) | ||
Actual, Amount | $ 469,701 | $ 461,933 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 314,070 | 292,258 |
Required For Capital Adequacy Purposes, Amount | $ 329,773 | $ 306,871 |
Actual, Ratio (as a percent) | 0.150 | 0.158 |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 0.100 | 0.100 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.105 | 0.105 |
Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 436,192 | $ 428,109 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 251,256 | 233,806 |
Required For Capital Adequacy Purposes, Amount | $ 266,959 | $ 248,419 |
Actual, Ratio (as a percent) | 0.139 | 0.146 |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 0.080 | 0.080 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.085 | 0.085 |
Common Equity Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 436,192 | $ 428,109 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 204,145 | 189,968 |
Required For Capital Adequacy Purposes, Amount | $ 219,849 | $ 204,580 |
Actual, Ratio (as a percent) | 0.139% | 0.146% |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 0.065% | 0.065% |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.07% | 0.07% |
Tier 1 Capital (to average assets) | ||
Actual, Amount | $ 436,192 | $ 428,109 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 242,600 | 225,263 |
Required For Capital Adequacy Purposes, Amount | $ 194,080 | $ 180,211 |
Actual, Ratio (as a percent) | 0.090 | 0.095 |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 0.050 | 0.050 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.040 | 0.040 |
Capital Requirements - Dividend
Capital Requirements - Dividends to Parent (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | |
Cash dividend | ||||
Subordinated Debt. | $ 39,832,000 | $ 39,832,000 | $ 39,740,000 | |
HBC (Wholly-owned Subsidiary) | ||||
Cash dividend | ||||
Cash dividend available | 35,173,000 | 35,173,000 | ||
Dividends paid to parent company | $ 8,000,000 | $ 8,000,000 | $ 16,000,000 |
Commitments and Loss Continge_3
Commitments and Loss Contingencies - Financial Instruments with Off-Balance Sheet Risk (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Commitments and Contingencies | ||||
Reserve for legal settlement | $ 4,000,000 | $ 4,000,000 | ||
Commitments to extend credit, fixed rate | 134,755,000 | 134,755,000 | $ 124,609,000 | |
Commitments to extend credit, variable rate | 1,033,740,000 | 1,033,740,000 | 989,584,000 | |
Commitment to extend credit, total | 1,168,495,000 | $ 1,168,495,000 | $ 1,114,193,000 | |
Percentage of unused commitments to outstanding gross loans | 41.00% | 43.00% | 42.00% | |
Off-Balance Sheet, Credit Loss, Liability, Credit Loss Expenses (Reduction) | $ 23,000 | |||
Off-balance sheet, credit loss liability increase due to offsetting increase in loss factors in CECL model | 1,101,000 | $ 1,078,000 | ||
Unused lines of credit and commitments to make loans | ||||
Commitments and Contingencies | ||||
Commitments to extend credit, fixed rate | 131,878,000 | 131,878,000 | 121,560,000 | |
Commitments to extend credit, variable rate | 1,018,383,000 | 1,018,383,000 | 970,614,000 | |
Commitment to extend credit, total | 1,150,261,000 | 1,150,261,000 | 1,092,174,000 | |
Standby letters of credit | ||||
Commitments and Contingencies | ||||
Commitments to extend credit, fixed rate | 2,877,000 | 2,877,000 | 3,049,000 | |
Commitments to extend credit, variable rate | 15,357,000 | 15,357,000 | 18,970,000 | |
Commitment to extend credit, total | $ 18,234,000 | $ 18,234,000 | $ 22,019,000 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Non-interest Income In-scope of Topic 606 | $ 659 | $ 650 | $ 1,260 | $ 2,410 |
Non-interest Income Out-of-scope of Topic 606 | 1,510 | 1,428 | 3,210 | 2,861 |
Total noninterest income | 2,169 | 2,078 | 4,470 | 5,271 |
Service charges and fees on deposit accounts | ||||
Disaggregation of Revenue [Line Items] | ||||
Non-interest Income In-scope of Topic 606 | $ 659 | $ 650 | $ 1,260 | $ 1,619 |
Revenue, Product and Service [Extensible List] | Service charges and fees on deposit accounts | Service charges and fees on deposit accounts | Service charges and fees on deposit accounts | Service charges and fees on deposit accounts |
Gain on the disposition of foreclosed assets | ||||
Disaggregation of Revenue [Line Items] | ||||
Non-interest Income In-scope of Topic 606 | $ 791 | |||
Revenue, Product and Service [Extensible List] | Gain on the disposition of foreclosed assets | Gain on the disposition of foreclosed assets | Gain on the disposition of foreclosed assets | Gain on the disposition of foreclosed assets |
Noninterest Expense (Details)
Noninterest Expense (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Noninterest Expense | ||||
Salaries and employee benefits | $ 12,572,000 | $ 12,300,000 | $ 26,530,000 | $ 26,503,000 |
Reserve for legal settlement | 4,000,000 | 4,000,000 | ||
Occupancy and equipment | 2,247,000 | 1,766,000 | 4,521,000 | 3,538,000 |
Professional fees | 1,771,000 | 1,155,000 | 3,490,000 | 2,590,000 |
Amortization of intangible assets | 754,000 | 964,000 | 1,487,000 | 1,822,000 |
Insurance expense | 661,000 | 516,000 | 1,324,000 | 1,034,000 |
Data processing | 583,000 | 779,000 | 1,117,000 | 1,755,000 |
Software subscriptions | 501,000 | 746,000 | 977,000 | 1,635,000 |
Other | 2,686,000 | 2,786,000 | 5,573,000 | 7,909,000 |
Total noninterest expense, excluding merger-related costs | 25,775,000 | 21,012,000 | 49,019,000 | 46,786,000 |
Salaries and employee benefits merger-related costs | 356,000 | |||
Other | (24,000) | 59,000 | 34,000 | 2,127,000 |
Total merger-related costs | $ (24,000) | $ 59,000 | $ 34,000 | $ 2,483,000 |
Leases (Details)
Leases (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Leases | ||||
Lessee, Operating Lease, Option to renew | true | |||
Operating Lease Cost (Cost resulting from lease payments) | $ 1,621,000 | $ 1,733,000 | $ 3,292,000 | $ 3,502,000 |
Operating Lease - Operating Cash Flows (Fixed Payments) | 1,220,000 | 1,379,000 | 2,406,000 | 2,570,000 |
Operating Lease - ROU assets | 36,601,000 | 37,137,000 | 36,601,000 | 37,137,000 |
Operating Lease - Liabilities | $ 36,601,000 | $ 37,137,000 | $ 36,601,000 | $ 37,137,000 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Operating Lease - Liabilities | Operating Lease - Liabilities | Operating Lease - Liabilities | Operating Lease - Liabilities |
Weighted Average Lease Term - Operating Leases | 7 years 9 months 14 days | 8 years 6 months | 7 years 9 months 14 days | 8 years 6 months |
Weighted Average Discount Rate - Operating Leases | 4.48% | 4.53% | 4.48% | 4.53% |
Leases - Maturity Analysis (Det
Leases - Maturity Analysis (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Operating Lease Payments Due | ||
2021 remaining | $ 2,998,000 | |
2022 | 6,353,000 | |
2023 | 5,724,000 | |
2024 | 5,341,000 | |
2025 | 4,929,000 | |
Thereafter | 19,011,000 | |
Total undiscounted cash flows | 44,356,000 | |
Discount on cash flows | (7,755,000) | |
Total lease liability | $ 36,601,000 | $ 37,137,000 |
Business Segment Information -
Business Segment Information - Business Segments (Details) | 6 Months Ended |
Jun. 30, 2021segment | |
Business Segment Information | |
Number of business segments | 2 |
Focus | |
Business Segment Information | |
Number of business segments | 2 |
Business Segment Information _2
Business Segment Information - Operating Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Operating Income | |||||||
Interest income | $ 36,632 | $ 37,132 | $ 73,393 | $ 78,074 | |||
Total interest expense | 1,756 | 2,192 | 3,559 | 4,554 | |||
Net interest income | 34,876 | 34,940 | 69,834 | 73,520 | |||
Provision for (recapture of) credit losses on loans | (493) | 1,114 | (2,005) | 14,384 | |||
Net interest income after provision | 35,369 | 33,826 | 71,839 | 59,136 | |||
Noninterest income | 2,169 | 2,078 | 4,470 | 5,271 | |||
Noninterest expense | 25,775 | 21,012 | 49,019 | 46,786 | |||
Income before income taxes | 11,763 | 14,892 | 27,290 | 17,621 | |||
Income tax expense | 2,950 | 4,274 | 7,273 | 5,142 | |||
Net income | 8,813 | $ 11,204 | 10,618 | $ 1,861 | 20,017 | 12,479 | |
Total assets | 5,072,875 | 4,614,401 | 5,072,875 | 4,614,401 | $ 4,634,114 | ||
Loans, net of deferred fees | 2,824,796 | 2,686,389 | 2,824,796 | 2,686,389 | 2,619,261 | ||
Goodwill | 167,631 | 167,631 | 167,631 | 167,631 | 167,631 | ||
Banking | |||||||
Operating Income | |||||||
Interest income | 33,860 | 34,570 | 67,971 | 72,635 | |||
Intersegment interest allocations | 202 | 218 | 413 | 502 | |||
Total interest expense | 1,756 | 2,192 | 3,559 | 4,554 | |||
Net interest income | 32,306 | 32,596 | 64,825 | 68,583 | |||
Provision for (recapture of) credit losses on loans | (486) | 1,107 | (1,949) | 13,981 | |||
Net interest income after provision | 32,792 | 31,489 | 66,774 | 54,602 | |||
Noninterest income | 2,049 | 1,883 | 4,209 | 4,906 | |||
Noninterest expense | 24,331 | 19,336 | 46,228 | 43,519 | |||
Intersegment expense allocations | 127 | 106 | 233 | 235 | |||
Income before income taxes | 10,637 | 14,142 | 24,988 | 16,224 | |||
Income tax expense | 2,617 | 4,052 | 6,593 | 4,729 | |||
Net income | 8,020 | 10,090 | 18,395 | 11,495 | |||
Total assets | 5,003,894 | 4,546,199 | 5,003,894 | 4,546,199 | |||
Loans, net of deferred fees | 2,777,685 | 2,644,480 | 2,777,685 | 2,644,480 | |||
Goodwill | 154,587 | 154,587 | 154,587 | 154,587 | 154,587 | ||
Factoring | |||||||
Operating Income | |||||||
Interest income | 2,772 | 2,562 | 5,422 | 5,439 | |||
Intersegment interest allocations | (202) | (218) | (413) | (502) | |||
Net interest income | 2,570 | 2,344 | 5,009 | 4,937 | |||
Provision for (recapture of) credit losses on loans | (7) | 7 | (56) | 403 | |||
Net interest income after provision | 2,577 | 2,337 | 5,065 | 4,534 | |||
Noninterest income | 120 | 195 | 261 | 365 | |||
Noninterest expense | 1,444 | 1,676 | 2,791 | 3,267 | |||
Intersegment expense allocations | (127) | (106) | (233) | (235) | |||
Income before income taxes | 1,126 | 750 | 2,302 | 1,397 | |||
Income tax expense | 333 | 222 | 680 | 413 | |||
Net income | 793 | 528 | 1,622 | 984 | |||
Total assets | 68,981 | 68,202 | 68,981 | 68,202 | |||
Loans, net of deferred fees | 47,111 | 41,909 | 47,111 | 41,909 | |||
Goodwill | $ 13,044 | $ 13,044 | $ 13,044 | $ 13,044 | $ 13,044 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Jul. 22, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 |
Subsequent Event [Line Items] | |||||
Quarterly cash dividends declared to holders of common stock | $ 0.13 | $ 0.13 | $ 0.13 | $ 0.13 | |
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Quarterly cash dividends declared to holders of common stock | $ 0.13 |