Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | Apr. 29, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
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 | 60,439,607 | |
Document Fiscal Year Focus | 2022 | |
Entity Central Index Key | 0001053352 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Cash and due from banks | $ 29,729,000 | $ 15,703,000 |
Other investments and interest-bearing deposits in other financial institutions | 1,187,436,000 | 1,290,513,000 |
Total cash and cash equivalents | 1,217,165,000 | 1,306,216,000 |
Securities available-for-sale, at fair value | 111,217,000 | 102,252,000 |
Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $39 at March 31, 2022 and $43 at December 31, 2021 (fair value of $690,784 at March 31, 2022 and $657,649 at December 31, 2021) | 736,823,000 | 658,397,000 |
Loans held-for-sale - SBA, at lower of cost or fair value, including deferred costs | 831,000 | 2,367,000 |
Loans, net of deferred fees | 3,024,064,000 | 3,087,326,000 |
Allowance for credit losses on loans | (42,788,000) | (43,290,000) |
Loans, net | 2,981,276,000 | 3,044,036,000 |
Federal Home Loan Bank, Federal Reserve Bank stock and other investments, at cost | 32,509,000 | 32,504,000 |
Company-owned life insurance | 78,069,000 | 77,589,000 |
Premises and equipment, net | 9,580,000 | 9,639,000 |
Goodwill | 167,631,000 | 167,631,000 |
Other intangible assets | 13,009,000 | 13,668,000 |
Accrued interest receivable and other assets | 79,288,000 | 85,110,000 |
Total assets | 5,427,398,000 | 5,499,409,000 |
Deposits: | ||
Demand, noninterest-bearing | 1,811,943,000 | 1,903,768,000 |
Demand, interest-bearing | 1,268,942,000 | 1,308,114,000 |
Savings and money market | 1,447,434,000 | 1,375,825,000 |
Time deposits - under $250 | 38,417,000 | 38,734,000 |
Time deposits - $250 and over | 93,161,000 | 94,700,000 |
CDARS - interest-bearing demand, money market and time deposits | 30,008,000 | 38,271,000 |
Total deposits | 4,689,905,000 | 4,759,412,000 |
Subordinated debt, net of issuance costs | 39,987,000 | 39,925,000 |
Accrued interest payable and other liabilities | 96,450,000 | 102,044,000 |
Total liabilities | 4,826,342,000 | 4,901,381,000 |
Shareholders' equity: | ||
Preferred stock, no par value; 10,000,000 shares authorized; none issued and outstanding at March 31, 2022 and December 31, 2021 | ||
Common stock, no par value; 100,000,000 shares authorized; 60,407,846 shares issued and outstanding at March 31, 2022 and 60,339,837 shares issued and outstanding at December 31, 2021 | 498,763,000 | 497,695,000 |
Retained earnings | 116,347,000 | 111,329,000 |
Accumulated other comprehensive loss | (14,054,000) | (10,996,000) |
Total shareholders' equity | 601,056,000 | 598,028,000 |
Total liabilities and shareholders' equity | $ 5,427,398,000 | $ 5,499,409,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Securities held-to-maturity | ||
Allowance for credit losses | $ 39 | $ 43 |
Securities held-to-maturity, fair value (in dollars) | $ 690,784 | $ 657,649 |
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 | 60,407,846 | 60,339,837 |
Common stock, shares outstanding | 60,407,846 | 60,339,837 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Interest income: | ||
Loans, including fees | $ 35,101 | $ 33,836 |
Securities, taxable | 3,444 | 1,728 |
Securities, exempt from Federal tax | 297 | 429 |
Other investments, interest-bearing deposits in other financial institutions and Federal funds sold | 1,064 | 768 |
Total interest income | 39,906 | 36,761 |
Interest expense: | ||
Deposits | 1,114 | 1,232 |
Subordinated debt | 571 | 571 |
Total interest expense | 1,685 | 1,803 |
Net interest income before provision for credit losses on loans | 38,221 | 34,958 |
Provision for (recapture of) credit losses on loans | (567) | (1,512) |
Net interest income after provision for credit losses on loans | 38,788 | 36,470 |
Noninterest income: | ||
Gain (loss) on warrants | 637 | |
Service charges and fees on deposit accounts | 612 | 601 |
Increase in cash surrender value of life insurance | 480 | 456 |
Gain on sales of SBA loans | 156 | 550 |
Servicing income | 106 | 182 |
Termination fees | 90 | |
Gain on proceeds from company owned life insurance | 66 | |
Other | 469 | 356 |
Total noninterest income | 2,460 | 2,301 |
Noninterest expense: | ||
Salaries and employee benefits | 13,821 | 13,958 |
Occupancy and equipment | 2,437 | 2,274 |
Professional fees | 1,080 | 1,719 |
Other | 5,914 | 5,293 |
Total noninterest expense | 23,252 | 23,244 |
Income before income taxes | 17,996 | 15,527 |
Income tax expense | 5,130 | 4,323 |
Net income | $ 12,866 | $ 11,204 |
Earnings per common share: | ||
Basic (in dollars per share) | $ 0.21 | $ 0.19 |
Diluted (in dollars per share) | $ 0.21 | $ 0.19 |
Service charges and fees on deposit accounts | ||
Noninterest income: | ||
Revenue, Product and Service [Extensible List] | Service charges and fees on deposit accounts | Service charges and fees on deposit accounts |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 12,866 | $ 11,204 |
Other comprehensive income (loss): | ||
Change in net unrealized holding (losses) gains on available-for-sale securities and I/O strips | (4,405) | (849) |
Deferred income taxes | 1,277 | 247 |
Change in net unamortized unrealized gain on securities available-for-sale that were reclassified to securities held-to-maturity | (13) | |
Deferred income taxes | 4 | |
Change in unrealized (losses) gains on securities and I/O strips, net of deferred income taxes | (3,128) | (611) |
Change in net pension and other benefit plan liability adjustment | 104 | 89 |
Deferred income taxes | (34) | (29) |
Change in pension and other benefit plan liability, net of deferred income taxes | 70 | 60 |
Other comprehensive loss | (3,058) | (551) |
Total comprehensive income | $ 9,808 | $ 10,653 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income / (Loss) | Total |
Balance at Dec. 31, 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 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, 2021 | $ 497,695 | 111,329 | (10,996) | 598,028 |
Balance (in shares) at Dec. 31, 2021 | 60,339,837 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Net income | 12,866 | 12,866 | ||
Other comprehensive loss | (3,058) | (3,058) | ||
Amortization of restricted stock awards, net of forfeitures and taxes | $ 518 | 518 | ||
Cash dividend declared | (7,848) | (7,848) | ||
Stock option expense, net of forfeitures and taxes | 149 | 149 | ||
Stock options exercised | $ 401 | 401 | ||
Stock options exercised (in shares) | 68,009 | |||
Balance at Mar. 31, 2022 | $ 498,763 | $ 116,347 | $ (14,054) | $ 601,056 |
Balance (in shares) at Mar. 31, 2022 | 60,407,846 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | ||
Cash dividend declared per share (in dollars per share) | $ 0.13 | $ 0.13 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 12,866 | $ 11,204 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of discounts and premiums on securities | 675 | 1,071 |
Gain on sale of SBA loans | (156) | (550) |
Proceeds from sale of SBA loans originated for sale | 2,146 | 5,632 |
SBA loans originated for sale | (934) | (6,217) |
Provision for (recapture of) credit losses on loans | (567) | (1,512) |
Increase in cash surrender value of life insurance | (480) | (456) |
Depreciation and amortization | 283 | 243 |
Amortization of other intangible assets | 659 | 733 |
Stock option expense, net | 149 | 132 |
Amortization of restricted stock awards, net | 518 | 458 |
Amortization of subordinated debt issuance costs | 46 | 46 |
Gain on proceeds from company-owned life insurance | (66) | |
Effect of changes in: | ||
Accrued interest receivable and other assets | 7,053 | 623 |
Accrued interest payable and other liabilities | (5,475) | (1,085) |
Net cash provided by operating activities | 16,783 | 10,256 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of securities available-for-sale | (21,656) | |
Purchase of securities held-to-maturity | (109,610) | (40,366) |
Maturities/paydowns/calls of securities available-for-sale | 8,099 | 37,765 |
Maturities/paydowns/calls of securities held-to-maturity | 30,709 | 30,601 |
Net change in loans | 63,807 | (84,038) |
Changes in Federal Home Loan Bank stock and other investments | (5) | (4) |
Purchase of premises and equipment | (224) | (4) |
Proceeds from redemption of company-owned life insurance | 624 | |
Net cash (used in) investing activities | (28,880) | (55,422) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net change in deposits | (69,507) | 364,616 |
Exercise of stock options | 401 | 320 |
Payment of cash dividends | (7,848) | (7,789) |
Net cash (used-in) provided by financing activities | (76,954) | 357,147 |
Net increase in cash and cash equivalents | (89,051) | 311,981 |
Cash and cash equivalents, beginning of period | 1,306,216 | 1,131,073 |
Cash and cash equivalents, end of period | 1,217,165 | 1,443,054 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 1,112 | 1,242 |
Income taxes paid, net | (654) | $ (149) |
Supplemental schedule of non-cash activity: | ||
Transfer of loans held-for-sale to loan portfolio | $ 480 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2022 | |
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, 2021. 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 months ended March 31, 2022 are not necessarily indicative of the results expected for any subsequent period or for the entire year ending December 31, 2022. 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 Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 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. The ASU provides optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from London Inter-Bank Offered Rate (“LIBOR”) toward new interest rate benchmarks. For transactions that are modified because of reference rate reform and that meet certain scope guidance (i) modifications of loan agreements should be accounted for by prospectively adjusting the effective interest rate and the modification will be considered "minor" so that any existing unamortized origination fees/costs would carry forward and continue to be amortized and (ii) modifications of lease agreements should be accounted for as a continuation of the existing agreement with - - . - , , In March 2022, the FASB issued ASU No. 2022-02 Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restrucurings and Vintage Disclosures, which 1) eliminates the accounting guidance for troubled debt restructurings ("TDRs") by creditors while enhancing the disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty; and 2) requires that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases. ASU 2022-02 is effective for fiscal years beginning after December 15, 2022 and the amendments should be applied prospectively, although the entity has the option to apply a modified retrospective transition method for the recognition and measurement of TDRs, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. The Company is currently evaluating the impact of adopting the new guidance on its consolidated financial statements. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2022 | |
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 1,048,267 and 1,019,481 weighted average stock options outstanding for the three months ended March 31, 2022 and 2021, respectively, considered to be antidilutive and excluded from the computation of diluted earnings per share. A reconciliation of these factors used in computing basic and diluted earnings per common share is as follows: Three Months Ended March 31, 2022 2021 (Dollars in thousands, except per share amounts) Net income $ 12,866 $ 11,204 Weighted average common shares outstanding for basic earnings per common share 60,393,883 59,926,816 Dilutive potential common shares 527,952 477,397 Shares used in computing diluted earnings per common share 60,921,835 60,404,213 Basic earnings per share $ 0.21 $ 0.19 Diluted earnings per share $ 0.21 $ 0.19 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) ("AOCI") | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022 and 2021 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, 2022, net of taxes $ 2,153 $ — $ (13,149) $ (10,996) Other comprehensive (loss) before reclassification, net of taxes (3,128) — (3) (3,131) Amounts reclassified from other comprehensive income, net of taxes — — 73 73 Net current period other comprehensive income (loss), net of taxes (3,128) — 70 (3,058) Ending balance March 31, 2022, net of taxes $ (975) $ — $ (13,079) $ (14,054) Beginning balance January 1, 2021, net of taxes $ 3,929 $ 261 $ (14,907) $ (10,717) Other comprehensive (loss) before reclassification, net of taxes (602) — (53) (655) Amounts reclassified from other comprehensive income (loss), net of taxes — (9) 113 104 Net current period other comprehensive income (loss), net of taxes (602) (9) 60 (551) Ending balance March 31, 2021, net of taxes $ 3,327 $ 252 $ (14,847) $ (11,268) (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 March 31, Affected Line Item Where Details About AOCI Components 2022 2021 Net Income is Presented (Dollars in thousands) Amortization of unrealized gain on securities available- for-sale that were reclassified to securities held-to-maturity $ — $ 13 Interest income on taxable securities — (4) Income tax expense — 9 Net of tax Amortization of defined benefit pension plan items (1) Prior transition obligation and actuarial losses (2) 11 1 Prior service cost and actuarial losses (3) (114) (161) (103) (160) Other noninterest expense 30 47 Income tax benefit (73) (113) Net of tax Total reclassification from AOCI for the period $ (73) $ (104) (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 | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022 Cost Gains (Losses) Losses Value (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 91,059 $ 19 $ (1,425) $ — $ 89,653 U.S. Treasury 21,657 5 (98) — 21,564 Total $ 112,716 $ 24 $ (1,523) $ — $ 111,217 Gross Gross Estimated Allowance Amortized Unrecognized Unrecognized Fair for Credit March 31, 2022 Cost Gains (Losses) Value Losses (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 696,161 $ 28 $ (46,254) $ 649,935 $ — Municipals - exempt from Federal tax 40,701 197 (49) 40,849 (39) Total $ 736,862 $ 225 $ (46,303) $ 690,784 $ (39) Gross Gross Allowance Estimated Amortized Unrealized Unrealized for Credit Fair December 31, 2021 Cost Gains (Losses) Losses Value (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 99,359 $ 2,893 $ — $ — $ 102,252 Total $ 99,359 $ 2,893 $ — $ — $ 102,252 Gross Gross Estimated Allowance Amortized Unrecognized Unrecognized Fair for Credit December 31, 2021 Cost Gains (Losses) Value Losses (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 607,377 $ 3,157 $ (4,752) $ 605,782 $ — Municipals - exempt from Federal tax 51,063 804 — 51,867 (43) Total $ 658,440 $ 3,961 $ (4,752) $ 657,649 $ (43) Securities with unrealized losses at March 31, 2022 and December 31, 2021, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position are as follows: Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized March 31, 2022 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 84,890 $ (1,425) $ — $ — $ 84,890 $ (1,425) U.S. Treasury 11,858 (98) — — 11,858 (98) Total $ 96,748 $ (1,523) $ — $ — $ 96,748 $ (1,523) Securities held-to-maturity: Agency mortgage-backed securities $ 620,134 $ (42,837) $ 25,465 $ (3,417) $ 645,599 $ (46,254) Municipals — exempt from Federal tax 5,944 (49) — — 5,944 (49) Total $ 626,078 $ (42,886) $ 25,465 $ (3,417) $ 651,543 $ (46,303) Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2021 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 408,856 $ (3,319) $ 27,997 $ (1,433) $ 436,853 $ (4,752) Total $ 408,856 $ (3,319) $ 27,997 $ (1,433) $ 436,853 $ (4,752) There were no holdings of securities of any one issuer, other than the U.S. Government and its sponsored entities, in an amount greater than 10% of shareholders’ equity. At March 31, 2022, the Company held 395 securities (108 available-for-sale and 287 held-to-maturity), of which 266 had fair value below amortized cost. At March 31, 2022, there were $84,890,000 of agency mortgage-backed securities available-for-sale, and $11,858,000 of U.S. Treasury securities available-for-sale, carried with an unrealized loss for less than 12 months. At March 31, 2022, there were $620,134,000 of agency mortgage-backed securities held-to-maturity, and $5,944,000 of municipal securities, carried with an unrealized loss for less than 12 months, and $25,465,000 of agency mortgage-backed securities held-to-maturity, carried with an unrealized loss for 12 months or more. The total unrealized loss for securities carried less than 12 months was ($44,409,000), and the total unrealized loss for securities carried for 12 months or more was ($3,417,000) at March 31, 2022. The unrealized loss was due to higher interest rates in comparison to when the security was purchased. The issuers are of high credit quality and all principal amounts are expected to be paid when securities mature. The fair value is expected to recover as the securities approach their maturity date and/or market rates decline. The Company does not believe that it is more likely than not that the Company will be required to sell a security in an unrealized loss position prior to recovery in value. Therefore, the Company does not consider the agency mortgage-backed securities and U.S. Treasury securities to have credit-related losses as of March 31, 2022. The amortized cost and estimated fair values of securities as of March 31, 2022 are shown by contractual maturity below. The expected maturities will differ from contractual maturities if borrowers have the right to call or pre-pay obligations with or without call or pre-payment penalties. Securities not due at a single maturity date are shown separately. Available-for-sale Amortized Estimated Cost Fair Value (Dollars in thousands) Due after one through five years $ 21,657 $ 21,564 Agency mortgage-backed securities 91,059 89,653 Total $ 112,716 $ 111,217 Held-to-maturity Amortized Estimated Cost Fair Value (Dollars in thousands) Due after three months through one year $ 545 $ 548 Due after one through five years 7,348 7,402 Due after five through ten years 24,800 24,861 Due after ten years 8,008 8,038 Agency mortgage-backed securities 696,161 649,935 Total $ 736,862 $ 690,784 Securities with amortized cost of $53,897,000 and $42,473,000 as of March 31, 2022 and December 31, 2021 were pledged to secure public deposits and for other purposes as required or permitted by law or contract. The table below presents a roll-forward by major security type for the three months ended March 31, 2022 of the allowance for credit losses on debt securities held-to-maturity held at period end: Municipals (Dollars in thousands) Beginning balance January 1, 2022 $ 43 Provision for (recapture of) credit losses (4) Ending balance March 31, 2022 $ 39 For the three months ended March 31, 2022, there was a reduction of $4,000 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 March 31, 2022 were consistent with the ratings at December 31, 2021. |
Loans and Allowance for Credit
Loans and Allowance for Credit Losses on Loans | 3 Months Ended |
Mar. 31, 2022 | |
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 On January 1, 2020, the Company adopted the current expected credit loss (“CECL”) model under ASU 2016-13 (Topic 326) using the modified retrospective approach. The allowance for credit losses on loans is an estimate of the current expected credit losses in the loan portfolio. Loans are charged-off against the allowance when management determines that a loan balance has become uncollectible. Subsequent recoveries, if any, are credited to the allowance for credit losses on loans. 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. Management has also considered other qualitative 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 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 fluctuate 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 $37,393,000 of Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans at March 31, 2022 and $88,726,000 at December 31, 2021. 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 on 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. These loans are generally revolving lines of credit. 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 on 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 . These are generally term loans. 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 values can vary depending on economic conditions. Loan Distribution Loans by portfolio segment and the allowance for credit losses on loans were as follows for the periods indicated: March 31, December 31, 2022 2021 (Dollars in thousands) Loans held-for-investment: Commercial $ 605,446 $ 682,834 Real estate: CRE - owner occupied 597,542 595,934 CRE - non-owner occupied 928,220 902,326 Land and construction 153,323 147,855 Home equity 111,609 109,579 Multifamily 221,767 218,856 Residential mortgages 391,171 416,660 Consumer and other 17,110 16,744 Loans 3,026,188 3,090,788 Deferred loan fees, net (2,124) (3,462) Loans, net of deferred fees 3,024,064 3,087,326 Allowance for credit losses on loans (42,788) (43,290) Loans, net $ 2,981,276 $ 3,044,036 Changes in the allowance for credit losses on loans were as follows for the periods indicated: Three Months Ended March 31, 2022 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 $ 8,414 $ 7,954 $ 17,125 $ 1,831 $ 864 $ 2,796 $ 4,132 $ 174 $ 43,290 Charge-offs (16) — — — — — — — (16) Recoveries 54 3 — — 24 — — — 81 Net recoveries 38 3 — — 24 — — — 65 Provision for (recapture of) credit losses on loans (1,651) (1,560) 2,288 175 (166) (252) 625 (26) (567) End of period balance $ 6,801 $ 6,397 $ 19,413 $ 2,006 $ 722 $ 2,544 $ 4,757 $ 148 $ 42,788 Three Months Ended March 31, 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 (263) — — — — — — — (263) Recoveries 813 4 — 816 23 — — 15 1,671 Net recoveries 550 4 — 816 23 — — 15 1,408 Provision for (recapture of) credit losses on loans (537) (196) 15 (571) (149) (53) (25) 4 (1,512) End of period balance $ 11,600 $ 8,368 $ 16,431 $ 2,754 $ 1,171 $ 2,751 $ 918 $ 303 $ 44,296 The following tables present the amortized cost basis of nonperforming loans and loans past due over 90 days and still accruing at the periods indicated: March 31, 2022 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 $ 236 $ 761 $ 527 $ 1,524 Real estate: CRE - Owner Occupied 1,126 — — 1,126 Home equity 73 — — 73 Multifamily 1,107 — — 1,107 Total $ 2,542 $ 761 $ 527 $ 3,830 December 31, 2021 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 $ 94 $ 1,028 $ 278 $ 1,400 Real estate: CRE - Owner Occupied 1,126 — — 1,126 Home equity 84 — — 84 Multifamily 1,128 — — 1,128 Total $ 2,432 $ 1,028 $ 278 $ 3,738 The following tables present the aging of past due loans by class for the periods indicated: March 31, 2022 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 $ 5,522 $ 1,508 $ 578 $ 7,608 $ 597,838 $ 605,446 Real estate: CRE - Owner Occupied — — 1,126 1,126 596,416 597,542 CRE - Non-Owner Occupied — 707 — 707 927,513 928,220 Land and construction — — — — 153,323 153,323 Home equity — — — — 111,609 111,609 Multifamily — — — — 221,767 221,767 Residential mortgages 4,690 — — 4,690 386,481 391,171 Consumer and other — — — — 17,110 17,110 Total $ 10,212 $ 2,215 $ 1,704 $ 14,131 $ 3,012,057 $ 3,026,188 December 31, 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 $ 2,714 $ 168 $ 408 $ 3,290 $ 679,544 $ 682,834 Real estate: CRE - Owner Occupied — — 1,126 1,126 594,808 595,934 CRE - Non-Owner Occupied — — — — 902,326 902,326 Land and construction — — — — 147,855 147,855 Home equity — — — — 109,579 109,579 Multifamily — — — — 218,856 218,856 Residential mortgages 599 — — 599 416,061 416,660 Consumer and other — — — 16,744 16,744 Total $ 3,313 $ 168 $ 1,534 $ 5,015 $ 3,085,773 $ 3,090,788 Past due loans 30 days or greater totaled $14,131,000 and $5,015,000 at March 31, 2022 and December 31, 2021, respectively, of which $1,362,000 and $1,258,000 were on nonaccrual, at March 31, 2022 and December 31, 2021, respectively. At March 31, 2022, there were also $1,941,000 of loans less than 30 days past due included in nonaccrual loans held-for-investment. At December 31, 2021, there were also $2,202,000 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 March 31, 2022 and December 31, 2021. 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 March 31, 2022 and December 31, 2021. 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 March 31, 2022 and December 31, 2021. 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, 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 as of March 31, 2022 Amortized 2017 and Cost 03/31/2022 12/31/2021 12/31/2020 12/31/2019 12/31/2018 Prior Basis Total (Dollars in thousands) Commercial: Pass $ 83,467 $ 90,076 $ 51,230 $ 12,145 $ 10,818 $ 10,799 $ 333,283 $ 591,818 Special Mention 2,020 1,283 496 213 706 417 1,888 7,023 Substandard 4 561 258 - 11 167 4,607 5,608 Substandard-Nonaccrual - 548 362 - - 87 - 997 Total 85,491 92,468 52,346 12,358 11,535 11,470 339,778 605,446 CRE - Owner Occupied: Pass 39,671 163,716 125,993 58,738 51,196 127,282 13,022 579,618 Special Mention 568 - 6,657 668 - 347 - 8,240 Substandard 907 - 5,309 - 1,468 874 - 8,558 Substandard-Nonaccrual - - 1,101 - - 25 - 1,126 Total 41,146 163,716 139,060 59,406 52,664 128,528 13,022 597,542 CRE - Non-Owner Occupied: Pass 55,458 376,710 128,498 113,076 35,540 197,894 2,711 909,887 Special Mention - - 5,341 - - 356 5,697 Substandard - 707 5,798 - - 6,131 - 12,636 Substandard-Nonaccrual - - - - - - - - Total 55,458 377,417 139,637 113,076 35,540 204,381 2,711 928,220 Land and construction: Pass 53,912 79,197 11,259 3,925 - 1,289 3,741 153,323 Special Mention - - - - - - - - Substandard - - - - - - - - Substandard-Nonaccrual - - - - - - - - Total 53,912 79,197 11,259 3,925 - 1,289 3,741 153,323 Home equity: Pass - - - - 40 - 109,329 109,369 Special Mention - - - - - - 1,932 1,932 Substandard - - - - - 143 92 235 Substandard-Nonaccrual - - 73 - - - 73 Total - - 73 - 40 143 111,353 111,609 Multifamily: Pass 7,949 100,952 27,780 28,548 16,062 28,204 - 209,495 Special Mention - 6,880 - 4,285 - - 11,165 Substandard - - - - - - - - Substandard-Nonaccrual - 1,107 - - - - - 1,107 Total 7,949 108,939 27,780 32,833 16,062 28,204 - 221,767 Residential mortgage: Pass 765 338,359 17,742 7,643 3,022 23,413 - 390,944 Special Mention - - - - - - - - Substandard - - - - - 227 - 227 Substandard-Nonaccrual - - - - - - - - Total 765 338,359 17,742 7,643 3,022 23,640 - 391,171 Consumer and other: Pass 79 522 - 32 1,411 895 14,159 17,098 Special Mention - - - - - - - - Substandard - 12 - - - - 12 Substandard-Nonaccrual - - - - - - - - Total 79 534 - 32 1,411 895 14,159 17,110 Total loans $ 244,800 $ 1,160,630 $ 387,897 $ 229,273 $ 120,274 $ 398,550 $ 484,764 $ 3,026,188 Risk Grades: Pass $ 241,301 $ 1,149,532 $ 362,502 $ 224,107 $ 118,089 $ 389,776 $ 476,245 $ 2,961,552 Special Mention 2,588 8,163 12,494 5,166 706 1,120 3,820 34,057 Substandard 911 1,280 11,365 - 1,479 7,542 4,699 27,276 Substandard-Nonaccrual - 1,655 1,536 - - 112 - 3,303 Grand Total $ 244,800 $ 1,160,630 $ 387,897 $ 229,273 $ 120,274 $ 398,550 $ 484,764 $ 3,026,188 Revolving Loans Term Loans Amortized Cost Basis by Originated Period as of December 31, 2021 Amortized Cost 2021 2020 2019 2018 2017 Prior Periods Basis Total (Dollars in thousands) Commercial: Pass $ 208,645 65,257 $ 15,086 $ 12,281 $ 7,311 $ 5,507 $ 349,717 $ 663,804 Special Mention 2,210 512 219 764 243 204 4,024 8,176 Substandard 3,709 930 - 13 302 2 4,776 9,732 Substandard-Nonaccrual 595 442 37 - - 48 - 1,122 Total 215,159 67,141 15,342 13,058 7,856 5,761 358,517 682,834 CRE - Owner Occupied: Pass 170,504 135,103 65,596 57,017 31,657 107,203 14,486 581,566 Special Mention 568 2,254 672 - - 355 - 3,849 Substandard 985 6,042 - 1,477 - 889 - 9,393 Substandard-Nonaccrual - 1,100 - - - 26 - 1,126 Total 172,057 144,499 66,268 58,494 31,657 108,473 14,486 595,934 CRE - Non-Owner Occupied: Pass 374,470 141,404 115,170 45,959 68,125 134,454 2,068 881,650 Special Mention - 5,388 - - 1,133 3,816 - 10,337 Substandard - 5,842 - - - 4,497 - 10,339 Substandard-Nonaccrual - - - - - - - - Total 374,470 152,634 115,170 45,959 69,258 142,767 2,068 902,326 Land and construction: Pass 125,844 11,401 4,385 - - 1,300 3,566 146,496 Special Mention 1,359 - - - - - - 1,359 Substandard - - - - - - - - Substandard-Nonaccrual - - - - - - - - Total 127,203 11,401 4,385 - - 1,300 3,566 147,855 Home equity: Pass - - - 46 - - 106,738 106,784 Special Mention - - - - - - 1,931 1,931 Substandard - - - - - 54 726 780 Substandard-Nonaccrual - 84 - - - - - 84 Total - 84 - 46 - 54 109,395 109,579 Multifamily: Pass 102,535 27,955 30,820 16,151 16,261 13,895 - 207,617 Special Mention 5,804 - 4,307 - - - - 10,111 Substandard - - - - - - - - Substandard-Nonaccrual 1,128 - - - - - - 1,128 Total 109,467 27,955 35,127 16,151 16,261 13,895 - 218,856 Residential mortgage: Pass 360,424 17,875 8,065 3,070 6,015 19,967 - 415,416 Special Mention - - - - - 1,244 - 1,244 Substandard - - - - - - - - Substandard-Nonaccrual - - - - - - - - Total 360,424 17,875 8,065 3,070 6,015 21,211 - 416,660 Consumer and other: Pass 491 2 40 1,426 14 1,000 13,756 16,729 Special Mention - - - - - - - - Substandard 15 - - - - - - 15 Substandard-Nonaccrual - - - - - - - - Total 506 2 40 1,426 14 1,000 13,756 16,744 Total loans $ 1,359,286 421,591 $ 244,397 $ 138,204 $ 131,061 $ 294,461 $ 501,788 $ 3,090,788 Risk Grades:. Pass $ 1,342,913 398,997 $ 239,162 $ 135,950 $ 129,383 $ 283,326 $ 490,331 $ 3,020,062 Special Mention 9,941 8,154 5,198 764 1,376 5,619 5,955 37,007 Substandard 4,709 12,814 - 1,490 302 5,442 5,502 30,259 Substandard-Nonaccrual 1,723 1,626 37 - - 74 - 3,460 Grand Total $ 1,359,286 421,591 $ 244,397 $ 138,204 $ 131,061 $ 294,461 $ 501,788 $ 3,090,788 The amortized cost basis of collateral-dependent loans by business assets was $761,000 and $1,028,000 at March 31, 2022 and December 31, 2021, respectfully. 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 appropriate. For loans for which foreclosure is not probable, but for which repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty, management has elected the practical expedient under ASC 326 to estimate expected credit losses based on the fair value of collateral, adjusted for selling costs as appropriate. The class of loan represents the primary collateral type associated with the loan. Significant quarter over quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value. The book balance of troubled debt restructurings at March 31, 2022 was $481,000 which included $355,000 of nonaccrual loans and $126,000 of accruing loans. The book balance of troubled debt restructurings at December 31, 2021 was $500,000 which included $372,000 of nonaccrual loans and $128,000 of accruing loans. Approximately $279,000 and $290,000 in specific reserves were established with respect to these loans as of March 31, 2022 and December 31, 2021, respectively. There were no loans modified as a troubled debt restructuring during the three months ended March 31, 2022. There was one new loan with total recorded investment of $3,000 that was modified as a troubled debt restructuring during the three months ended March 31, 2021. The following table presents loans by class modified as troubled debt restructurings for the period indicated: Three Months Ended March 31, 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 A loan is considered to be in payment default when it is 30 days contractually past due under the modified terms. There were no defaults on troubled debt restructurings, within twelve months following the modification, during the three months ended March 31, 2022 and 2021. A loan that is a troubled debt restructuring on nonaccrual status may return to accruing status after a period of at least six months of consecutive payments in accordance with the modified terms. On April 7, 2020, U.S. banking agencies issued the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus. The statement describes accounting for COVID-19-related loan modifications and clarifies the interaction between current accounting rules and the temporary relief provided by the CARES Act. Initially, the Bank made accommodations for payment deferrals for a number of customers with a window of up to 90 days, with the potential of an additional 90 days of payment deferral (180 days maximum) upon application. The Bank also waived all customary applicable fees. Of the loans for which deferrals were originally granted, all have returned to regular payment status. At March 31, 2022, there were no remaining deferments. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | 6) Goodwill and Other Intangible Assets Goodwill At March 31, 2022, 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 its acquisition of 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, 2021 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, 2021 annual impairment test were noted that would indicate it was more likely than not that 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: March 31, December 31, 2022 2021 (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: March 31, 2022 Gross Carrying Accumulated Amount Amortization Total (Dollars in thousands) Core deposit intangibles $ 25,023 $ (12,593) $ 12,430 Customer relationship and brokered relationship intangibles 1,900 (1,409) 491 Below market leases 110 (22) 88 Total $ 27,033 $ (14,024) $ 13,009 December 31, 2021 Gross Carrying Accumulated Amount Amortization Total (Dollars in thousands) Core deposit intangibles $ 25,023 $ (11,982) $ 13,041 Customer relationship and brokered relationship intangibles 1,900 (1,361) 539 Below market leases 110 (22) 88 Total $ 27,033 $ (13,365) $ 13,668 As of March 31, 2022, the estimated amortization expense for future periods is as follows: Customer & Below/ Core Brokered (Above) Total Deposit Relationship Market Amortization Year Intangible Intangible Lease Expense (Dollars in thousands) 2022 remaining $ 1,836 142 $ (2) $ 1,976 2023 2,217 190 (2) 2,405 2024 2,023 159 5 2,187 2025 1,795 — 18 1,813 2026 1,512 — 18 1,530 2027 1,438 — 18 1,456 Thereafter 1,609 — 33 1,642 $ 12,430 $ 491 $ 88 $ 13,009 Impairment testing of the intangible assets is performed at the individual asset level. Impairment exists if the carrying amount of the asset is not recoverable and exceeds its fair value at the date of the impairment test. For intangible assets, estimates of expected future cash flows (cash inflows less cash outflows) that are directly associated with an intangible asset are used to determine the fair value of that asset. Management makes certain estimates and assumptions in determining the expected future cash flows from core deposit and customer relationship intangibles including account attrition, expected lives, discount rates, interest rates, servicing costs and other factors. Significant changes in these estimates and assumptions could adversely impact the valuation of these intangible assets. If an impairment loss exists, the carrying amount of the intangible asset is adjusted to a new cost basis. The new cost basis is then amortized over the remaining useful life of the asset. Based on its assessment, management concluded that there was no impairment of intangible assets at March 31, 2022 and December 31, 2021. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
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 $28,054,000, and $28,757,000, at March 31, 2022 and December 31, 2021, respectively. After consideration of the matters in the preceding paragraph, the Company determined that it is more likely than not that the net deferred tax assets at March 31, 2022 and December 31, 2021 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: March 31, December 31, 2022 2021 (Dollars in thousands) Low income housing investments $ 4,169 $ 4,380 Future commitments $ 568 $ 568 The Company expects $55,000 of the future commitments to be paid in 2022, and $513,000 in 2023 through 2025. For tax purposes, the Company had low income housing tax credits of $210,000 for both the three months ended March 31, 2022 and March 31, 2021, and low income housing investment expense of $211,000 and $208,000, respectively. The Company recognized low income housing investment expense as a component of income tax expense. |
Benefit Plans
Benefit Plans | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022 2021 (Dollars in thousands) Components of net periodic benefit cost: Service cost $ 87 $ 120 Interest cost 216 190 Amortization of prior service cost — 25 Amortization of net actuarial loss 114 136 Net periodic benefit cost $ 417 $ 471 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: March 31, December 31, 2022 2021 (Dollars in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 9,244 $ 9,689 Interest cost 62 219 Actuarial loss — (664) Projected benefit obligation at end of period $ 9,306 $ 9,244 March 31, December 31, 2022 2021 (Dollars in thousands) Net actuarial loss $ 4,633 $ 4,601 Prior transition obligation 858 879 Accumulated other comprehensive loss $ 5,491 $ 5,480 Three Months Ended March 31, 2022 2021 (Dollars in thousands) Amortization of prior transition obligation and actuarial losses $ (11) $ (1) Interest cost 62 55 Net periodic benefit cost $ 51 $ 54 |
Fair Value
Fair Value | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022 Available-for-sale securities: Agency mortgage-backed securities $ 89,653 $ — $ 89,653 $ — U.S. Treasury 21,564 21,564 — — I/O strip receivables 208 — 208 — Assets at December 31, 2021 Available-for-sale securities: Agency mortgage-backed securities $ 102,252 $ — $ 102,252 $ — I/O strip receivables 221 — 221 — 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 March 31, 2022 or December 31, 2021. 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 March 31, 2022 and December 31, 2021, there were no foreclosed assets on the balance sheet. The carrying amounts and estimated fair values of financial instruments at March 31, 2022 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 $ 1,217,165 $ 1,217,165 $ — $ — $ 1,217,165 Securities available-for-sale 111,217 21,564 89,653 — 111,217 Securities held-to-maturity 736,823 — 690,784 — 690,784 Loans (including loans held-for-sale), net 2,982,107 — 831 2,954,560 2,955,391 FHLB stock, FRB stock, and other investments 32,509 — — — N/A Accrued interest receivable 11,120 52 1,998 9,070 11,120 I/O strips receivables 208 — 208 — 208 Liabilities: Time deposits $ 137,203 $ — $ 137,417 $ — $ 137,417 Other deposits 4,552,702 — 4,552,702 — 4,552,702 Subordinated debt 39,987 — 39,587 — 39,587 Accrued interest payable 1,005 — 1,005 — 1,005 The carrying amounts and estimated fair values of the Company’s financial instruments at December 31, 2021: 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 $ 1,306,216 $ 1,306,216 $ — $ — $ 1,306,216 Securities available-for-sale 102,252 — 102,252 — 102,252 Securities held-to-maturity 658,397 — 657,649 — 657,649 Loans (including loans held-for-sale), net 3,046,403 — 2,367 3,061,558 3,063,925 FHLB stock, FRB stock, and other investments 32,504 — — — N/A Accrued interest receivable 10,781 — 1,719 9,062 10,781 I/O strips receivables 221 — 221 — 221 Liabilities: Time deposits $ 139,834 $ — $ 140,086 $ — $ 140,086 Other deposits 4,619,578 — 4,619,578 — 4,619,578 Subordinated debt 39,925 — 40,425 — 40,425 Accrued interest payable 477 — 477 — 477 |
Equity Plan
Equity Plan | 3 Months Ended |
Mar. 31, 2022 | |
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. There were no nonqualified stock options or shares of restricted stock granted for the three months ended March 31, 2022. There were 1,962,229 shares available for the issuance of equity awards under the 2013 Plan as of March 31, 2022. 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, 2022 2,584,632 $ 10.00 Exercised 68,009 $ 5.90 Forfeited or expired (14,969) $ 11.16 Outstanding at March 31, 2022 2,501,654 $ 10.10 5.29 $ 5,248,759 Vested or expected to vest 2,351,555 5.29 $ 4,933,833 Exercisable at March 31, 2022 1,987,706 4.47 $ 4,903,446 Information related to the equity plans for the periods indicated: Three Months Ended March 31, 2022 2021 Intrinsic value of options exercised $ 415,117 $ 167,420 Cash received from option exercise $ 401,136 $ 319,862 Tax benefit (expense) realized from option exercises $ 31,971 $ (1,539) As of March 31, 2022, there was $965,000 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 2.46 years. 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, 2022 298,566 $ 11.03 Vested (4,255) $ 11.75 Nonvested shares at March 31, 2022 294,311 $ 12.24 As of March 31, 2022, there was $1,638,000 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 1.68 years. |
Subordinated Debt
Subordinated Debt | 3 Months Ended |
Mar. 31, 2022 | |
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 |
Capital Requirements
Capital Requirements | 3 Months Ended |
Mar. 31, 2022 | |
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. 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 March 31, 2022. There are no conditions or events since March 31, 2022, that management believes have changed the categorization of the Company or HBC as “well-capitalized.” 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 delayed the effects of CECL on our regulatory capital through the end of 2021. The effects are being 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 March 31, 2022 and December 31, 2021, 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 for the periods indicated: Required For Capital Adequacy Purposes Actual Under Basel III Amount Ratio Amount Ratio (1) (Dollars in thousands) As of March 31, 2022 Total Capital $ 513,272 14.6 % $ 370,203 10.5 % (to risk-weighted assets) Tier 1 Capital $ 438,203 12.4 % $ 299,688 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 438,203 12.4 % $ 246,802 7.0 % (to risk-weighted assets) Tier 1 Capital $ 438,203 8.3 % $ 210,246 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, 2021 Total Capital $ 506,209 14.4 % $ 369,711 10.5 % (to risk-weighted assets) Tier 1 Capital $ 433,488 12.3 % $ 299,290 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 433,488 12.3 % $ 246,474 7.0 % (to risk-weighted assets) Tier 1 Capital $ 433,488 7.9 % $ 220,193 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 for the periods indicated: Required For Capital To Be Well-Capitalized Adequacy Under Basel III PCA Regulatory Purposes Actual Requirements Under Basel III Amount Ratio Amount Ratio Amount Ratio (1) (Dollars in thousands) As of March 31, 2022 Total Capital $ 491,349 13.9 % $ 352,436 10.0 % $ 370,058 10.5 % (to risk-weighted assets) Tier 1 Capital $ 456,267 12.9 % $ 281,949 8.0 % $ 299,571 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 456,267 12.9 % $ 229,084 6.5 % $ 246,705 7.0 % (to risk-weighted assets) Tier 1 Capital $ 456,267 8.7 % $ 262,709 5.0 % $ 210,167 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, 2021 Total Capital $ 484,382 13.8 % $ 351,839 10.0 % $ 369,431 10.5 % (to risk-weighted assets) Tier 1 Capital $ 451,586 12.8 % $ 281,471 8.0 % $ 299,063 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 451,586 12.8 % $ 228,695 6.5 % $ 246,287 7.0 % (to risk-weighted assets) Tier 1 Capital $ 451,586 8.2 % $ 275,109 5.0 % $ 220,087 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 $39,987,000 at March 31, 2022, 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 DFPI 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 March 31, 2022, HBC would not be required to obtain regulatory approval, and the amount available for cash dividends is $41,140,000 . HBC distributed to HCC dividends of $8,000,000, during the first quarter of 2022. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies | |
Commitments and 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 March 31, 2022 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 the Bank 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 denied all liability. The Bank received a full and complete release of the trustee’s claims. 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 full settlement payment was made on October 26, 2021. The Bank is pursuing recovery of the $4,000,000 settlement amount plus $1,000,000 of legal costs and interest from an insurance carrier. 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 the Bank, and others, in the Solano County Superior Court for the State of California. The case relates to the Bank’s former deposit relationships with investment funds sponsored by D.C. Solar and affiliates (collectively “D.C. Solar”). D.C. Solar is a former customer that allegedly perpetrated a Ponzi scheme and declared bankruptcy. In October 2021, the court sustained the Bank’s demurrer without leave to amend on all but two counts. Subsequently, the plaintiffs sought to overturn the court’s ruling in favor of the Bank by filing a petition for a writ of mandate in the California Court of Appeals, where the petition is pending as of the date of this report. We intend to vigorously defend this action. ● In December 2021, East West Bank, et al. v. Heritage Bank of Commerce was filed against the Bank and one of its former employees in the Solano County Superior Court for the State of California. The case arose out of the Bank’s former deposit relationship with D.C. Solar and its sponsored investment funds. In March 2022, the plaintiffs dismissed its case against the Bank and its former employee. ● In December 2020, Solarmore Management Services, Inc. v. Jeff Carpoff et al., (“Solarmore”) was filed as an amended complaint in the United States District Court for the Eastern District of California against the Bank, a former employee and other unrelated parties. The case arose out of the Bank’s former deposit relationship with D.C. Solar and its sponsored investment funds. On February 4, 2022, Solarmore voluntarily dismissed the Bank without prejudice, but not the Bank’s former employee. The Bank’s former employee remains a party to the action. ● 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. Because the class/PAGA action alleges wage and hour claims, it is not covered by the Bank’s insurance. ● In February 2021, the Bank was notified of a set of PAGA and potential class claims alleged by letter to the California Labor and Workforce Development Agency transmitted on behalf of a third claimant, who was also a 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 third employee/claimant is being added as a plaintiff to the previously filed class/PAGA action. ● In October 2021 the third employee/claimant filed a lawsuit alleging race, color, gender, and sex discrimination; disability discrimination; discrimination against an employee making a CFRA claim, violation of the Equal Pay Act, retaliation, and related claims. We intend to vigorously defend the filed class and PAGA complaint, and the action filed by the third employee/claimant. 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, 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 $1,154,361,000 at March 31, 2022, and $1,150,811,000 at December 31, 2021. Unused commitments represented 38% outstanding gross loans at March 31, 2022, 40% at March 31, 2021, and 37% at December 31, 2021. 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: March 31, 2022 December 31, 2021 Fixed Variable Fixed Variable Rate Rate Total Rate Rate Total (Dollars in thousands) Unused lines of credit and commitments to make loans $ 114,333 $ 1,027,606 $ 1,141,939 $ 119,071 $ 1,015,588 $ 1,134,659 Standby letters of credit 3,058 9,364 12,422 3,084 13,068 16,152 $ 117,391 $ 1,036,970 $ 1,154,361 $ 122,155 $ 1,028,656 $ 1,150,811 For the three months ended March 31, 2022, there was a decrease of $40,000 to the allowance for credit losses on the Company’s off-balance sheet credit exposures. The decrease in the allowance for credit losses for off-balance sheet credit exposures in the first three months of 2022 was driven by lower loss factors as a result of improving economic outlook. The allowance for credit losses on the Company’s off-balance sheet credit exposures was $775,000 at March 31, 2022 and $815,000 at December 31, 2021. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2022 | |
Revenue Recognition | |
Revenue Recognition | 14) Revenue Recognition On January 1, 2018, the Company adopted ASU No. 2014-09 (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 March 31, 2022 2021 (Dollars in thousands) Noninterest Income In-scope of Topic 606: Service charges and fees on deposit accounts $ 612 $ 601 Total noninterest income in-scope of Topic 606 612 601 Noninterest Income Out-of-scope of Topic 606 1,848 1,700 Total noninterest income $ 2,460 $ 2,301 |
Noninterest Expense
Noninterest Expense | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022 2021 (Dollars in thousands) Salaries and employee benefits $ 13,821 $ 13,958 Occupancy and equipment 2,437 2,274 Professional fees 1,080 1,719 Insurance expense 1,043 663 Amortization of intangible assets 659 733 Data processing 651 534 Federal Deposit Insurance Corporation ("FDIC") assessments 479 146 Other 3,082 3,217 Total noninterest expense $ 23,252 $ 23,244 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022 2021 (Dollars in thousands) Operating Lease Cost (Cost resulting from lease payments) $ 1,620 $ 1,671 Operating Lease - Operating Cash Flows (Fixed Payments) $ 1,210 $ 1,186 Operating Lease - ROU assets $ 33,669 $ 37,405 Operating Lease - Liabilities $ 33,669 $ 37,405 Weighted Average Lease Term - Operating Leases 7.19 years 8.17 years Weighted Average Discount Rate - Operating Leases 4.49% 4.49% The following maturity analysis shows the undiscounted cash flows due on the Company’s operating lease liabilities as of March 31, 2022: (Dollars in thousands) 2022 $ 4,769 2023 5,724 2024 5,341 2025 4,929 2026 4,357 Thereafter 14,654 Total undiscounted cash flows 39,774 Discount on cash flows (6,105) Total lease liability $ 33,669 |
Business Segment Information
Business Segment Information | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 37,113 $ 2,793 $ 39,906 Intersegment interest allocations 237 (237) — Total interest expense 1,685 — 1,685 Net interest income 35,665 2,556 38,221 Provision for (recapture of) credit losses on loans (539) (28) (567) Net interest income after provision 36,204 2,584 38,788 Noninterest income 2,398 62 2,460 Noninterest expense 21,767 1,485 23,252 Intersegment expense allocations 114 (114) — Income before income taxes 16,949 1,047 17,996 Income tax expense 4,821 309 5,130 Net income $ 12,128 $ 738 $ 12,866 Total assets $ 5,352,709 $ 74,689 $ 5,427,398 Loans, net of deferred fees $ 2,962,823 $ 61,241 $ 3,024,064 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations Three Months Ended March 31, 2021 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 34,111 $ 2,650 $ 36,761 Intersegment interest allocations 211 (211) — Total interest expense 1,803 — 1,803 Net interest income 32,519 2,439 34,958 Provision (recapture) for credit losses on loans (1,463) (49) (1,512) Net interest income after provision 33,982 2,488 36,470 Noninterest income 2,160 141 2,301 Noninterest expense 21,897 1,347 23,244 Intersegment expense allocations 106 (106) — Income before income taxes 14,351 1,176 15,527 Income tax expense 3,975 348 4,323 Net income $ 10,376 $ 828 $ 11,204 Total assets $ 4,933,350 $ 68,040 $ 5,001,390 Loans, net of deferred fees $ 2,656,178 $ 48,529 $ 2,704,707 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2022 | |
Subsequent Events | |
Subsequent Events | 18) Subsequent Events On April 28, 2022, 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 May 26, 2022, to shareholders of record at the close of the business day on May 12, 2022. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Basis of Presentation | |
Description of Business and 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, 2021. 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 months ended March 31, 2022 are not necessarily indicative of the results expected for any subsequent period or for the entire year ending December 31, 2022. |
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 Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 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. The ASU provides optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from London Inter-Bank Offered Rate (“LIBOR”) toward new interest rate benchmarks. For transactions that are modified because of reference rate reform and that meet certain scope guidance (i) modifications of loan agreements should be accounted for by prospectively adjusting the effective interest rate and the modification will be considered "minor" so that any existing unamortized origination fees/costs would carry forward and continue to be amortized and (ii) modifications of lease agreements should be accounted for as a continuation of the existing agreement with - - . - , , In March 2022, the FASB issued ASU No. 2022-02 Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restrucurings and Vintage Disclosures, which 1) eliminates the accounting guidance for troubled debt restructurings ("TDRs") by creditors while enhancing the disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty; and 2) requires that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases. ASU 2022-02 is effective for fiscal years beginning after December 15, 2022 and the amendments should be applied prospectively, although the entity has the option to apply a modified retrospective transition method for the recognition and measurement of TDRs, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. The Company is currently evaluating the impact of adopting the new guidance on its consolidated financial statements. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share | |
Schedule of reconciliation of factors used in computing basic and diluted earnings per common share | Three Months Ended March 31, 2022 2021 (Dollars in thousands, except per share amounts) Net income $ 12,866 $ 11,204 Weighted average common shares outstanding for basic earnings per common share 60,393,883 59,926,816 Dilutive potential common shares 527,952 477,397 Shares used in computing diluted earnings per common share 60,921,835 60,404,213 Basic earnings per share $ 0.21 $ 0.19 Diluted earnings per share $ 0.21 $ 0.19 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income ("AOCI") (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accumulated Other Comprehensive Income ("AOCI") | |
Schedule of changes in AOCI by component | Three Months Ended March 31, 2022 and 2021 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, 2022, net of taxes $ 2,153 $ — $ (13,149) $ (10,996) Other comprehensive (loss) before reclassification, net of taxes (3,128) — (3) (3,131) Amounts reclassified from other comprehensive income, net of taxes — — 73 73 Net current period other comprehensive income (loss), net of taxes (3,128) — 70 (3,058) Ending balance March 31, 2022, net of taxes $ (975) $ — $ (13,079) $ (14,054) Beginning balance January 1, 2021, net of taxes $ 3,929 $ 261 $ (14,907) $ (10,717) Other comprehensive (loss) before reclassification, net of taxes (602) — (53) (655) Amounts reclassified from other comprehensive income (loss), net of taxes — (9) 113 104 Net current period other comprehensive income (loss), net of taxes (602) (9) 60 (551) Ending balance March 31, 2021, net of taxes $ 3,327 $ 252 $ (14,847) $ (11,268) (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 March 31, Affected Line Item Where Details About AOCI Components 2022 2021 Net Income is Presented (Dollars in thousands) Amortization of unrealized gain on securities available- for-sale that were reclassified to securities held-to-maturity $ — $ 13 Interest income on taxable securities — (4) Income tax expense — 9 Net of tax Amortization of defined benefit pension plan items (1) Prior transition obligation and actuarial losses (2) 11 1 Prior service cost and actuarial losses (3) (114) (161) (103) (160) Other noninterest expense 30 47 Income tax benefit (73) (113) Net of tax Total reclassification from AOCI for the period $ (73) $ (104) (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) | 3 Months Ended |
Mar. 31, 2022 | |
Securities | |
Schedule of amortized cost and estimated fair value of securities | Gross Gross Allowance Estimated Amortized Unrealized Unrealized for Credit Fair March 31, 2022 Cost Gains (Losses) Losses Value (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 91,059 $ 19 $ (1,425) $ — $ 89,653 U.S. Treasury 21,657 5 (98) — 21,564 Total $ 112,716 $ 24 $ (1,523) $ — $ 111,217 Gross Gross Estimated Allowance Amortized Unrecognized Unrecognized Fair for Credit March 31, 2022 Cost Gains (Losses) Value Losses (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 696,161 $ 28 $ (46,254) $ 649,935 $ — Municipals - exempt from Federal tax 40,701 197 (49) 40,849 (39) Total $ 736,862 $ 225 $ (46,303) $ 690,784 $ (39) Gross Gross Allowance Estimated Amortized Unrealized Unrealized for Credit Fair December 31, 2021 Cost Gains (Losses) Losses Value (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 99,359 $ 2,893 $ — $ — $ 102,252 Total $ 99,359 $ 2,893 $ — $ — $ 102,252 Gross Gross Estimated Allowance Amortized Unrecognized Unrecognized Fair for Credit December 31, 2021 Cost Gains (Losses) Value Losses (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 607,377 $ 3,157 $ (4,752) $ 605,782 $ — Municipals - exempt from Federal tax 51,063 804 — 51,867 (43) Total $ 658,440 $ 3,961 $ (4,752) $ 657,649 $ (43) |
Schedule of securities with unrealized losses | Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized March 31, 2022 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 84,890 $ (1,425) $ — $ — $ 84,890 $ (1,425) U.S. Treasury 11,858 (98) — — 11,858 (98) Total $ 96,748 $ (1,523) $ — $ — $ 96,748 $ (1,523) Securities held-to-maturity: Agency mortgage-backed securities $ 620,134 $ (42,837) $ 25,465 $ (3,417) $ 645,599 $ (46,254) Municipals — exempt from Federal tax 5,944 (49) — — 5,944 (49) Total $ 626,078 $ (42,886) $ 25,465 $ (3,417) $ 651,543 $ (46,303) Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2021 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 408,856 $ (3,319) $ 27,997 $ (1,433) $ 436,853 $ (4,752) Total $ 408,856 $ (3,319) $ 27,997 $ (1,433) $ 436,853 $ (4,752) |
Schedule of amortized cost and estimated fair values of securities, by contractual maturity | Available-for-sale Amortized Estimated Cost Fair Value (Dollars in thousands) Due after one through five years $ 21,657 $ 21,564 Agency mortgage-backed securities 91,059 89,653 Total $ 112,716 $ 111,217 Held-to-maturity Amortized Estimated Cost Fair Value (Dollars in thousands) Due after three months through one year $ 545 $ 548 Due after one through five years 7,348 7,402 Due after five through ten years 24,800 24,861 Due after ten years 8,008 8,038 Agency mortgage-backed securities 696,161 649,935 Total $ 736,862 $ 690,784 |
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, 2022 $ 43 Provision for (recapture of) credit losses (4) Ending balance March 31, 2022 $ 39 |
Loans and Allowance for Credi_2
Loans and Allowance for Credit Losses on Loans (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Loans and Allowance for Credit Losses on Loans | |
Schedule of loans | March 31, December 31, 2022 2021 (Dollars in thousands) Loans held-for-investment: Commercial $ 605,446 $ 682,834 Real estate: CRE - owner occupied 597,542 595,934 CRE - non-owner occupied 928,220 902,326 Land and construction 153,323 147,855 Home equity 111,609 109,579 Multifamily 221,767 218,856 Residential mortgages 391,171 416,660 Consumer and other 17,110 16,744 Loans 3,026,188 3,090,788 Deferred loan fees, net (2,124) (3,462) Loans, net of deferred fees 3,024,064 3,087,326 Allowance for credit losses on loans (42,788) (43,290) Loans, net $ 2,981,276 $ 3,044,036 |
Schedule of changes in allowance for loan (credit) losses | Three Months Ended March 31, 2022 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 $ 8,414 $ 7,954 $ 17,125 $ 1,831 $ 864 $ 2,796 $ 4,132 $ 174 $ 43,290 Charge-offs (16) — — — — — — — (16) Recoveries 54 3 — — 24 — — — 81 Net recoveries 38 3 — — 24 — — — 65 Provision for (recapture of) credit losses on loans (1,651) (1,560) 2,288 175 (166) (252) 625 (26) (567) End of period balance $ 6,801 $ 6,397 $ 19,413 $ 2,006 $ 722 $ 2,544 $ 4,757 $ 148 $ 42,788 Three Months Ended March 31, 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 (263) — — — — — — — (263) Recoveries 813 4 — 816 23 — — 15 1,671 Net recoveries 550 4 — 816 23 — — 15 1,408 Provision for (recapture of) credit losses on loans (537) (196) 15 (571) (149) (53) (25) 4 (1,512) End of period balance $ 11,600 $ 8,368 $ 16,431 $ 2,754 $ 1,171 $ 2,751 $ 918 $ 303 $ 44,296 |
Schedule of nonperforming loans by class | March 31, 2022 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 $ 236 $ 761 $ 527 $ 1,524 Real estate: CRE - Owner Occupied 1,126 — — 1,126 Home equity 73 — — 73 Multifamily 1,107 — — 1,107 Total $ 2,542 $ 761 $ 527 $ 3,830 December 31, 2021 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 $ 94 $ 1,028 $ 278 $ 1,400 Real estate: CRE - Owner Occupied 1,126 — — 1,126 Home equity 84 — — 84 Multifamily 1,128 — — 1,128 Total $ 2,432 $ 1,028 $ 278 $ 3,738 |
Schedule of aging of past due loans by class of loans | March 31, 2022 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 $ 5,522 $ 1,508 $ 578 $ 7,608 $ 597,838 $ 605,446 Real estate: CRE - Owner Occupied — — 1,126 1,126 596,416 597,542 CRE - Non-Owner Occupied — 707 — 707 927,513 928,220 Land and construction — — — — 153,323 153,323 Home equity — — — — 111,609 111,609 Multifamily — — — — 221,767 221,767 Residential mortgages 4,690 — — 4,690 386,481 391,171 Consumer and other — — — — 17,110 17,110 Total $ 10,212 $ 2,215 $ 1,704 $ 14,131 $ 3,012,057 $ 3,026,188 December 31, 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 $ 2,714 $ 168 $ 408 $ 3,290 $ 679,544 $ 682,834 Real estate: CRE - Owner Occupied — — 1,126 1,126 594,808 595,934 CRE - Non-Owner Occupied — — — — 902,326 902,326 Land and construction — — — — 147,855 147,855 Home equity — — — — 109,579 109,579 Multifamily — — — — 218,856 218,856 Residential mortgages 599 — — 599 416,061 416,660 Consumer and other — — — 16,744 16,744 Total $ 3,313 $ 168 $ 1,534 $ 5,015 $ 3,085,773 $ 3,090,788 |
Summary of loan portfolio by loan type and credit quality classification | Revolving Loans Term Loans Amortized Cost Basis by Originated Period as of March 31, 2022 Amortized 2017 and Cost 03/31/2022 12/31/2021 12/31/2020 12/31/2019 12/31/2018 Prior Basis Total (Dollars in thousands) Commercial: Pass $ 83,467 $ 90,076 $ 51,230 $ 12,145 $ 10,818 $ 10,799 $ 333,283 $ 591,818 Special Mention 2,020 1,283 496 213 706 417 1,888 7,023 Substandard 4 561 258 - 11 167 4,607 5,608 Substandard-Nonaccrual - 548 362 - - 87 - 997 Total 85,491 92,468 52,346 12,358 11,535 11,470 339,778 605,446 CRE - Owner Occupied: Pass 39,671 163,716 125,993 58,738 51,196 127,282 13,022 579,618 Special Mention 568 - 6,657 668 - 347 - 8,240 Substandard 907 - 5,309 - 1,468 874 - 8,558 Substandard-Nonaccrual - - 1,101 - - 25 - 1,126 Total 41,146 163,716 139,060 59,406 52,664 128,528 13,022 597,542 CRE - Non-Owner Occupied: Pass 55,458 376,710 128,498 113,076 35,540 197,894 2,711 909,887 Special Mention - - 5,341 - - 356 5,697 Substandard - 707 5,798 - - 6,131 - 12,636 Substandard-Nonaccrual - - - - - - - - Total 55,458 377,417 139,637 113,076 35,540 204,381 2,711 928,220 Land and construction: Pass 53,912 79,197 11,259 3,925 - 1,289 3,741 153,323 Special Mention - - - - - - - - Substandard - - - - - - - - Substandard-Nonaccrual - - - - - - - - Total 53,912 79,197 11,259 3,925 - 1,289 3,741 153,323 Home equity: Pass - - - - 40 - 109,329 109,369 Special Mention - - - - - - 1,932 1,932 Substandard - - - - - 143 92 235 Substandard-Nonaccrual - - 73 - - - 73 Total - - 73 - 40 143 111,353 111,609 Multifamily: Pass 7,949 100,952 27,780 28,548 16,062 28,204 - 209,495 Special Mention - 6,880 - 4,285 - - 11,165 Substandard - - - - - - - - Substandard-Nonaccrual - 1,107 - - - - - 1,107 Total 7,949 108,939 27,780 32,833 16,062 28,204 - 221,767 Residential mortgage: Pass 765 338,359 17,742 7,643 3,022 23,413 - 390,944 Special Mention - - - - - - - - Substandard - - - - - 227 - 227 Substandard-Nonaccrual - - - - - - - - Total 765 338,359 17,742 7,643 3,022 23,640 - 391,171 Consumer and other: Pass 79 522 - 32 1,411 895 14,159 17,098 Special Mention - - - - - - - - Substandard - 12 - - - - 12 Substandard-Nonaccrual - - - - - - - - Total 79 534 - 32 1,411 895 14,159 17,110 Total loans $ 244,800 $ 1,160,630 $ 387,897 $ 229,273 $ 120,274 $ 398,550 $ 484,764 $ 3,026,188 Risk Grades: Pass $ 241,301 $ 1,149,532 $ 362,502 $ 224,107 $ 118,089 $ 389,776 $ 476,245 $ 2,961,552 Special Mention 2,588 8,163 12,494 5,166 706 1,120 3,820 34,057 Substandard 911 1,280 11,365 - 1,479 7,542 4,699 27,276 Substandard-Nonaccrual - 1,655 1,536 - - 112 - 3,303 Grand Total $ 244,800 $ 1,160,630 $ 387,897 $ 229,273 $ 120,274 $ 398,550 $ 484,764 $ 3,026,188 Revolving Loans Term Loans Amortized Cost Basis by Originated Period as of December 31, 2021 Amortized Cost 2021 2020 2019 2018 2017 Prior Periods Basis Total (Dollars in thousands) Commercial: Pass $ 208,645 65,257 $ 15,086 $ 12,281 $ 7,311 $ 5,507 $ 349,717 $ 663,804 Special Mention 2,210 512 219 764 243 204 4,024 8,176 Substandard 3,709 930 - 13 302 2 4,776 9,732 Substandard-Nonaccrual 595 442 37 - - 48 - 1,122 Total 215,159 67,141 15,342 13,058 7,856 5,761 358,517 682,834 CRE - Owner Occupied: Pass 170,504 135,103 65,596 57,017 31,657 107,203 14,486 581,566 Special Mention 568 2,254 672 - - 355 - 3,849 Substandard 985 6,042 - 1,477 - 889 - 9,393 Substandard-Nonaccrual - 1,100 - - - 26 - 1,126 Total 172,057 144,499 66,268 58,494 31,657 108,473 14,486 595,934 CRE - Non-Owner Occupied: Pass 374,470 141,404 115,170 45,959 68,125 134,454 2,068 881,650 Special Mention - 5,388 - - 1,133 3,816 - 10,337 Substandard - 5,842 - - - 4,497 - 10,339 Substandard-Nonaccrual - - - - - - - - Total 374,470 152,634 115,170 45,959 69,258 142,767 2,068 902,326 Land and construction: Pass 125,844 11,401 4,385 - - 1,300 3,566 146,496 Special Mention 1,359 - - - - - - 1,359 Substandard - - - - - - - - Substandard-Nonaccrual - - - - - - - - Total 127,203 11,401 4,385 - - 1,300 3,566 147,855 Home equity: Pass - - - 46 - - 106,738 106,784 Special Mention - - - - - - 1,931 1,931 Substandard - - - - - 54 726 780 Substandard-Nonaccrual - 84 - - - - - 84 Total - 84 - 46 - 54 109,395 109,579 Multifamily: Pass 102,535 27,955 30,820 16,151 16,261 13,895 - 207,617 Special Mention 5,804 - 4,307 - - - - 10,111 Substandard - - - - - - - - Substandard-Nonaccrual 1,128 - - - - - - 1,128 Total 109,467 27,955 35,127 16,151 16,261 13,895 - 218,856 Residential mortgage: Pass 360,424 17,875 8,065 3,070 6,015 19,967 - 415,416 Special Mention - - - - - 1,244 - 1,244 Substandard - - - - - - - - Substandard-Nonaccrual - - - - - - - - Total 360,424 17,875 8,065 3,070 6,015 21,211 - 416,660 Consumer and other: Pass 491 2 40 1,426 14 1,000 13,756 16,729 Special Mention - - - - - - - - Substandard 15 - - - - - - 15 Substandard-Nonaccrual - - - - - - - - Total 506 2 40 1,426 14 1,000 13,756 16,744 Total loans $ 1,359,286 421,591 $ 244,397 $ 138,204 $ 131,061 $ 294,461 $ 501,788 $ 3,090,788 Risk Grades:. Pass $ 1,342,913 398,997 $ 239,162 $ 135,950 $ 129,383 $ 283,326 $ 490,331 $ 3,020,062 Special Mention 9,941 8,154 5,198 764 1,376 5,619 5,955 37,007 Substandard 4,709 12,814 - 1,490 302 5,442 5,502 30,259 Substandard-Nonaccrual 1,723 1,626 37 - - 74 - 3,460 Grand Total $ 1,359,286 421,591 $ 244,397 $ 138,204 $ 131,061 $ 294,461 $ 501,788 $ 3,090,788 |
Schedule of loans by class modified as troubled debt restructurings | Three Months Ended March 31, 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 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Other Intangible Assets | |
Schedule of carrying amount of goodwill by segment | March 31, December 31, 2022 2021 (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 | March 31, 2022 Gross Carrying Accumulated Amount Amortization Total (Dollars in thousands) Core deposit intangibles $ 25,023 $ (12,593) $ 12,430 Customer relationship and brokered relationship intangibles 1,900 (1,409) 491 Below market leases 110 (22) 88 Total $ 27,033 $ (14,024) $ 13,009 December 31, 2021 Gross Carrying Accumulated Amount Amortization Total (Dollars in thousands) Core deposit intangibles $ 25,023 $ (11,982) $ 13,041 Customer relationship and brokered relationship intangibles 1,900 (1,361) 539 Below market leases 110 (22) 88 Total $ 27,033 $ (13,365) $ 13,668 |
Schedule of estimated amortization expense | Customer & Below/ Core Brokered (Above) Total Deposit Relationship Market Amortization Year Intangible Intangible Lease Expense (Dollars in thousands) 2022 remaining $ 1,836 142 $ (2) $ 1,976 2023 2,217 190 (2) 2,405 2024 2,023 159 5 2,187 2025 1,795 — 18 1,813 2026 1,512 — 18 1,530 2027 1,438 — 18 1,456 Thereafter 1,609 — 33 1,642 $ 12,430 $ 491 $ 88 $ 13,009 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Income Taxes | |
Summary of carrying amount of low income tax housing investment | March 31, December 31, 2022 2021 (Dollars in thousands) Low income housing investments $ 4,169 $ 4,380 Future commitments $ 568 $ 568 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Supplemental Retirement Plan | |
Benefit plans | |
Schedule of components of net periodic benefit cost | Three Months Ended March 31, 2022 2021 (Dollars in thousands) Components of net periodic benefit cost: Service cost $ 87 $ 120 Interest cost 216 190 Amortization of prior service cost — 25 Amortization of net actuarial loss 114 136 Net periodic benefit cost $ 417 $ 471 |
Split-Dollar Life Insurance Benefit Plan | |
Benefit plans | |
Schedule of change in projected benefit obligation | March 31, December 31, 2022 2021 (Dollars in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 9,244 $ 9,689 Interest cost 62 219 Actuarial loss — (664) Projected benefit obligation at end of period $ 9,306 $ 9,244 |
Schedule of amounts recognized in accumulated other comprehensive loss | March 31, December 31, 2022 2021 (Dollars in thousands) Net actuarial loss $ 4,633 $ 4,601 Prior transition obligation 858 879 Accumulated other comprehensive loss $ 5,491 $ 5,480 |
Schedule of components of net periodic benefit cost | Three Months Ended March 31, 2022 2021 (Dollars in thousands) Amortization of prior transition obligation and actuarial losses $ (11) $ (1) Interest cost 62 55 Net periodic benefit cost $ 51 $ 54 |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value | |
Schedule of financial assets and liabilities measured on a recurring basis | Fair Value Measurements Using Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Balance (Level 1) (Level 2) (Level 3) (Dollars in thousands) Assets at March 31, 2022 Available-for-sale securities: Agency mortgage-backed securities $ 89,653 $ — $ 89,653 $ — U.S. Treasury 21,564 21,564 — — I/O strip receivables 208 — 208 — Assets at December 31, 2021 Available-for-sale securities: Agency mortgage-backed securities $ 102,252 $ — $ 102,252 $ — I/O strip receivables 221 — 221 — |
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 $ 1,217,165 $ 1,217,165 $ — $ — $ 1,217,165 Securities available-for-sale 111,217 21,564 89,653 — 111,217 Securities held-to-maturity 736,823 — 690,784 — 690,784 Loans (including loans held-for-sale), net 2,982,107 — 831 2,954,560 2,955,391 FHLB stock, FRB stock, and other investments 32,509 — — — N/A Accrued interest receivable 11,120 52 1,998 9,070 11,120 I/O strips receivables 208 — 208 — 208 Liabilities: Time deposits $ 137,203 $ — $ 137,417 $ — $ 137,417 Other deposits 4,552,702 — 4,552,702 — 4,552,702 Subordinated debt 39,987 — 39,587 — 39,587 Accrued interest payable 1,005 — 1,005 — 1,005 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 $ 1,306,216 $ 1,306,216 $ — $ — $ 1,306,216 Securities available-for-sale 102,252 — 102,252 — 102,252 Securities held-to-maturity 658,397 — 657,649 — 657,649 Loans (including loans held-for-sale), net 3,046,403 — 2,367 3,061,558 3,063,925 FHLB stock, FRB stock, and other investments 32,504 — — — N/A Accrued interest receivable 10,781 — 1,719 9,062 10,781 I/O strips receivables 221 — 221 — 221 Liabilities: Time deposits $ 139,834 $ — $ 140,086 $ — $ 140,086 Other deposits 4,619,578 — 4,619,578 — 4,619,578 Subordinated debt 39,925 — 40,425 — 40,425 Accrued interest payable 477 — 477 — 477 |
Equity Plan (Tables)
Equity Plan (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
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, 2022 2,584,632 $ 10.00 Exercised 68,009 $ 5.90 Forfeited or expired (14,969) $ 11.16 Outstanding at March 31, 2022 2,501,654 $ 10.10 5.29 $ 5,248,759 Vested or expected to vest 2,351,555 5.29 $ 4,933,833 Exercisable at March 31, 2022 1,987,706 4.47 $ 4,903,446 |
Schedule of information related to the equity Plan | Three Months Ended March 31, 2022 2021 Intrinsic value of options exercised $ 415,117 $ 167,420 Cash received from option exercise $ 401,136 $ 319,862 Tax benefit (expense) realized from option exercises $ 31,971 $ (1,539) |
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, 2022 298,566 $ 11.03 Vested (4,255) $ 11.75 Nonvested shares at March 31, 2022 294,311 $ 12.24 |
Capital Requirements (Tables)
Capital Requirements (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Capital Requirements | |
Schedule of actual capital and required amounts and ratios | Required For Capital Adequacy Purposes Actual Under Basel III Amount Ratio Amount Ratio (1) (Dollars in thousands) As of March 31, 2022 Total Capital $ 513,272 14.6 % $ 370,203 10.5 % (to risk-weighted assets) Tier 1 Capital $ 438,203 12.4 % $ 299,688 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 438,203 12.4 % $ 246,802 7.0 % (to risk-weighted assets) Tier 1 Capital $ 438,203 8.3 % $ 210,246 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, 2021 Total Capital $ 506,209 14.4 % $ 369,711 10.5 % (to risk-weighted assets) Tier 1 Capital $ 433,488 12.3 % $ 299,290 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 433,488 12.3 % $ 246,474 7.0 % (to risk-weighted assets) Tier 1 Capital $ 433,488 7.9 % $ 220,193 4.0 % (to average assets) (2) Includes 2.5% capital conservation buffer, except the Tier 1 Capital to average assets ratio. |
HBC | |
Capital Requirements | |
Schedule of actual capital and required amounts and ratios | Required For Capital To Be Well-Capitalized Adequacy Under Basel III PCA Regulatory Purposes Actual Requirements Under Basel III Amount Ratio Amount Ratio Amount Ratio (1) (Dollars in thousands) As of March 31, 2022 Total Capital $ 491,349 13.9 % $ 352,436 10.0 % $ 370,058 10.5 % (to risk-weighted assets) Tier 1 Capital $ 456,267 12.9 % $ 281,949 8.0 % $ 299,571 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 456,267 12.9 % $ 229,084 6.5 % $ 246,705 7.0 % (to risk-weighted assets) Tier 1 Capital $ 456,267 8.7 % $ 262,709 5.0 % $ 210,167 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, 2021 Total Capital $ 484,382 13.8 % $ 351,839 10.0 % $ 369,431 10.5 % (to risk-weighted assets) Tier 1 Capital $ 451,586 12.8 % $ 281,471 8.0 % $ 299,063 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 451,586 12.8 % $ 228,695 6.5 % $ 246,287 7.0 % (to risk-weighted assets) Tier 1 Capital $ 451,586 8.2 % $ 275,109 5.0 % $ 220,087 4.0 % (to average assets) (1) Includes 2.5% capital conservation buffer, except the Tier 1 Capital to average assets ratio. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies | |
Schedule of commitments to extend credit | March 31, 2022 December 31, 2021 Fixed Variable Fixed Variable Rate Rate Total Rate Rate Total (Dollars in thousands) Unused lines of credit and commitments to make loans $ 114,333 $ 1,027,606 $ 1,141,939 $ 119,071 $ 1,015,588 $ 1,134,659 Standby letters of credit 3,058 9,364 12,422 3,084 13,068 16,152 $ 117,391 $ 1,036,970 $ 1,154,361 $ 122,155 $ 1,028,656 $ 1,150,811 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue Recognition | |
Schedule of noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606 | Three Months Ended March 31, 2022 2021 (Dollars in thousands) Noninterest Income In-scope of Topic 606: Service charges and fees on deposit accounts $ 612 $ 601 Total noninterest income in-scope of Topic 606 612 601 Noninterest Income Out-of-scope of Topic 606 1,848 1,700 Total noninterest income $ 2,460 $ 2,301 |
Noninterest Expense (Tables)
Noninterest Expense (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Noninterest Expense | |
Schedule of noninterest expense | Three Months Ended March 31, 2022 2021 (Dollars in thousands) Salaries and employee benefits $ 13,821 $ 13,958 Occupancy and equipment 2,437 2,274 Professional fees 1,080 1,719 Insurance expense 1,043 663 Amortization of intangible assets 659 733 Data processing 651 534 Federal Deposit Insurance Corporation ("FDIC") assessments 479 146 Other 3,082 3,217 Total noninterest expense $ 23,252 $ 23,244 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Leases | |
Schedule of leases | Three Months Ended March 31, 2022 2021 (Dollars in thousands) Operating Lease Cost (Cost resulting from lease payments) $ 1,620 $ 1,671 Operating Lease - Operating Cash Flows (Fixed Payments) $ 1,210 $ 1,186 Operating Lease - ROU assets $ 33,669 $ 37,405 Operating Lease - Liabilities $ 33,669 $ 37,405 Weighted Average Lease Term - Operating Leases 7.19 years 8.17 years Weighted Average Discount Rate - Operating Leases 4.49% 4.49% |
Schedule of maturity analysis shows the undiscounted cash flows due on the Company's operating lease liabilities | (Dollars in thousands) 2022 $ 4,769 2023 5,724 2024 5,341 2025 4,929 2026 4,357 Thereafter 14,654 Total undiscounted cash flows 39,774 Discount on cash flows (6,105) Total lease liability $ 33,669 |
Business Segment Information (T
Business Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Business Segment Information | |
Schedule of information by operating segment | Three Months Ended March 31, 2022 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 37,113 $ 2,793 $ 39,906 Intersegment interest allocations 237 (237) — Total interest expense 1,685 — 1,685 Net interest income 35,665 2,556 38,221 Provision for (recapture of) credit losses on loans (539) (28) (567) Net interest income after provision 36,204 2,584 38,788 Noninterest income 2,398 62 2,460 Noninterest expense 21,767 1,485 23,252 Intersegment expense allocations 114 (114) — Income before income taxes 16,949 1,047 17,996 Income tax expense 4,821 309 5,130 Net income $ 12,128 $ 738 $ 12,866 Total assets $ 5,352,709 $ 74,689 $ 5,427,398 Loans, net of deferred fees $ 2,962,823 $ 61,241 $ 3,024,064 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations Three Months Ended March 31, 2021 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 34,111 $ 2,650 $ 36,761 Intersegment interest allocations 211 (211) — Total interest expense 1,803 — 1,803 Net interest income 32,519 2,439 34,958 Provision (recapture) for credit losses on loans (1,463) (49) (1,512) Net interest income after provision 33,982 2,488 36,470 Noninterest income 2,160 141 2,301 Noninterest expense 21,897 1,347 23,244 Intersegment expense allocations 106 (106) — Income before income taxes 14,351 1,176 15,527 Income tax expense 3,975 348 4,323 Net income $ 10,376 $ 828 $ 11,204 Total assets $ 4,933,350 $ 68,040 $ 5,001,390 Loans, net of deferred fees $ 2,656,178 $ 48,529 $ 2,704,707 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations |
Basis of Presentation (Details)
Basis of Presentation (Details) | 3 Months Ended |
Mar. 31, 2022USD ($)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 | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Reconciliation of factors used in computing basic and diluted earnings per common share | ||
Net income | $ 12,866 | $ 11,204 |
Weighted average common shares outstanding for basic earnings per common share (in shares) | 60,393,883 | 59,926,816 |
Dilutive potential common shares | 527,952 | 477,397 |
Shares used in computing diluted earnings per common share (in shares) | 60,921,835 | 60,404,213 |
Basic earnings per share (in dollars per share) | $ 0.21 | $ 0.19 |
Diluted earnings per share (in dollars per share) | $ 0.21 | $ 0.19 |
Number of shares not in computing diluted earnings per common share | 1,048,267 | 1,019,481 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (''AOCI'') - Changes in AOCI by Component (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Changes in AOCI by Component | ||
Balance at the beginning of the period, net of taxes | $ (10,996) | |
Net current period other comprehensive income (loss), net of taxes | (3,058) | $ (551) |
Balance at the end of the period, net of taxes | (14,054) | |
Accumulated Other Comprehensive Income / (Loss) | ||
Changes in AOCI by Component | ||
Balance at the beginning of the period, net of taxes | (10,996) | (10,717) |
Other comprehensive (loss) before reclassification, net of taxes | (3,131) | (655) |
Amounts reclassified from other comprehensive income (loss), net of taxes | 73 | 104 |
Net current period other comprehensive income (loss), net of taxes | (3,058) | (551) |
Balance at the end of the period, net of taxes | (14,054) | (11,268) |
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 | 2,153 | 3,929 |
Other comprehensive (loss) before reclassification, net of taxes | (3,128) | (602) |
Net current period other comprehensive income (loss), net of taxes | (3,128) | (602) |
Balance at the end of the period, net of taxes | (975) | 3,327 |
Amortization of unrealized gain on securities available-for-sale that were reclassified to securities held-to-maturity | ||
Changes in AOCI by Component | ||
Balance at the beginning of the period, net of taxes | 261 | |
Amounts reclassified from other comprehensive income (loss), net of taxes | (9) | |
Net current period other comprehensive income (loss), net of taxes | (9) | |
Balance at the end of the period, net of taxes | 252 | |
Defined Benefit Pension Plan Items | ||
Changes in AOCI by Component | ||
Balance at the beginning of the period, net of taxes | (13,149) | (14,907) |
Other comprehensive (loss) before reclassification, net of taxes | (3) | (53) |
Amounts reclassified from other comprehensive income (loss), net of taxes | 73 | 113 |
Net current period other comprehensive income (loss), net of taxes | 70 | 60 |
Balance at the end of the period, net of taxes | $ (13,079) | $ (14,847) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (''AOCI'') - Amount Reclassified from AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Amount Reclassified from AOCI | ||
Interest income on taxable securities | $ 3,444 | $ 1,728 |
Income tax expense | (5,130) | (4,323) |
Net income | 12,866 | 11,204 |
Amortization of unrealized gain on securities available-for-sale that were reclassified to securities held-to-maturity | ||
Amount Reclassified from AOCI | ||
Net of tax | 9 | |
Amortization of unrealized gain on securities available-for-sale that were reclassified to securities held-to-maturity | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Interest income on taxable securities | 13 | |
Income tax expense | (4) | |
Net income | 9 | |
Defined Benefit Pension Plan Items | ||
Amount Reclassified from AOCI | ||
Net of tax | (73) | (113) |
Defined Benefit Pension Plan Items | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Other noninterest expense | (103) | (160) |
Income tax benefit | 30 | 47 |
Net of tax | (73) | (113) |
Prior transition obligation | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Other noninterest expense | 11 | 1 |
Prior service cost | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Other noninterest expense | (114) | (161) |
Accumulated Other Comprehensive Income / (Loss) | ||
Amount Reclassified from AOCI | ||
Net of tax | (73) | (104) |
Accumulated Other Comprehensive Income / (Loss) | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Net of tax | $ (73) | $ (104) |
Securities - Amortized Cost and
Securities - Amortized Cost and Estimated Fair Value of Securities - Securities Available-for-sale (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Securities available-for-sale: | ||
Amortized Cost | $ 112,716 | $ 99,359 |
Gross Unrealized Gains | 24 | 2,893 |
Gross Unrealized (Losses) | (1,523) | |
Estimated Fair Value | 111,217 | 102,252 |
Agency mortgage-backed securities | ||
Securities available-for-sale: | ||
Amortized Cost | 91,059 | 99,359 |
Gross Unrealized Gains | 19 | 2,893 |
Gross Unrealized (Losses) | (1,425) | |
Estimated Fair Value | 89,653 | $ 102,252 |
U.S. Treasury | ||
Securities available-for-sale: | ||
Amortized Cost | 21,657 | |
Gross Unrealized Gains | 5 | |
Gross Unrealized (Losses) | (98) | |
Estimated Fair Value | $ 21,564 |
Securities - Amortized Cost a_2
Securities - Amortized Cost and Estimated Fair Value of Securities - Securities Held-to-maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Securities held-to-maturity: | ||
Amortized Cost | $ 736,862 | $ 658,440 |
Gross Unrealized Gains | 225 | 3,961 |
Gross Unrealized (Losses) | (46,303) | (4,752) |
Estimated Fair Value | 690,784 | 657,649 |
Allowance for credit losses | (39) | (43) |
Agency mortgage-backed securities | ||
Securities held-to-maturity: | ||
Amortized Cost | 696,161 | 607,377 |
Gross Unrealized Gains | 28 | 3,157 |
Gross Unrealized (Losses) | (46,254) | (4,752) |
Estimated Fair Value | 649,935 | 605,782 |
Municipals - Tax Exempt | ||
Securities held-to-maturity: | ||
Amortized Cost | 40,701 | 51,063 |
Gross Unrealized Gains | 197 | 804 |
Gross Unrealized (Losses) | (49) | |
Estimated Fair Value | 40,849 | 51,867 |
Allowance for credit losses | $ (39) | $ (43) |
Securities - Securities with Un
Securities - Securities with Unrealized Losses - Securities Held-to-maturity (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Securities, Fair Value | ||
Less Than 12 Months | $ 96,748,000 | |
Total | 96,748,000 | |
Less Than 12 Months | 626,078,000 | $ 408,856,000 |
12 Months or More | 25,465,000 | 27,997,000 |
Total | 651,543,000 | 436,853,000 |
Securities, Unrealized (Losses) | ||
Less Than 12 Months | (1,523,000) | |
Total | (1,523,000) | |
Less Than 12 Months | (42,886,000) | (3,319,000) |
12 Months or More | (3,417,000) | (1,433,000) |
Total | (46,303,000) | (4,752,000) |
Agency mortgage-backed securities | ||
Securities, Fair Value | ||
Less Than 12 Months | 84,890,000 | |
Total | 84,890,000 | |
Less Than 12 Months | 620,134,000 | 408,856,000 |
12 Months or More | 25,465,000 | 27,997,000 |
Total | 645,599,000 | 436,853,000 |
Securities, Unrealized (Losses) | ||
Less Than 12 Months | (1,425,000) | |
Total | (1,425,000) | |
Less Than 12 Months | (42,837,000) | (3,319,000) |
12 Months or More | (3,417,000) | (1,433,000) |
Total | (46,254,000) | $ (4,752,000) |
U.S. Treasury | ||
Securities, Fair Value | ||
Less Than 12 Months | 11,858,000 | |
Total | 11,858,000 | |
Securities, Unrealized (Losses) | ||
Less Than 12 Months | (98,000) | |
Total | (98,000) | |
Municipals - Tax Exempt | ||
Securities, Fair Value | ||
Less Than 12 Months | 5,944,000 | |
Total | 5,944,000 | |
Securities, Unrealized (Losses) | ||
Less Than 12 Months | (49,000) | |
Total | $ (49,000) |
Securities - Additional Informa
Securities - Additional Information (Details) | 3 Months Ended | |
Mar. 31, 2022USD ($)itemsecurity | Dec. 31, 2021USD ($) | |
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 | item | 395 | |
Number of available for sale securities held | item | 108 | |
Number of held to maturity securities held | item | 287 | |
Number of securities with fair values below amortized cost | item | 266 | |
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months | $ 96,748,000 | |
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value | 626,078,000 | $ 408,856,000 |
Held-to-maturity Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value | 25,465,000 | 27,997,000 |
Total unrealized loss for securities carried less than 12 months | (44,409,000) | |
Total unrealized loss for securities carried for 12 months or more | (3,417,000,000) | |
Agency mortgage-backed securities | ||
Additional Information | ||
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months | 84,890,000 | |
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value | 620,134,000 | 408,856,000 |
Held-to-maturity Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value | 25,465,000 | $ 27,997,000 |
U.S. Treasury | ||
Additional Information | ||
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months | 11,858,000 | |
Municipals - Tax Exempt | ||
Additional Information | ||
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value | $ 5,944,000 |
Securities - Amortized Cost a_3
Securities - Amortized Cost and Fair Value of Debt Securities by Contractual Maturity - Securities Available-for-sale (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Available-for-sale, Amortized Cost | ||
Due after one year through five years | $ 21,657 | |
Agency mortgage-backed securities | 91,059 | |
Total | 112,716 | $ 99,359 |
Available-for-sale, Estimated Fair Value | ||
Due after one year through five years | 21,564 | |
Agency mortgage-backed securities | 89,653 | |
Total | $ 111,217 | $ 102,252 |
Securities - Amortized Cost a_4
Securities - Amortized Cost and Fair Value of Debt Securities by Contractual Maturity - Securities Held-to-maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Held-to-maturity, Amortized Cost | ||
Due after 3 months through one year | $ 545 | |
Due after one year through five years | 7,348 | |
Due after five years through ten years | 24,800 | |
Due after ten years | 8,008 | |
Agency mortgage-backed securities | 696,161 | |
Total | 736,862 | |
Held-to-maturity, Estimated Fair Value | ||
Due after 3 months through one year | 548 | |
Due after one year through five years | 7,402 | |
Due after five years through ten years | 24,861 | |
Due after ten years | 8,038 | |
Agency mortgage-backed securities | 649,935 | |
Total | $ 690,784 | $ 657,649 |
Securities - Securities Pledged
Securities - Securities Pledged to Secure Public Deposits and for Other Purposes (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
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 | $ 53,897,000 | $ 42,473,000 |
Securities - Roll-forward by ma
Securities - Roll-forward by major security type (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Securities | |
Debt Securities, Held-to-maturity, Allowance for Credit Loss, Beginning Balance | $ 43 |
Provision for (recapture of) credit losses | (4) |
Debt Securities, Held-to-maturity, Allowance for Credit Loss, Ending Balance | $ 39 |
Loans and Allowance for Credi_3
Loans and Allowance for Credit Losses on Loans - Loans Balance (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Loans held-for-investment: | ||||
Total loan balance | $ 3,026,188,000 | $ 3,090,788,000 | ||
Deferred loan fees, net | (2,124,000) | (3,462,000) | ||
Loans, net of deferred fees | 3,024,064,000 | 3,087,326,000 | $ 2,704,707,000 | |
Allowance for credit losses on loans | (42,788,000) | (43,290,000) | (44,296,000) | $ (44,400,000) |
Loans, net | 2,981,276,000 | 3,044,036,000 | ||
Commercial. | SBA Paycheck Protection Program ("PPP") | ||||
Loans held-for-investment: | ||||
Allowance for credit losses on loans | 0 | 0 | ||
Loans, net | 37,393,000 | 88,726,000 | ||
Commercial | ||||
Loans held-for-investment: | ||||
Total loan balance | 605,446,000 | 682,834,000 | ||
Allowance for credit losses on loans | (6,801,000) | (8,414,000) | (11,600,000) | (11,587,000) |
Commercial | Commercial. | ||||
Loans held-for-investment: | ||||
Total loan balance | 605,446,000 | 682,834,000 | ||
Commercial Loans excluding SBA Paycheck Protection Program [Member] | Commercial. | ||||
Loans held-for-investment: | ||||
Total loan balance | 605,446,000 | 682,834,000 | ||
CRE - owner occupied | ||||
Loans held-for-investment: | ||||
Total loan balance | 597,542,000 | 595,934,000 | ||
Allowance for credit losses on loans | (6,397,000) | (7,954,000) | (8,368,000) | (8,560,000) |
CRE - owner occupied | Real estate | ||||
Loans held-for-investment: | ||||
Total loan balance | 597,542,000 | 595,934,000 | ||
CRE - non-owner occupied | ||||
Loans held-for-investment: | ||||
Total loan balance | 928,220,000 | 902,326,000 | ||
Allowance for credit losses on loans | (19,413,000) | (17,125,000) | (16,431,000) | (16,416,000) |
CRE - non-owner occupied | Real estate | ||||
Loans held-for-investment: | ||||
Total loan balance | 928,220,000 | 902,326,000 | ||
Land and construction | ||||
Loans held-for-investment: | ||||
Total loan balance | 153,323,000 | 147,855,000 | ||
Allowance for credit losses on loans | (2,006,000) | (1,831,000) | (2,754,000) | (2,509,000) |
Land and construction | Real estate | ||||
Loans held-for-investment: | ||||
Total loan balance | 153,323,000 | 147,855,000 | ||
Home equity | ||||
Loans held-for-investment: | ||||
Total loan balance | 111,609,000 | 109,579,000 | ||
Allowance for credit losses on loans | (722,000) | (864,000) | (1,171,000) | (1,297,000) |
Home equity | Real estate | ||||
Loans held-for-investment: | ||||
Total loan balance | 111,609,000 | 109,579,000 | ||
Multi-family | ||||
Loans held-for-investment: | ||||
Total loan balance | 221,767,000 | 218,856,000 | ||
Allowance for credit losses on loans | (2,544,000) | (2,796,000) | (2,751,000) | (2,804,000) |
Multi-family | Real estate | ||||
Loans held-for-investment: | ||||
Total loan balance | 221,767,000 | 218,856,000 | ||
Residential mortgages | ||||
Loans held-for-investment: | ||||
Total loan balance | 391,171,000 | 416,660,000 | ||
Allowance for credit losses on loans | (4,757,000) | (4,132,000) | (918,000) | (943,000) |
Residential mortgages | Real estate | ||||
Loans held-for-investment: | ||||
Total loan balance | 391,171,000 | 416,660,000 | ||
Consumer and other | ||||
Loans held-for-investment: | ||||
Total loan balance | 17,110,000 | 16,744,000 | ||
Allowance for credit losses on loans | (148,000) | (174,000) | $ (303,000) | $ (284,000) |
Consumer and other | Consumer | ||||
Loans held-for-investment: | ||||
Total loan balance | $ 17,110,000 | $ 16,744,000 |
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 | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Changes in the Allowance for Loan Losses | ||
Beginning of period balance | $ 43,290,000 | $ 44,400,000 |
Charge-offs | (16,000) | (263,000) |
Recoveries | 81,000 | 1,671,000 |
Net (charge-offs) recoveries | 65,000 | 1,408,000 |
Provision for (recapture of) credit losses on loans | (567,000) | (1,512,000) |
End of period balance | 42,788,000 | 44,296,000 |
Decrease in reserve for pooled loans | (426,000) | |
Decrease in the allowance of credit loss | (76,000) | |
Commercial | ||
Changes in the Allowance for Loan Losses | ||
Beginning of period balance | 8,414,000 | 11,587,000 |
Charge-offs | (16,000) | (263,000) |
Recoveries | 54,000 | 813,000 |
Net (charge-offs) recoveries | 38,000 | 550,000 |
Provision for (recapture of) credit losses on loans | (1,651,000) | (537,000) |
End of period balance | 6,801,000 | 11,600,000 |
CRE - owner occupied | ||
Changes in the Allowance for Loan Losses | ||
Beginning of period balance | 7,954,000 | 8,560,000 |
Recoveries | 3,000 | 4,000 |
Net (charge-offs) recoveries | 3,000 | 4,000 |
Provision for (recapture of) credit losses on loans | (1,560,000) | (196,000) |
End of period balance | 6,397,000 | 8,368,000 |
CRE - non-owner occupied | ||
Changes in the Allowance for Loan Losses | ||
Beginning of period balance | 17,125,000 | 16,416,000 |
Provision for (recapture of) credit losses on loans | 2,288,000 | 15,000 |
End of period balance | 19,413,000 | 16,431,000 |
Land and construction | ||
Changes in the Allowance for Loan Losses | ||
Beginning of period balance | 1,831,000 | 2,509,000 |
Recoveries | 816,000 | |
Net (charge-offs) recoveries | 816,000 | |
Provision for (recapture of) credit losses on loans | 175,000 | (571,000) |
End of period balance | 2,006,000 | 2,754,000 |
Home equity | ||
Changes in the Allowance for Loan Losses | ||
Beginning of period balance | 864,000 | 1,297,000 |
Recoveries | 24,000 | 23,000 |
Net (charge-offs) recoveries | 24,000 | 23,000 |
Provision for (recapture of) credit losses on loans | (166,000) | (149,000) |
End of period balance | 722,000 | 1,171,000 |
Multi-family | ||
Changes in the Allowance for Loan Losses | ||
Beginning of period balance | 2,796,000 | 2,804,000 |
Provision for (recapture of) credit losses on loans | (252,000) | (53,000) |
End of period balance | 2,544,000 | 2,751,000 |
Residential mortgages | ||
Changes in the Allowance for Loan Losses | ||
Beginning of period balance | 4,132,000 | 943,000 |
Provision for (recapture of) credit losses on loans | 625,000 | (25,000) |
End of period balance | 4,757,000 | 918,000 |
Consumer and other | ||
Changes in the Allowance for Loan Losses | ||
Beginning of period balance | 174,000 | 284,000 |
Recoveries | 15,000 | |
Net (charge-offs) recoveries | 15,000 | |
Provision for (recapture of) credit losses on loans | (26,000) | 4,000 |
End of period balance | $ 148,000 | $ 303,000 |
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 | Mar. 31, 2022 | Dec. 31, 2021 |
Nonperforming Loans by Class | ||
Nonaccrual Financing Receivable, no special allowance | $ 2,542 | $ 2,432 |
Nonaccrual Financing Receivable, with special allowance | 761 | 1,028 |
Loans Over 90 Days Past Due and Still Accruing | 527 | 278 |
Total | 3,830 | 3,738 |
Commercial. | ||
Nonperforming Loans by Class | ||
Nonaccrual Financing Receivable, no special allowance | 236 | 94 |
Nonaccrual Financing Receivable, with special allowance | 761 | 1,028 |
Loans Over 90 Days Past Due and Still Accruing | 527 | 278 |
Total | 1,524 | 1,400 |
CRE - owner occupied | Real estate | ||
Nonperforming Loans by Class | ||
Nonaccrual Financing Receivable, no special allowance | 1,126 | 1,126 |
Total | 1,126 | 1,126 |
Home equity | Real estate | ||
Nonperforming Loans by Class | ||
Nonaccrual Financing Receivable, no special allowance | 73 | 84 |
Total | 73 | 84 |
Multi-family | Real estate | ||
Nonperforming Loans by Class | ||
Nonaccrual Financing Receivable, no special allowance | 1,107 | 1,128 |
Total | $ 1,107 | $ 1,128 |
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 ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | $ 3,026,188,000 | $ 3,090,788,000 |
30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 10,212,000 | 3,313,000 |
60-89 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 2,215,000 | 168,000 |
90 Days or Greater Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 1,704,000 | 1,534,000 |
Past due | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 14,131,000 | 5,015,000 |
Current | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 3,012,057,000 | 3,085,773,000 |
Commercial | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 605,446,000 | 682,834,000 |
Commercial | Commercial. | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 605,446,000 | 682,834,000 |
Commercial | Commercial. | 30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 5,522,000 | 2,714,000 |
Commercial | Commercial. | 60-89 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 1,508,000 | 168,000 |
Commercial | Commercial. | 90 Days or Greater Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 578,000 | 408,000 |
Commercial | Commercial. | Past due | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 7,608,000 | 3,290,000 |
Commercial | Commercial. | Current | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 597,838,000 | 679,544,000 |
CRE - owner occupied | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 597,542,000 | 595,934,000 |
CRE - owner occupied | Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 597,542,000 | 595,934,000 |
CRE - owner occupied | Real estate | 90 Days or Greater Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 1,126,000 | 1,126,000 |
CRE - owner occupied | Real estate | Past due | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 1,126,000 | 1,126,000 |
CRE - owner occupied | Real estate | Current | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 596,416,000 | 594,808,000 |
CRE - non-owner occupied | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 928,220,000 | 902,326,000 |
CRE - non-owner occupied | Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 928,220,000 | 902,326,000 |
CRE - non-owner occupied | Real estate | 60-89 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 707,000 | |
CRE - non-owner occupied | Real estate | Past due | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 707,000 | |
CRE - non-owner occupied | Real estate | Current | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 927,513,000 | 902,326,000 |
Land and construction | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 153,323,000 | 147,855,000 |
Land and construction | Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 153,323,000 | 147,855,000 |
Land and construction | Real estate | Current | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 153,323,000 | 147,855,000 |
Home equity | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 111,609,000 | 109,579,000 |
Home equity | Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 111,609,000 | 109,579,000 |
Home equity | Real estate | Current | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 111,609,000 | 109,579,000 |
Multi-family | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 221,767,000 | 218,856,000 |
Multi-family | Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 221,767,000 | 218,856,000 |
Multi-family | Real estate | Current | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 221,767,000 | 218,856,000 |
Residential mortgages | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 391,171,000 | 416,660,000 |
Residential mortgages | Real estate | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 391,171,000 | 416,660,000 |
Residential mortgages | Real estate | 30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 4,690,000 | 599,000 |
Residential mortgages | Real estate | Past due | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 4,690,000 | 599,000 |
Residential mortgages | Real estate | Current | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | 386,481,000 | 416,061,000 |
Consumer and other | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 17,110,000 | 16,744,000 |
Consumer and other | Consumer | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 17,110,000 | 16,744,000 |
Consumer and other | Consumer | Current | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | $ 17,110,000 | $ 16,744,000 |
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 ($) | Mar. 31, 2022 | Dec. 31, 2021 |
30 days or greater past due | ||
Aging of Past Due Loans by Class of Loans | ||
Nonaccrual loans | $ 1,362,000 | $ 1,258,000 |
Less than 30 days past due | ||
Aging of Past Due Loans by Class of Loans | ||
Nonaccrual loans | 1,941,000 | 2,202,000 |
Past due | ||
Aging of Past Due Loans by Class of Loans | ||
Loan balance | $ 14,131,000 | $ 5,015,000 |
Loans and Allowance for Credi_8
Loans and Allowance for Credit Losses on Loans - Credit Quality Indicators (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Loans | ||
2022 | $ 244,800 | $ 1,359,286 |
2021 | 1,160,630 | 421,591 |
2020 | 387,897 | 244,397 |
2019 | 229,273 | 138,204 |
2018 | 120,274 | 131,061 |
2017 and Prior | 398,550 | 294,461 |
Revolving | 484,764 | 501,788 |
Total loan balance | 3,026,188 | 3,090,788 |
Balance to report | 2,981,276 | 3,044,036 |
Loan classified as loss | ||
Loans | ||
Balance to report | 0 | 0 |
Commercial | ||
Loans | ||
2022 | 85,491 | 215,159 |
2021 | 92,468 | 67,141 |
2020 | 52,346 | 15,342 |
2019 | 12,358 | 13,058 |
2018 | 11,535 | 7,856 |
2017 and Prior | 11,470 | 5,761 |
Revolving | 339,778 | 358,517 |
Total loan balance | 605,446 | 682,834 |
Commercial | Pass [Member] | ||
Loans | ||
2022 | 83,467 | 208,645 |
2021 | 90,076 | 65,257 |
2020 | 51,230 | 15,086 |
2019 | 12,145 | 12,281 |
2018 | 10,818 | 7,311 |
2017 and Prior | 10,799 | 5,507 |
Revolving | 333,283 | 349,717 |
Total loan balance | 591,818 | 663,804 |
Commercial | Special Mention [Member] | ||
Loans | ||
2022 | 2,020 | 2,210 |
2021 | 1,283 | 512 |
2020 | 496 | 219 |
2019 | 213 | 764 |
2018 | 706 | 243 |
2017 and Prior | 417 | 204 |
Revolving | 1,888 | 4,024 |
Total loan balance | 7,023 | 8,176 |
Commercial | Substandard [Member] | ||
Loans | ||
2022 | 4 | 3,709 |
2021 | 561 | 930 |
2020 | 258 | |
2019 | 13 | |
2018 | 11 | 302 |
2017 and Prior | 167 | 2 |
Revolving | 4,607 | 4,776 |
Total loan balance | 5,608 | 9,732 |
Commercial | Substandard-Nonaccrual [Member] | ||
Loans | ||
2022 | 595 | |
2021 | 548 | 442 |
2020 | 362 | 37 |
2017 and Prior | 87 | 48 |
Total loan balance | 997 | 1,122 |
CRE - owner occupied | ||
Loans | ||
2022 | 41,146 | 172,057 |
2021 | 163,716 | 144,499 |
2020 | 139,060 | 66,268 |
2019 | 59,406 | 58,494 |
2018 | 52,664 | 31,657 |
2017 and Prior | 128,528 | 108,473 |
Revolving | 13,022 | 14,486 |
Total loan balance | 597,542 | 595,934 |
CRE - owner occupied | Pass [Member] | ||
Loans | ||
2022 | 39,671 | 170,504 |
2021 | 163,716 | 135,103 |
2020 | 125,993 | 65,596 |
2019 | 58,738 | 57,017 |
2018 | 51,196 | 31,657 |
2017 and Prior | 127,282 | 107,203 |
Revolving | 13,022 | 14,486 |
Total loan balance | 579,618 | 581,566 |
CRE - owner occupied | Special Mention [Member] | ||
Loans | ||
2022 | 568 | 568 |
2021 | 2,254 | |
2020 | 6,657 | 672 |
2019 | 668 | |
2017 and Prior | 347 | 355 |
Total loan balance | 8,240 | 3,849 |
CRE - owner occupied | Substandard [Member] | ||
Loans | ||
2022 | 907 | 985 |
2021 | 6,042 | |
2020 | 5,309 | |
2019 | 1,477 | |
2018 | 1,468 | |
2017 and Prior | 874 | 889 |
Total loan balance | 8,558 | 9,393 |
CRE - owner occupied | Substandard-Nonaccrual [Member] | ||
Loans | ||
2021 | 1,100 | |
2020 | 1,101 | |
2017 and Prior | 25 | 26 |
Total loan balance | 1,126 | 1,126 |
CRE - non-owner occupied | ||
Loans | ||
2022 | 55,458 | 374,470 |
2021 | 377,417 | 152,634 |
2020 | 139,637 | 115,170 |
2019 | 113,076 | 45,959 |
2018 | 35,540 | 69,258 |
2017 and Prior | 204,381 | 142,767 |
Revolving | 2,711 | 2,068 |
Total loan balance | 928,220 | 902,326 |
CRE - non-owner occupied | Pass [Member] | ||
Loans | ||
2022 | 55,458 | 374,470 |
2021 | 376,710 | 141,404 |
2020 | 128,498 | 115,170 |
2019 | 113,076 | 45,959 |
2018 | 35,540 | 68,125 |
2017 and Prior | 197,894 | 134,454 |
Revolving | 2,711 | 2,068 |
Total loan balance | 909,887 | 881,650 |
CRE - non-owner occupied | Special Mention [Member] | ||
Loans | ||
2021 | 5,388 | |
2020 | 5,341 | |
2018 | 1,133 | |
2017 and Prior | 356 | 3,816 |
Total loan balance | 5,697 | 10,337 |
CRE - non-owner occupied | Substandard [Member] | ||
Loans | ||
2021 | 707 | 5,842 |
2020 | 5,798 | |
2017 and Prior | 6,131 | 4,497 |
Total loan balance | 12,636 | 10,339 |
Land and construction | ||
Loans | ||
2022 | 53,912 | 127,203 |
2021 | 79,197 | 11,401 |
2020 | 11,259 | 4,385 |
2019 | 3,925 | |
2017 and Prior | 1,289 | 1,300 |
Revolving | 3,741 | 3,566 |
Total loan balance | 153,323 | 147,855 |
Land and construction | Pass [Member] | ||
Loans | ||
2022 | 53,912 | 125,844 |
2021 | 79,197 | 11,401 |
2020 | 11,259 | 4,385 |
2019 | 3,925 | |
2017 and Prior | 1,289 | 1,300 |
Revolving | 3,741 | 3,566 |
Total loan balance | 153,323 | 146,496 |
Land and construction | Special Mention [Member] | ||
Loans | ||
2022 | 1,359 | |
Total loan balance | 1,359 | |
Home equity | ||
Loans | ||
2021 | 84 | |
2020 | 73 | |
2019 | 46 | |
2018 | 40 | |
2017 and Prior | 143 | 54 |
Revolving | 111,353 | 109,395 |
Total loan balance | 111,609 | 109,579 |
Home equity | Pass [Member] | ||
Loans | ||
2019 | 46 | |
2018 | 40 | |
Revolving | 109,329 | 106,738 |
Total loan balance | 109,369 | 106,784 |
Home equity | Special Mention [Member] | ||
Loans | ||
Revolving | 1,932 | 1,931 |
Total loan balance | 1,932 | 1,931 |
Home equity | Substandard [Member] | ||
Loans | ||
2017 and Prior | 143 | 54 |
Revolving | 92 | 726 |
Total loan balance | 235 | 780 |
Home equity | Substandard-Nonaccrual [Member] | ||
Loans | ||
2021 | 84 | |
2020 | 73 | |
Total loan balance | 73 | 84 |
Multi-family | ||
Loans | ||
2022 | 7,949 | 109,467 |
2021 | 108,939 | 27,955 |
2020 | 27,780 | 35,127 |
2019 | 32,833 | 16,151 |
2018 | 16,062 | 16,261 |
2017 and Prior | 28,204 | 13,895 |
Total loan balance | 221,767 | 218,856 |
Multi-family | Pass [Member] | ||
Loans | ||
2022 | 7,949 | 102,535 |
2021 | 100,952 | 27,955 |
2020 | 27,780 | 30,820 |
2019 | 28,548 | 16,151 |
2018 | 16,062 | 16,261 |
2017 and Prior | 28,204 | 13,895 |
Total loan balance | 209,495 | 207,617 |
Multi-family | Special Mention [Member] | ||
Loans | ||
2022 | 5,804 | |
2021 | 6,880 | |
2020 | 4,307 | |
2019 | 4,285 | |
Total loan balance | 11,165 | 10,111 |
Multi-family | Substandard-Nonaccrual [Member] | ||
Loans | ||
2022 | 1,128 | |
2021 | 1,107 | |
Total loan balance | 1,107 | 1,128 |
Residential mortgages | ||
Loans | ||
2022 | 765 | 360,424 |
2021 | 338,359 | 17,875 |
2020 | 17,742 | 8,065 |
2019 | 7,643 | 3,070 |
2018 | 3,022 | 6,015 |
2017 and Prior | 23,640 | 21,211 |
Total loan balance | 391,171 | 416,660 |
Residential mortgages | Pass [Member] | ||
Loans | ||
2022 | 765 | 360,424 |
2021 | 338,359 | 17,875 |
2020 | 17,742 | 8,065 |
2019 | 7,643 | 3,070 |
2018 | 3,022 | 6,015 |
2017 and Prior | 23,413 | 19,967 |
Total loan balance | 390,944 | 415,416 |
Residential mortgages | Special Mention [Member] | ||
Loans | ||
2017 and Prior | 1,244 | |
Total loan balance | 1,244 | |
Residential mortgages | Substandard [Member] | ||
Loans | ||
2017 and Prior | 227 | |
Total loan balance | 227 | |
Consumer and other | ||
Loans | ||
2022 | 79 | 506 |
2021 | 534 | 2 |
2020 | 40 | |
2019 | 32 | 1,426 |
2018 | 1,411 | 14 |
2017 and Prior | 895 | 1,000 |
Revolving | 14,159 | 13,756 |
Total loan balance | 17,110 | 16,744 |
Consumer and other | Pass [Member] | ||
Loans | ||
2022 | 79 | 491 |
2021 | 522 | 2 |
2020 | 40 | |
2019 | 32 | 1,426 |
2018 | 1,411 | 14 |
2017 and Prior | 895 | 1,000 |
Revolving | 14,159 | 13,756 |
Total loan balance | 17,098 | 16,729 |
Consumer and other | Substandard [Member] | ||
Loans | ||
2022 | 15 | |
2021 | 12 | |
Total loan balance | 12 | 15 |
Risk Grades [Member] | ||
Loans | ||
2022 | 244,800 | 1,359,286 |
2021 | 1,160,630 | 421,591 |
2020 | 387,897 | 244,397 |
2019 | 229,273 | 138,204 |
2018 | 120,274 | 131,061 |
2017 and Prior | 398,550 | 294,461 |
Revolving | 484,764 | 501,788 |
Total loan balance | 3,026,188 | 3,090,788 |
Risk Grades [Member] | Pass [Member] | ||
Loans | ||
2022 | 241,301 | 1,342,913 |
2021 | 1,149,532 | 398,997 |
2020 | 362,502 | 239,162 |
2019 | 224,107 | 135,950 |
2018 | 118,089 | 129,383 |
2017 and Prior | 389,776 | 283,326 |
Revolving | 476,245 | 490,331 |
Total loan balance | 2,961,552 | 3,020,062 |
Risk Grades [Member] | Special Mention [Member] | ||
Loans | ||
2022 | 2,588 | 9,941 |
2021 | 8,163 | 8,154 |
2020 | 12,494 | 5,198 |
2019 | 5,166 | 764 |
2018 | 706 | 1,376 |
2017 and Prior | 1,120 | 5,619 |
Revolving | 3,820 | 5,955 |
Total loan balance | 34,057 | 37,007 |
Risk Grades [Member] | Substandard [Member] | ||
Loans | ||
2022 | 911 | 4,709 |
2021 | 1,280 | 12,814 |
2020 | 11,365 | |
2019 | 1,490 | |
2018 | 1,479 | 302 |
2017 and Prior | 7,542 | 5,442 |
Revolving | 4,699 | 5,502 |
Total loan balance | 27,276 | 30,259 |
Risk Grades [Member] | Substandard-Nonaccrual [Member] | ||
Loans | ||
2022 | 1,723 | |
2021 | 1,655 | 1,626 |
2020 | 1,536 | 37 |
2017 and Prior | 112 | 74 |
Total loan balance | $ 3,303 | $ 3,460 |
Loans and Allowance for Credi_9
Loans and Allowance for Credit Losses on Loans - Amortized Cost Basis of Collateral-dependent Loans (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Business Assets | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Collateral dependent loans | $ 761,000 | $ 1,028,000 |
Loans and Allowance for Cred_10
Loans and Allowance for Credit Losses on Loans - Troubled Debt Restructurings (Details) - USD ($) | Mar. 31, 2022 | Mar. 30, 2022 | Dec. 31, 2021 |
Loans and Allowance for Credit Losses on Loans | |||
Recorded investment of troubled debt restructurings | $ 481,000 | $ 500,000 | |
Troubled debt restructurings, nonaccrual loans | 355,000 | 372,000 | |
Troubled debt restructurings, accruing loans | $ 126,000 | 128,000 | |
Specific reserves | $ 279,000 | $ 290,000 |
Loans and Allowance for Cred_11
Loans and Allowance for Credit Losses on Loans - Troubled Debt Restructurings by Class (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022loan | Mar. 31, 2021USD ($)loan | Dec. 31, 2021loan | |
Troubled Debt Restructurings by Class | |||
Number of loans modified as troubled debt restructurings during the period | loan | 0 | 1 | 0 |
Pre-modification Outstanding Recorded Investment | $ 3,000 | ||
Post-modification Outstanding Recorded Investment | $ 3,000 | ||
Commercial. | |||
Troubled Debt Restructurings by Class | |||
Number of loans modified as troubled debt restructurings during the period | loan | 1 | ||
Pre-modification Outstanding Recorded Investment | $ 3,000 | ||
Post-modification Outstanding Recorded Investment | $ 3,000 |
Loans and Allowance for Cred_12
Loans and Allowance for Credit Losses on Loans - Defaults on Troubled Debt Restructurings (Details) - item | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Loans and Allowance for Credit Losses on Loans | ||
Default period contractually past due under modified terms (in days) | 30 days | |
Number of defaults on troubled debt restructurings | 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) | 3 Months Ended |
Mar. 31, 2022item | |
Loans and Allowance for Credit Losses on Loans | |
Number of remaining second deferments | 0 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | |
Goodwill | |||
Goodwill | $ 167,631,000 | $ 167,631,000 | $ 167,631,000 |
BVF/CSNK | |||
Goodwill | |||
Goodwill acquired | 13,044,000 | ||
Focus | |||
Goodwill | |||
Goodwill acquired | 32,619,000 | ||
Tri Valley Bank | |||
Goodwill | |||
Goodwill acquired | 13,819,000 | ||
United American Bank | |||
Goodwill | |||
Goodwill acquired | 24,271,000 | ||
Presidio bank | |||
Goodwill | |||
Goodwill acquired | 83,878,000 | ||
Banking | |||
Goodwill | |||
Goodwill | 154,587,000 | 154,587,000 | 154,587,000 |
Factoring | |||
Goodwill | |||
Goodwill | $ 13,044,000 | $ 13,044,000 | $ 13,044,000 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Other Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Other Intangible Assets | ||
Gross Carrying amount | $ 27,033 | $ 27,033 |
Accumulated Amortization | (14,024) | (13,365) |
Total | 13,009 | 13,668 |
Core deposit | ||
Other Intangible Assets | ||
Gross Carrying amount | 25,023 | 25,023 |
Accumulated Amortization | (12,593) | (11,982) |
Total | 12,430 | 13,041 |
Below/ (Above) market-value lease | ||
Other Intangible Assets | ||
Gross Carrying amount | 110 | 110 |
Accumulated Amortization | (22) | (22) |
Total | 88 | 88 |
Customer relationship and brokered relationship | ||
Other Intangible Assets | ||
Gross Carrying amount | 1,900 | 1,900 |
Accumulated Amortization | (1,409) | (1,361) |
Total | $ 491 | $ 539 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Estimated Amortization Expense (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Estimated Amortization Expense | ||
2022 remaining | $ 1,976 | |
2023 | 2,405 | |
2024 | 2,187 | |
2025 | 1,813 | |
2026 | 1,530 | |
2027 | 1,456 | |
Thereafter | 1,642 | |
Total | 13,009 | $ 13,668 |
Core deposit | ||
Estimated Amortization Expense | ||
2022 remaining | 1,836 | |
2023 | 2,217 | |
2024 | 2,023 | |
2025 | 1,795 | |
2026 | 1,512 | |
2027 | 1,438 | |
Thereafter | 1,609 | |
Total | 12,430 | 13,041 |
Customer relationship and brokered relationship | ||
Estimated Amortization Expense | ||
2022 remaining | 142 | |
2023 | 190 | |
2024 | 159 | |
Total | 491 | 539 |
Below/ (Above) market-value lease | ||
Estimated Amortization Expense | ||
2022 remaining | (2) | |
2023 | (2) | |
2024 | 5 | |
2025 | 18 | |
2026 | 18 | |
2027 | 18 | |
Thereafter | 33 | |
Total | $ 88 | $ 88 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Impairment of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Impairment of Intangible Assets | ||
Impairment of intangible assets | $ 0 | $ 0 |
Income Taxes - Net Deferred Tax
Income Taxes - Net Deferred Tax Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Net deferred tax assets | ||
Net deferred tax assets | $ 28,054 | $ 28,757 |
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 | Mar. 31, 2022 | Dec. 31, 2021 |
Income Taxes | ||
Low income housing investments | $ 4,169 | $ 4,380 |
Future commitments | $ 568 | $ 568 |
Income Taxes - Future Commitmen
Income Taxes - Future Commitments of the Low Income Housing Investments (Details) - Low income housing investments | Mar. 31, 2022USD ($) |
Future Commitments | |
2022 | $ 55,000 |
2023 through 2026 | $ 513,000 |
Income Taxes - Components of Lo
Income Taxes - Components of Low Income Housing Investment (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Taxes | ||
Low income housing tax credits | $ 210,000 | $ 210,000 |
Low income housing investment expense | $ 211,000 | $ 208,000 |
Benefit Plans - Defined Benefit
Benefit Plans - Defined Benefit Plans - Components of Pension Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Supplemental Retirement Plan | |||
Components of net periodic benefit cost: | |||
Service cost | $ 87 | $ 120 | |
Interest cost | 216 | 190 | |
Amortization of prior service cost | 25 | ||
Amortization of net actuarial loss | 114 | 136 | |
Net periodic benefit cost | 417 | 471 | |
Defined Benefit Plan, Assets for Plan Benefits | 0 | ||
Split-Dollar Life Insurance Benefit Plan | |||
Components of net periodic benefit cost: | |||
Amortization of prior transition obligation and actuarial losses | (11) | (1) | |
Interest cost | 62 | 55 | $ 219 |
Net periodic benefit cost | $ 51 | $ 54 |
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 | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Change in projected benefit obligation: | |||
Projected benefit obligation at beginning of year | $ 9,244 | $ 9,689 | $ 9,689 |
Interest cost | 62 | $ 55 | 219 |
Actuarial loss | (664) | ||
Projected benefit obligation at end of period | $ 9,306 | $ 9,244 |
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 | Mar. 31, 2022 | Dec. 31, 2021 |
Amounts Recognized in Accumulated Other Comprehensive Loss | ||
Net actuarial loss | $ 4,633 | $ 4,601 |
Prior transition obligation | 858 | 879 |
Accumulated other comprehensive loss | $ 5,491 | $ 5,480 |
Fair Value - Financial Assets a
Fair Value - Financial Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | $ 111,217 | $ 102,252 |
Agency mortgage-backed securities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 89,653 | 102,252 |
U.S. Treasury | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 21,564 | |
Recurring basis | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
I/O strip receivables | 208 | 221 |
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 |
Recurring basis | Agency mortgage-backed securities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 89,653 | 102,252 |
Recurring basis | U.S. Treasury | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 21,564 | |
Recurring basis | 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 | 21,564 | |
Recurring basis | Significant Other Observable Inputs (Level 2) | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
I/O strip receivables | 208 | 221 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Agency mortgage-backed securities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | $ 89,653 | $ 102,252 |
Fair Value - Impaired Loans Hel
Fair Value - Impaired Loans Held-for-investment - Additional Disclosures (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Carrying Amounts | ||
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 ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Securities available-for-sale | $ 111,217,000 | $ 102,252,000 |
Securities held-to-maturity | 690,784,000 | 657,649,000 |
Federal Home Loan Bank, Federal Reserve Bank stock and other investments, at cost | 32,509,000 | 32,504,000 |
Liabilities | ||
Subordinated debt | 39,987,000 | 39,925,000 |
Carrying Amounts | ||
Assets | ||
Cash and cash equivalents | 1,217,165,000 | 1,306,216,000 |
Securities available-for-sale | 111,217,000 | 102,252,000 |
Securities held-to-maturity | 736,823,000 | 658,397,000 |
Loans (including loans held-for-sale), net | 2,982,107,000 | 3,046,403,000 |
Federal Home Loan Bank, Federal Reserve Bank stock and other investments, at cost | 32,509,000 | 32,504,000 |
Accrued interest receivable | 11,120,000 | 10,781,000 |
I/O strips receivables | 208,000 | 221,000 |
Liabilities | ||
Time deposits | 137,203,000 | 139,834,000 |
Other deposits | 4,552,702,000 | 4,619,578,000 |
Subordinated debt | 39,987,000 | 39,925,000 |
Accrued interest payable | 1,005,000 | 477,000 |
Balance | ||
Assets | ||
Cash and cash equivalents | 1,217,165,000 | 1,306,216,000 |
Securities available-for-sale | 111,217,000 | 102,252,000 |
Securities held-to-maturity | 690,784,000 | 657,649,000 |
Loans (including loans held-for-sale), net | 2,955,391,000 | 3,063,925,000 |
Accrued interest receivable | 11,120,000 | 10,781,000 |
I/O strips receivables | 208,000 | 221,000 |
Liabilities | ||
Time deposits | 137,417,000 | 140,086,000 |
Other deposits | 4,552,702,000 | 4,619,578,000 |
Subordinated debt | 39,587,000 | 40,425,000 |
Accrued interest payable | 1,005,000 | 477,000 |
Balance | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets | ||
Cash and cash equivalents | 1,217,165,000 | 1,306,216,000 |
Securities available-for-sale | 21,564,000 | |
Accrued interest receivable | 52,000 | |
Balance | Significant Other Observable Inputs (Level 2) | ||
Assets | ||
Securities available-for-sale | 89,653,000 | 102,252,000 |
Securities held-to-maturity | 690,784,000 | 657,649,000 |
Loans (including loans held-for-sale), net | 831,000 | 2,367,000 |
Accrued interest receivable | 1,998,000 | 1,719,000 |
I/O strips receivables | 208,000 | 221,000 |
Liabilities | ||
Time deposits | 137,417,000 | 140,086,000 |
Other deposits | 4,552,702,000 | 4,619,578,000 |
Subordinated debt | 39,587,000 | 40,425,000 |
Accrued interest payable | 1,005,000 | 477,000 |
Balance | Significant Unobservable Inputs (Level 3) | ||
Assets | ||
Loans (including loans held-for-sale), net | 2,954,560,000 | 3,061,558,000 |
Accrued interest receivable | $ 9,070,000 | $ 9,062,000 |
Equity Plan - General Disclosur
Equity Plan - General Disclosures (Details) - shares | 3 Months Ended | ||
Mar. 31, 2022 | May 21, 2020 | May 20, 2020 | |
2013 Plan | |||
Equity Plan | |||
Number of shares authorized for equity plan | 5,000,000 | 3,000,000 | |
Number of shares available for future grants | 1,962,229 | ||
Options | |||
Equity Plan | |||
Vesting period | 4 years | ||
Expiration term | 10 years |
Equity Plan - Stock Option Acti
Equity Plan - Stock Option Activity (Details) - Options | 3 Months Ended |
Mar. 31, 2022USD ($)$ / sharesshares | |
Number of Shares | |
Outstanding at the beginning of the period (in shares) | 2,584,632 |
Exercised (in shares) | (68,009) |
Forfeited or expired (in shares) | (14,969) |
Outstanding at the end of the period (in shares) | 2,501,654 |
Vested or expected to vest (in shares) | 2,351,555 |
Exercisable at the end of the period (in shares) | 1,987,706 |
Weighted Average Exercise Price | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 10 |
Exercised (in dollars per share) | $ / shares | 5.90 |
Forfeited or expired (in dollars per share) | $ / shares | 11.16 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 10.10 |
Additional Information | |
Weighted Average Remaining Contractual Life - Outstanding at the end of the period (in years) | 5 years 3 months 14 days |
Weighted Average Remaining Contractual Life - Vested or expected to vest (in years) | 5 years 3 months 14 days |
Weighted Average Remaining Contractual Life - Exercisable at the end of the period (in years) | 4 years 5 months 19 days |
Aggregate Intrinsic Value - Outstanding at the end of the period (in dollars) | $ | $ 5,248,759 |
Aggregate Intrinsic Value - Vested or expected to vest (in dollars) | $ | 4,933,833 |
Aggregate Intrinsic Value - Exercisable at the end of the period (in dollars) | $ | $ 4,903,446 |
Equity Plan - Information Relat
Equity Plan - Information Related to the Equity Plans for each of the Last Three Years (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Information Related to the Equity Plans | ||
Cash received from option exercise | $ 401 | $ 320 |
Options | ||
Information Related to the Equity Plans | ||
Intrinsic value of options exercised | 415,117 | 167,420 |
Cash received from option exercise | 401,136 | 319,862 |
Tax benefit (expense) realized from option exercises | $ 31,971 | $ (1,539) |
Equity Plan - Unrecognized Comp
Equity Plan - Unrecognized Compensation Cost - Nonvested Awards (Details) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Options | |
Unrecognized Compensation Cost | |
Total unrecognized compensation cost related to nonvested stock options granted | $ 965,000 |
Expected weighted-average period for recognition of compensation costs related to nonvested stock options | 2 years 5 months 15 days |
Restricted stock | |
Unrecognized Compensation Cost | |
Total unrecognized compensation cost related to nonvested stock options granted | $ 1,638,000 |
Expected weighted-average period for recognition of compensation costs related to nonvested stock options | 1 year 8 months 4 days |
Equity Plan - Restricted Stock
Equity Plan - Restricted Stock Activity (Details) - Restricted stock | 3 Months Ended |
Mar. 31, 2022$ / sharesshares | |
Number of Shares | |
Nonvested shares at the beginning of the period (in shares) | shares | 298,566 |
Vested (in shares) | shares | (4,255) |
Nonvested shares at the end of the period (in shares) | shares | 294,311 |
Weighted Average Grant Date Fair Value | |
Nonvested shares at the beginning of the period (in dollars per share) | $ / shares | $ 11.03 |
Vested (in dollars per share) | $ / shares | 11.75 |
Nonvested shares at the end of the period (in dollars per share) | $ / shares | $ 12.24 |
Subordinated Debt (Details)
Subordinated Debt (Details) - USD ($) | May 26, 2017 | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | |||
Principal amount | $ 40,000,000 | ||
Fixed interest rate (as a percent) | 5.25% | ||
Subordinated debt, net of issuance costs | $ 39,987,000 | $ 39,925,000 | |
Debt Issuance Costs | $ 13,000 | ||
LIBOR | |||
Debt Instrument [Line Items] | |||
Rate of interest added to base rate | 3.365% |
Capital Requirements - General
Capital Requirements - General Information (Details) | Mar. 27, 2020 | Mar. 31, 2022 | Dec. 31, 2021 |
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 | 2 years | |
Addition period for transition | 3 years | ||
Percentage of adjustment to regulatory capital deferred until phase in period of adoption of CECL Standard | 25.00% | ||
Capital conservation buffer (as a percent) | 2.50% | 2.50% | |
2022 | |||
Capital Requirements | |||
Percentage of impact on allowances for credit losses on delayed adoption of CECL standard | 75.00% | ||
2023 | |||
Capital Requirements | |||
Percentage of impact on allowances for credit losses on delayed adoption of CECL standard | 50.00% | ||
2024 | |||
Capital Requirements | |||
Percentage of impact on allowances for credit losses on delayed adoption of CECL standard | 25.00% | ||
HBC | |||
Capital Requirements | |||
Capital conservation buffer (as a percent) | 2.50% | 2.50% |
Capital Requirements - Tabular
Capital Requirements - Tabular Disclosure (Details) $ in Thousands | Mar. 31, 2022USD ($) | Dec. 31, 2021USD ($) |
Total Capital (to risk-weighted assets) | ||
Actual, Amount | $ 513,272 | $ 506,209 |
Required For Capital Adequacy Purposes, Amount | $ 370,203 | $ 369,711 |
Actual, Ratio (as a percent) | 14.6 | 14.4 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 10.5 | 10.5 |
Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 438,203 | $ 433,488 |
Required For Capital Adequacy Purposes, Amount | $ 299,688 | $ 299,290 |
Actual, Ratio (as a percent) | 12.4 | 12.3 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 8.5 | 8.5 |
Common Equity Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 438,203 | $ 433,488 |
Required For Capital Adequacy Purposes, Amount | $ 246,802 | $ 246,474 |
Actual, Ratio (as a percent) | 12.40% | 12.30% |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 7.00% | 7.00% |
Tier 1 Capital (to average assets) | ||
Actual, Amount | $ 438,203 | $ 433,488 |
Required For Capital Adequacy Purposes, Amount | $ 210,246 | $ 220,193 |
Actual, Ratio (as a percent) | 8.3 | 7.9 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 4 | 4 |
HBC | ||
Total Capital (to risk-weighted assets) | ||
Actual, Amount | $ 491,349 | $ 484,382 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 352,436 | 351,839 |
Required For Capital Adequacy Purposes, Amount | $ 370,058 | $ 369,431 |
Actual, Ratio (as a percent) | 13.9 | 13.8 |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 10 | 10 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 10.5 | 10.5 |
Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 456,267 | $ 451,586 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 281,949 | 281,471 |
Required For Capital Adequacy Purposes, Amount | $ 299,571 | $ 299,063 |
Actual, Ratio (as a percent) | 12.9 | 12.8 |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 8 | 8 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 8.5 | 8.5 |
Common Equity Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 456,267 | $ 451,586 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 229,084 | 228,695 |
Required For Capital Adequacy Purposes, Amount | $ 246,705 | $ 246,287 |
Actual, Ratio (as a percent) | 12.90% | 12.80% |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 6.50% | 6.50% |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 7.00% | 7.00% |
Tier 1 Capital (to average assets) | ||
Actual, Amount | $ 456,267 | $ 451,586 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 262,709 | 275,109 |
Required For Capital Adequacy Purposes, Amount | $ 210,167 | $ 220,087 |
Actual, Ratio (as a percent) | 8.7 | 8.2 |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 5 | 5 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 4 | 4 |
Capital Requirements - Dividend
Capital Requirements - Dividends to Parent (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Cash dividend | ||
Subordinated Debt. | $ 39,987,000 | $ 39,925,000 |
HBC | ||
Cash dividend | ||
Cash dividend available | 41,140,000 | |
Dividends paid to parent company | $ 8,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Financial Instruments with Off-Balance Sheet Risk (Details) | Oct. 26, 2021USD ($) | Mar. 31, 2022USD ($) | Jun. 30, 2021USD ($) | Mar. 31, 2021 | Dec. 31, 2021USD ($) | Oct. 31, 2021item |
Commitments and Contingencies | ||||||
Reserve for legal settlement | $ 4,000,000 | |||||
Amount of settlement | $ 4,000,000 | |||||
Legal costs | $ 1,000,000 | |||||
Number of counts not sustained by court without leave to amend | item | 2 | |||||
Commitments to extend credit, fixed rate | $ 117,391,000 | $ 122,155,000 | ||||
Commitments to extend credit, variable rate | 1,036,970,000 | 1,028,656,000 | ||||
Commitment to extend credit, total | $ 1,154,361,000 | $ 1,150,811,000 | ||||
Percentage of unused commitments to outstanding gross loans | 38.00% | 40.00% | 37.00% | |||
Increase (decrease) to the allowance for credit losses on loans | $ (40,000) | |||||
Off-balance sheet, credit loss liability increase due to offsetting increase in loss factors in CECL model | 775,000 | $ 815,000 | ||||
Unused lines of credit and commitments to make loans | ||||||
Commitments and Contingencies | ||||||
Commitments to extend credit, fixed rate | 114,333,000 | 119,071,000 | ||||
Commitments to extend credit, variable rate | 1,027,606,000 | 1,015,588,000 | ||||
Commitment to extend credit, total | 1,141,939,000 | 1,134,659,000 | ||||
Standby letters of credit | ||||||
Commitments and Contingencies | ||||||
Commitments to extend credit, fixed rate | 3,058,000 | 3,084,000 | ||||
Commitments to extend credit, variable rate | 9,364,000 | 13,068,000 | ||||
Commitment to extend credit, total | $ 12,422,000 | $ 16,152,000 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||
Non-interest Income In-scope of Topic 606 | $ 612 | $ 601 | |
Non-interest Income Out-of-scope of Topic 606 | 1,848 | 1,700 | |
Total noninterest income | 2,460 | 2,301 | |
Service charges and fees on deposit accounts | |||
Disaggregation of Revenue [Line Items] | |||
Non-interest Income In-scope of Topic 606 | $ 612 | $ 601 | |
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 |
Noninterest Expense (Details)
Noninterest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Noninterest Expense | ||
Salaries and employee benefits | $ 13,821 | $ 13,958 |
Occupancy and equipment | 2,437 | 2,274 |
Professional fees | 1,080 | 1,719 |
Insurance expense | 1,043 | 663 |
Amortization of intangible assets | 659 | 733 |
Data processing | 651 | 534 |
Federal Deposit Insurance Corporation ("FDIC") assessments | 479 | 146 |
Other | 3,082 | 3,217 |
Total noninterest expense | $ 23,252 | $ 23,244 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Leases | ||
Lessee, Operating Lease, Option to renew | true | |
Operating Lease Cost (Cost resulting from lease payments) | $ 1,620 | $ 1,671 |
Operating Lease - Operating Cash Flows (Fixed Payments) | 1,210 | 1,186 |
Operating Lease - ROU assets | $ 33,669 | $ 37,405 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Interest Receivable and Other Assets | Interest Receivable and Other Assets |
Operating Lease - Liabilities | $ 33,669 | $ 37,405 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Accrued Interest Payable and Other Liabilities | Accrued Interest Payable and Other Liabilities |
Weighted Average Lease Term - Operating Leases | 7 years 2 months 8 days | 8 years 2 months 1 day |
Weighted Average Discount Rate - Operating Leases | 4.49% | 4.49% |
Leases - Maturity Analysis (Det
Leases - Maturity Analysis (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Mar. 31, 2021 |
Operating Lease Payments Due | ||
2022 | $ 4,769 | |
2023 | 5,724 | |
2024 | 5,341 | |
2025 | 4,929 | |
2026 | 4,357 | |
Thereafter | 14,654 | |
Total undiscounted cash flows | 39,774 | |
Discount on cash flows | (6,105) | |
Total lease liability | $ 33,669 | $ 37,405 |
Business Segment Information -
Business Segment Information - Business Segments (Details) | 3 Months Ended |
Mar. 31, 2022segment | |
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 ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Operating Income | |||
Interest income | $ 39,906,000 | $ 36,761,000 | |
Total interest expense | 1,685,000 | 1,803,000 | |
Net interest income | 38,221,000 | 34,958,000 | |
Provision for (recapture of) credit losses on loans | (567,000) | (1,512,000) | |
Net interest income after provision | 38,788,000 | 36,470,000 | |
Noninterest income | 2,460,000 | 2,301,000 | |
Noninterest expense | 23,252,000 | 23,244,000 | |
Income before income taxes | 17,996,000 | 15,527,000 | |
Income tax expense | 5,130,000 | 4,323,000 | |
Net income | 12,866,000 | 11,204,000 | |
Total assets | 5,427,398,000 | 5,001,390,000 | $ 5,499,409,000 |
Loans, net of deferred fees | 3,024,064,000 | 2,704,707,000 | 3,087,326,000 |
Goodwill | 167,631,000 | 167,631,000 | 167,631,000 |
Banking | |||
Operating Income | |||
Interest income | 37,113,000 | 34,111,000 | |
Intersegment interest allocations | 237,000 | 211,000 | |
Total interest expense | 1,685,000 | 1,803,000 | |
Net interest income | 35,665,000 | 32,519,000 | |
Provision for (recapture of) credit losses on loans | (539,000) | (1,463,000) | |
Net interest income after provision | 36,204,000 | 33,982,000 | |
Noninterest income | 2,398,000 | 2,160,000 | |
Noninterest expense | 21,767,000 | 21,897,000 | |
Intersegment expense allocations | 114,000 | 106,000 | |
Income before income taxes | 16,949,000 | 14,351,000 | |
Income tax expense | 4,821,000 | 3,975,000 | |
Net income | 12,128,000 | 10,376,000 | |
Total assets | 5,352,709,000 | 4,933,350,000 | |
Loans, net of deferred fees | 2,962,823,000 | 2,656,178,000 | |
Goodwill | 154,587,000 | 154,587,000 | 154,587,000 |
Factoring | |||
Operating Income | |||
Interest income | 2,793,000 | 2,650,000 | |
Intersegment interest allocations | (237,000) | (211,000) | |
Net interest income | 2,556,000 | 2,439,000 | |
Provision for (recapture of) credit losses on loans | (28,000) | (49,000) | |
Net interest income after provision | 2,584,000 | 2,488,000 | |
Noninterest income | 62,000 | 141,000 | |
Noninterest expense | 1,485,000 | 1,347,000 | |
Intersegment expense allocations | (114,000) | (106,000) | |
Income before income taxes | 1,047,000 | 1,176,000 | |
Income tax expense | 309,000 | 348,000 | |
Net income | 738,000 | 828,000 | |
Total assets | 74,689,000 | 68,040,000 | |
Loans, net of deferred fees | 61,241,000 | 48,529,000 | |
Goodwill | $ 13,044,000 | $ 13,044,000 | $ 13,044,000 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Apr. 28, 2022 | Mar. 31, 2022 | Mar. 31, 2021 |
Subsequent Event [Line Items] | |||
Quarterly cash dividends declared to holders of common stock | $ 0.13 | $ 0.13 | |
Subsequent event | |||
Subsequent Event [Line Items] | |||
Quarterly cash dividends declared to holders of common stock | $ 0.13 |