Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 09, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 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 Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 507.8 | ||
Entity Common Stock, Shares Outstanding | 60,897,655 | ||
Auditor Name | Crowe LLP | ||
Auditor Firm ID | 173 | ||
Auditor Location | Oak Brook, Illinois | ||
Document Fiscal Year Focus | 2022 | ||
Entity Central Index Key | 0001053352 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Cash and due from banks | $ 27,595,000 | $ 15,703,000 |
Other investments and interest-bearing deposits in other financial institutions | 279,008,000 | 1,290,513,000 |
Total cash and cash equivalents | 306,603,000 | 1,306,216,000 |
Securities available-for-sale, at fair value | 489,596,000 | 102,252,000 |
Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $14 at 2022 and $43 at 2021 (fair value of $614,452 at 2022 and $657,649 at 2021) | 714,990,000 | 658,397,000 |
Loans held-for-sale - SBA, at lower of cost or fair value, including deferred costs | 2,456,000 | 2,367,000 |
Loans, net of deferred fees | 3,298,550,000 | 3,087,326,000 |
Allowance for credit losses on loans | (47,512,000) | (43,290,000) |
Loans, net | 3,251,038,000 | 3,044,036,000 |
Federal Home Loan Bank, Federal Reserve Bank stock and other investments, at cost | 32,522,000 | 32,504,000 |
Company-owned life insurance | 78,945,000 | 77,589,000 |
Premises and equipment, net | 9,301,000 | 9,639,000 |
Goodwill | 167,631,000 | 167,631,000 |
Other intangible assets | 11,033,000 | 13,668,000 |
Accrued interest receivable and other assets | 93,465,000 | 85,110,000 |
Total assets | 5,157,580,000 | 5,499,409,000 |
Deposits: | ||
Demand, noninterest-bearing | 1,736,722,000 | 1,903,768,000 |
Demand, interest-bearing | 1,196,427,000 | 1,308,114,000 |
Savings and money market | 1,285,444,000 | 1,375,825,000 |
Time deposits - under $250 | 32,445,000 | 38,734,000 |
Time deposits - $250 and over | 108,192,000 | 94,700,000 |
CDARS - interest-bearing demand, money market and time deposits | 30,374,000 | 38,271,000 |
Total deposits | 4,389,604,000 | 4,759,412,000 |
Subordinated debt, net of issuance costs | 39,350,000 | 39,925,000 |
Accrued interest payable and other liabilities | 96,170,000 | 102,044,000 |
Total liabilities | 4,525,124,000 | 4,901,381,000 |
Shareholders' equity: | ||
Preferred stock, no par value; 10,000,000 shares authorized; none issued and outstanding at 2022 and 2021 | ||
Common stock, no par value; 100,000,000 shares authorized; 60,852,723 shares issued and outstanding at 2022 and 60,339,837 shares issued and outstanding at 2021 | 502,923,000 | 497,695,000 |
Retained earnings | 146,389,000 | 111,329,000 |
Accumulated other comprehensive loss | (16,856,000) | (10,996,000) |
Total shareholders' equity | 632,456,000 | 598,028,000 |
Total liabilities and shareholders' equity | $ 5,157,580,000 | $ 5,499,409,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Securities held-to-maturity | ||
Allowance for credit losses | $ 14 | $ 43 |
Securities held-to-maturity | $ 614,452 | $ 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 |
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 | 60,852,723 | 60,339,837 |
Common stock, shares outstanding | 60,852,723 | 60,339,837 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Interest income: | |||
Loans, including fees | $ 153,010 | $ 139,244 | $ 133,169 |
Securities, taxable | 20,666 | 8,678 | 11,637 |
Securities, exempt from Federal tax | 1,084 | 1,576 | 1,908 |
Other investments, interest-bearing deposits in other financial institutions and Federal funds sold | 14,068 | 3,758 | 3,757 |
Total interest income | 188,828 | 153,256 | 150,471 |
Interest expense: | |||
Deposits | 6,770 | 4,816 | 6,260 |
Subordinated debt | 2,178 | 2,314 | 2,320 |
Short-term borrowings | 1 | 1 | |
Total interest expense | 8,948 | 7,131 | 8,581 |
Net interest income before provision for credit losses on loans | 179,880 | 146,125 | 141,890 |
Provision for (recapture of) credit losses on loans | 766 | (3,134) | 13,233 |
Net interest income after provision for credit losses on loans | 179,114 | 149,259 | 128,657 |
Noninterest income: | |||
Service charges and fees on deposit accounts | $ 4,640 | $ 2,488 | $ 2,859 |
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 |
Increase in cash surrender value of life insurance | $ 1,925 | $ 1,838 | $ 1,845 |
Gain on warrants | 669 | 11 | 449 |
Servicing income | 508 | 553 | 673 |
Gain on sales of SBA loans | 491 | 1,718 | 839 |
Termination fees | 61 | 797 | 89 |
Gain on proceeds from company-owned life insurance | 27 | 675 | 20 |
Gain on sales of securities | 277 | ||
Other | 1,790 | 1,608 | 2,080 |
Total noninterest income | 10,111 | 9,688 | 9,922 |
Noninterest expense: | |||
Salaries and employee benefits | 55,331 | 51,862 | 50,927 |
Occupancy and equipment | 9,639 | 9,038 | 8,018 |
Professional fees | 5,015 | 5,901 | 5,338 |
Other | 24,874 | 26,276 | 25,228 |
Total noninterest expense | 94,859 | 93,077 | 89,511 |
Income before income taxes | 94,366 | 65,870 | 49,068 |
Income tax expense | 27,811 | 18,170 | 13,769 |
Net income | $ 66,555 | $ 47,700 | $ 35,299 |
Earnings per common share: | |||
Basic (in dollars per share) | $ 1.10 | $ 0.79 | $ 0.59 |
Diluted (in dollars per share) | $ 1.09 | $ 0.79 | $ 0.59 |
Gain on the disposition of foreclosed assets | |||
Noninterest income: | |||
Service charges and fees on deposit accounts | $ 791 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 66,555 | $ 47,700 | $ 35,299 |
Other comprehensive income (loss): | |||
Change in net unrealized holding (losses) gains on available-for-sale securities and I/O strips | (19,079) | (2,953) | 3,553 |
Deferred income taxes | 5,532 | 1,177 | (1,031) |
Change in net unamortized unrealized gain on securities available-for- sale that were reclassified to securities held-to-maturity | (371) | (52) | |
Deferred income taxes | 110 | 15 | |
Reclassification adjustment for gains realized in income | (277) | ||
Deferred income taxes | 82 | ||
Change in unrealized (losses) gains on securities and I/O strips, net of deferred income taxes | (13,547) | (2,037) | 2,290 |
Change in net pension and other benefit plan liability adjustment | 9,909 | 2,219 | (4,036) |
Deferred income taxes | (2,222) | (461) | 807 |
Change in pension and other benefit plan liability, net of deferred income taxes | 7,687 | 1,758 | (3,229) |
Other comprehensive (loss) | (5,860) | (279) | (939) |
Total comprehensive income | $ 60,695 | $ 47,421 | $ 34,360 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Retained Earnings Adjustment | Retained Earnings | Accumulated Other Comprehensive Loss | Adjustment | Total |
Balance at Dec. 31, 2019 | $ 489,745 | $ 96,741 | $ (9,778) | $ 576,708 | ||
Balance (in shares) at Dec. 31, 2019 | 59,368,156 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net income | 35,299 | 35,299 | ||||
Other comprehensive loss | (939) | (939) | ||||
Issuance of restricted stock awards, net (in shares) | 168,117 | |||||
Amortization of restricted stock awards, net of forfeitures and taxes | $ 1,689 | 1,689 | ||||
Cash dividend declared | (31,079) | (31,079) | ||||
Stock option expense, net of forfeitures | 559 | 559 | ||||
Stock options exercised | $ 1,714 | 1,714 | ||||
Stock options exercised (in shares) | 381,184 | |||||
Balance at Dec. 31, 2020 | $ 493,707 | $ (6,062) | 94,899 | (10,717) | $ (6,062) | 577,889 |
Balance (in shares) at Dec. 31, 2020 | 59,917,457 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net income | 47,700 | 47,700 | ||||
Other comprehensive loss | (279) | (279) | ||||
Issuance of restricted stock awards, net (in shares) | 152,967 | |||||
Amortization of restricted stock awards, net of forfeitures and taxes | $ 1,940 | 1,940 | ||||
Cash dividend declared | (31,270) | (31,270) | ||||
Stock option expense, net of forfeitures and taxes | 579 | 579 | ||||
Stock options exercised | $ 1,469 | 1,469 | ||||
Stock options exercised (in shares) | 269,413 | |||||
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 | 66,555 | 66,555 | ||||
Other comprehensive loss | (5,860) | (5,860) | ||||
Issuance of restricted stock awards, net (in shares) | 207,006 | |||||
Amortization of restricted stock awards, net of forfeitures and taxes | $ 2,583 | 2,583 | ||||
Cash dividend declared | (31,495) | (31,495) | ||||
Stock option expense, net of forfeitures and taxes | 595 | 595 | ||||
Stock options exercised | $ 2,050 | 2,050 | ||||
Stock options exercised (in shares) | 305,880 | |||||
Balance at Dec. 31, 2022 | $ 502,923 | $ 146,389 | $ (16,856) | $ 632,456 | ||
Balance (in shares) at Dec. 31, 2022 | 60,852,723 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 12 Months Ended | |||
Jan. 26, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | ||||
Cash dividend declared per share (in dollars per share) | $ 0.13 | $ 0.52 | $ 0.52 | $ 0.52 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 66,555,000 | $ 47,700,000 | $ 35,299,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Amortization of discounts and premiums on securities | (953,000) | 3,649,000 | 3,747,000 |
Gain on sale of securities available-for-sale | (277,000) | ||
Gain on sale of SBA loans | (491,000) | (1,718,000) | (839,000) |
Proceeds from sale of SBA loans originated for sale | 7,689,000 | 18,324,000 | 11,154,000 |
SBA loans originated for sale | (7,767,000) | (17,274,000) | (10,962,000) |
Loss on the disposition of foreclosed assets | (791,000) | ||
Provision for (recapture of) credit losses on loans | 766,000 | (3,134,000) | 13,233,000 |
Increase in cash surrender value of life insurance | (1,925,000) | (1,838,000) | (1,845,000) |
Depreciation and amortization | 1,121,000 | 1,072,000 | 951,000 |
Amortization of other intangible assets | 2,635,000 | 2,996,000 | 3,751,000 |
Stock option expense, net | 595,000 | 579,000 | 559,000 |
Amortization of restricted stock awards, net | 2,583,000 | 1,940,000 | 1,689,000 |
Amortization of subordinated debt issuance costs | 172,000 | 185,000 | 186,000 |
Gain on proceeds from company-owned life insurance | (27,000) | (675,000) | (20,000) |
Effect of changes in: | |||
Accrued interest receivable and other assets | 978,000 | 6,127,000 | 8,101,000 |
Accrued interest payable and other liabilities | (2,078,000) | (1,084,000) | (6,641,000) |
Net cash provided by operating activities | 69,853,000 | 56,849,000 | 57,295,000 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of securities available-for-sale | (425,721,000) | ||
Purchase of securities held-to-maturity | (146,548,000) | (474,017,000) | (30,916,000) |
Maturities/paydowns/calls of securities available-for-sale | 21,881,000 | 129,191,000 | 114,662,000 |
Maturities/paydowns/calls of securities held-to-maturity | 88,394,000 | 110,823,000 | 97,365,000 |
Proceeds from sales of securities available-for-sale | 56,598,000 | ||
Proceeds from the disposition of foreclosed assets | 791,000 | ||
Purchase of mortgage loans | (185,426,000) | (405,752,000) | |
Net change in loans | (21,862,000) | (60,289,000) | (85,646,000) |
Changes in Federal Home Loan Bank stock and other investments | (18,000) | 1,018,000 | (3,680,000) |
Purchase of premises and equipment | (783,000) | (252,000) | (3,160,000) |
Proceeds from redemption of company-owned life insurance | 596,000 | 2,447,000 | 369,000 |
Net cash (used in) provided by investing activities | (669,487,000) | (696,831,000) | 146,383,000 |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Net change in deposits | (369,808,000) | 844,926,000 | 499,718,000 |
Net change in short-term borrowings | (328,000) | ||
Exercise of stock options | 2,050,000 | 1,469,000 | 1,714,000 |
Payment of cash dividends | (31,495,000) | (31,270,000) | (31,079,000) |
Redemption of subordinated debt | (40,000,000) | ||
Issuance of subordinated debt, net of issuance costs | 39,274,000 | ||
Net cash (used-in) provided by financing activities | (399,979,000) | 815,125,000 | 470,025,000 |
Net (decrease) increase in cash and cash equivalents | (999,613,000) | 175,143,000 | 673,703,000 |
Cash and cash equivalents, beginning of period | 1,306,216,000 | 1,131,073,000 | 457,370,000 |
Cash and cash equivalents, end of period | 306,603,000 | 1,306,216,000 | 1,131,073,000 |
Supplemental disclosures of cash flow information: | |||
Interest paid | 8,654,000 | 7,014,000 | 8,558,000 |
Income taxes paid, net | 25,175,000 | 15,372,000 | 10,640,000 |
Supplemental schedule of non-cash activity: | |||
Recording of right to use assets in exchange for lease obligations | 2,736,000 | $ 2,977,000 | $ 26,654,000 |
Transfer of loans held-for-sale to loan portfolio | $ 480,000 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | HERITAGE COMMERCE CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1) Summary of Significant Accounting Policies Description of Business and Basis of Presentation Heritage Commerce Corp (“HCC”) operates as a registered bank holding company for its wholly-owned subsidiary Heritage Bank of Commerce (“HBC” or the “Bank”), collectively referred to as the “Company”. HBC was incorporated on November 23, 1993 and commenced operations on June 8, 1994. HBC is a California state chartered bank which offers a full range of commercial and personal banking services to residents and the business/professional community 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. Bay View Funding’s primary business operation is purchasing and collecting factored receivables. Factored receivables are receivables that have been transferred by the originating organization and typically have not been subject to previous collection efforts. In a factoring transaction Bay View Funding directly purchases the receivables generated by its clients at a discount to their face value. The transactions are structured to provide the clients with immediate working capital when there is a mismatch between payments to the client for a good and service and the payment of operating costs incurred to provide such good or service. The consolidated financial statements are prepared in accordance with accounting policies generally accepted in the United States of America and general practices in the banking industry. The financial statements include the accounts of the Company. All inter-company accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, amounts due from banks, amounts held at the Federal Reserve Bank, and Federal funds sold. In response to the COVID pandemic, the Federal Reserve lowered the reserve requirement ratios to 0% effective March 26, 2020, and therefore, the Bank had no required reserve balance at December 31, 2022 and 2021. one Cash Flows Net cash flows are reported for customer loan and deposit transactions, notes payable, repurchase agreements and other short-term borrowings. Securities The Company classifies its securities as either available-for-sale or held-to-maturity at the time of purchase. Debt securities are classified as held-to-maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities not classified as held-to-maturity are classified as available-for-sale. Securities available-for-sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of taxes. Interest income includes amortization of purchase premiums or discounts. Premiums and discounts are amortized, or accreted, over the life of the related security, or the earliest call date for callable securities purchased at a premium, as an adjustment to income using a method that approximates the interest method. Realized gains and losses are recorded on the trade date and determined using the specific identification method for the cost of securities sold. Allowance for Credit Losses – Available-for-sale Securities Changes in the allowance for credit losses are recorded as a provision (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Allowance for Credit Losses – Held-to-Maturity Securities Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type and bond rating. The estimate of expected credit losses considers historical loss information that is adjusted for current conditions and reasonable and supportable forecasts. Management classifies the held-to-maturity portfolio in the following major security types: Agency mortgage-backed and municipal securities. All the mortgage-backed securities held by the Company are issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies, and have a long history of no credit losses. Other securities are comprised primarily of tax exempt municipal securities. At December 31, 2022, all of these securities are rated A-Aaa (defined as investment grade). The issuers in these securities are primarily municipal entities and school districts. Loan Sales and Servicing The Company holds for sale the conditionally guaranteed portion of certain loans guaranteed by the Small Business Administration or the U.S. Department of Agriculture (collectively referred to as “SBA loans”). These loans are carried at the lower of aggregate cost or fair value. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings. Gains or losses on SBA loans held-for-sale are recognized upon completion of the sale, based on the difference between the selling price and the carrying value of the related loan sold. SBA loans are sold with servicing retained. Servicing assets recognized separately upon the sale of SBA loans consist of servicing rights and, for loans sold prior to 2009, interest-only strip receivables (“I/O strips”). The Company accounts for the sale and servicing of SBA loans based on the financial and servicing assets it controls and liabilities it has incurred, reversing recognition of financial assets when control has been surrendered, and reversing recognition of liabilities when extinguished. Servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sale of loans. Servicing rights are amortized in proportion to and over the period of net servicing income and are assessed for impairment on an ongoing basis. Impairment is determined by stratifying the servicing rights based on interest rates and terms. Any servicing assets in excess of the contractually specified servicing fees are reclassified at fair value as an I/O strip receivable and treated like an available for sale security. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance. The servicing rights, net of any required valuation allowance, and I/O strip receivable are included in other assets on the consolidated balance sheets. Servicing income, net of amortization of servicing rights, is recognized as noninterest income. The initial fair value of I/O strip receivables is amortized against interest income on loans. Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at the principal amount outstanding, net of deferred loan origination fees and costs on originated loans, or unamortized premiums or discounts on purchased or acquired loans, and an allowance for credit losses on loans. Accrued interest receivable is excluded from the estimate of credit losses. Interest on loans is accrued on the unpaid principal balance and is credited to income using the effective yield interest method. Interest on purchased or acquired loans and the accretion (amortization) of the related purchase discount (premium) is also credited to income using the effective yield interest method. A loan portfolio segment is defined as the level at which the Company uses a systematic methodology to determine the allowance for credit losses on loans. A loan portfolio class is defined as a group of loans having similar risk characteristics and methods for monitoring and assessing risk. For all loan classes, when a loan is classified as nonaccrual, the accrual of interest is discontinued, any accrued and unpaid interest is reversed, and the amortization of deferred loan fees and costs is discontinued. For all loan classes, loans are classified as nonaccrual when the payment of principal or interest is 90 days past due, unless the loan is well secured and in the process of collection. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for credit loss and individually evaluated loans. In certain circumstances, loans that are under 90 days past due may also be classified as nonaccrual. Any interest or principal payments received on nonaccrual loans are applied toward reduction of principal. Nonaccrual loans generally are not returned to performing status until the obligation is brought current, the loan has performed in accordance with the contract terms for a reasonable period of time, and the ultimate collectability of the contractual principal and interest is no longer in doubt. Non-refundable loan fees and direct origination costs are deferred and recognized over the expected lives of the related loans using the effective yield interest method. Allowance for Credit Losses on Loans On January 1, 2020, the Company adopted the current expected credit loss (“CECL”) model under Accounting Standards Update (“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 loans. The risk characteristics of each loan portfolio segment are as follows: Commercial Commercial loans primarily rely on the identified cash flows of the borrower for repayment and secondarily on the underlying collateral provided by the borrower. However, the cash flows of the borrowers may not be as expected and the collateral securing these loans may vary in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable, inventory or equipment and may incorporate a personal guarantee; however, some loans may be unsecured. Included in commercial loans are $1,166,000 of SBA Paycheck Protection Program (“PPP”) loans and $79,263,000 of Bay View Funding factored receivables at December 31, 2022, compared to $88,726,000 and $53,229,000, respectively 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 by the value of the property securing the loan which can be impacted by changes in economic conditions such as the unemployment rate and property values. 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 and are acquired. Consumer and Other Consumer and other loans are secured by personal property or are unsecured and rely primarily on the income of the borrower for repayment and secondarily on the collateral value for secured loans. Borrower income and collateral value can vary dependent on economic conditions. Loan Commitments and Related Financial Instruments Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded. The notional amount of these commitments is not reflected in the consolidated financial statement until they are funded. The Company maintains an allowance for credit losses on unfunded commercial lending commitments and letters of credit to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the allowance for credit losses for loans, modified to take into account the probability of a drawdown on the commitment. The allowance for credit losses on unfunded loan commitments is classified as a liability account on the balance sheet and is adjusted as a provision for credit loss expense included in other noninterest expense. Federal Home Loan Bank and Federal Reserve Bank Stock As a member of the Federal Home Loan Bank (“FHLB”) system, the Bank is required to own common stock in the FHLB based on the Bank’s level of borrowings and outstanding FHLB advances. FHLB stock is carried at cost and classified as a restricted security. Both cash and stock dividends from the FHLB are reported as income. As a member of the Federal Reserve Bank (“FRB”) of San Francisco, the Bank is required to own stock in the FRB of San Francisco based on a specified ratio relative to our capital. FRB stock is carried at cost and may be sold back to the FRB at its carrying value. Cash dividends received from the FRB are reported as income. Company-Owned Life Insurance and Split-Dollar Life Insurance Benefit Plan The Company has purchased life insurance policies on certain directors and officers. Company-owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for charges or other amounts due that are probable at settlement. The purchased insurance is subject to split-dollar insurance agreements with the insured participants, which continues after the participant’s employment and retirement. Accounting guidance requires that a liability be recorded primarily over the participant’s service period when a split-dollar life insurance agreement continues after a participant’s employment or retirement. The required accrued liability is based on either the post-employment benefit cost for the continuing life insurance or the future death benefit depending on the contractual terms of the underlying agreement. Premises and Equipment Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Depreciation and amortization are computed on the straight-line basis over the lesser of the respective lease terms or estimated useful lives. The Company owns one building which is being depreciated over 40 years. Furniture, equipment and improvements depreciated five Operating Lease Right of Use Assets and Liabilities The Company determines if a lease is present at the inception of an agreement. Operating leases are capitalized at commencement and are discounted using the Company’s FHLB borrowing rate for a similar term borrowing unless the lease defines an implicit rate within the contract. The operating lease right of use assets represent the Company’s right to use an underlying asset for the lease term, and the operating lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease right of use assets and operating lease liabilities are recognized on the lease commencement date based on the present value of lease payments over the lease term. No significant judgments or assumptions were involved in developing the estimated operating lease liabilities as the Company’s operating lease liabilities largely represent future rental expenses associated with operating leases and the borrowing rates are based on publicly available interest rates. Business Combinations The Company accounts for acquisitions of businesses using the acquisition method of accounting. Under the acquisition method, assets acquired and liabilities assumed are recorded at their estimated fair values at the date of acquisition. Management utilizes various valuation techniques including discounted cash flow analyses to determine these fair values. Any excess of the purchase price over amounts allocated to the acquired assets, including identifiable intangible assets, and liabilities assumed is recorded as goodwill. Goodwill and Other Intangible Assets Goodwill resulting from business combinations represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill is assessed at least annually for impairment and any such impairment is recognized in the period identified. The Company’s annual goodwill impairment testing date is November 30. Other intangible assets consist of a core deposit intangible, a below market lease, an above market lease liability, a customer relationship and brokered relationship intangible assets. They are initially measured at fair value and then are amortized over their estimated useful lives. The core deposits intangible assets from the acquisitions are being amortized on an accelerated method over ten years. The below market value lease intangible assets are being amortized on the straight line method over three years. The above market lease adjustment is being amortized on the straight line method over 60 months. The customer relationship and brokered relationship intangible assets are being amortized over ten years. Foreclosed Assets Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through operations. Operating costs after acquisition are expensed. Gains and losses on disposition are included in noninterest expense. There were no foreclosed assets at December 31, 2022 and 2021. Retirement Plans Expenses for the Company’s non-qualified, unfunded defined benefits plan consists of service and interest cost and amortization of gains and losses not immediately recognized. Employee 401(k) and profit sharing plan expense is the amount of matching contributions. Deferred compensation and supplemental retirement plan expense allocates the benefits over years of service. Loss Contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. The Company’s accounting policy for legal costs related to loss contingencies is to accrue for the probable fees that can be reasonably estimated. The Company’s accounting policy for uncertain recoveries is to recognize the anticipated recovery when realization is deemed probable. Income Taxes The Company files consolidated Federal and combined and separate state income tax returns. Income tax expense is the total of the current year income tax payable or refunded, the change in deferred tax assets and liabilities, and low income housing investment losses, net of tax benefits received. Some items of income and expense are recognized in different years for tax purposes when applying generally accepted accounting principles, leading to timing differences between the Company’s actual 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. Realization of the Company’s deferred tax assets is primarily dependent upon the Company generating sufficient taxable income to obtain benefit from the reversal of net deductible temporary differences and utilization of tax credit carryforwards for Federal and California state income tax purposes. The amount of deferred tax assets considered realizable is subject to adjustment in future periods based on estimates of future taxable income. Under generally accepted accounting principles, a valuation allowance is required to be recognized 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. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. Stock-Based Compensation Compensation cost is recognized for stock options and restricted stock awards issued to employees and directors, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. Compensation cost recognized reflects estimated forfeitures, adjusted as necessary for actual forfeitures. Comprehensive Income (Loss) Total comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to gains and losses that are included in comprehensive income (loss) but are excluded from net income (loss) because they have been recorded directly in equity, net of tax, under the provisions of certain accounting guidance. The Company’s sources of other comprehensive income (loss) are unrealized gains and losses on securities available-for-sale, and I/O strips, which are treated like available-for-sale securities, and the liabilities related to the Company’s defined benefit pension plan and the split-dollar life insurance benefit plan. Reclassification adjustments result from gains or losses that were realized and included in net income (loss) of the current period that also had been included in other comprehensive income as unrealized holding gains and losses. Segment Reporting HBC is a commercial bank serving customers located in Alameda, Contra Costa, Marin, San Benito, San Francisco, San Mateo, and Santa Clara counties of California. Bay View Funding provides business essential working capital factoring financing to various industries throughout the United States. No customer accounts for more than 10 percent of revenue for HBC or the Company. With the previous acquisition of Bay View Funding, the Company has two reportable segments consisting of Banking and Factoring. Reclassifications Certain items in the consolidated financial statements for the years ended December 31, 2021 and 2020 were reclassified to conform to the 2022 presentation. These reclassifications did not affect previously reported net income or shareholders’ equity. 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 not - also provides numerous optional expedients for derivative accounting. In December 2022, to ensure relief in Topic 848 covers the period of time during which a significant number of modifications may take place, the FASB issued ASU No. 2022-06, which defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply relief in Topic 848. Once elected for a Topic or an Industry Subtopic within the Codification, the amendments in this ASU must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic. The Company does 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, however, the impact is not expected to be material. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 12 Months Ended |
Dec. 31, 2022 | |
Accumulated Other Comprehensive Income ("AOCI") | |
Accumulated Other Comprehensive Income ("AOCI") | 2) Accumulated Other Comprehensive Income (“AOCI”) The following table reflects the changes in AOCI by component for the periods indicated: Year Ended December 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 (13,547) — 7,395 (6,152) Amounts reclassified from other comprehensive income, net of taxes — — 292 292 Net current period other comprehensive income (loss), net of taxes (13,547) — 7,687 (5,860) Ending balance December 31, 2022, net of taxes $ (11,394) $ — $ (5,462) $ (16,856) Beginning balance January 1, 2021, net of taxes $ 3,929 $ 261 $ (14,907) $ (10,717) Other comprehensive (loss) before reclassification, net of taxes (1,776) — 1,308 (468) Amounts reclassified from other comprehensive income (loss), net of taxes — (261) 450 189 Net current period other comprehensive income (loss), net of taxes (1,776) (261) 1,758 (279) Ending balance December 31, 2021, net of taxes $ 2,153 $ — $ (13,149) $ (10,996) (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 13—Benefit Plans) and includes split-dollar life insurance benefit plan. Amounts Reclassified from AOCI Year Ended December 31, Affected Line Item Where Details About AOCI Components 2022 2021 2020 Net Income is Presented (Dollars in thousands) Unrealized gains on available-for-sale securities and I/O strips $ — $ — $ 277 Gain on sales of securities — — (82) Income tax expense — — 195 Net of tax Amortization of unrealized gain on securities available-for-sale that were reclassified to securities held-to-maturity $ — $ 371 52 Interest income on taxable securities — (110) (15) Income tax expense — 261 37 Net of tax Amortization of defined benefit pension plan items (1) Prior transition obligation and actuarial losses (2) 41 4 60 Prior service cost and actuarial losses (3) (455) (643) (387) (414) (639) (327) Other noninterest expense 122 189 97 Income tax expense (292) (450) (230) Net of tax Total reclassification from AOCI for the period $ (292) $ (189) $ 2 (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 13 — 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 | 12 Months Ended |
Dec. 31, 2022 | |
Securities | |
Securities | 3) Securities The amortized cost and estimated fair value of securities at year-end were as follows: Gross Gross Allowance Estimated Amortized Unrealized Unrealized for Credit Fair December 31, 2022 Cost Gains (Losses) Losses Value (Dollars in thousands) Securities available-for-sale: U.S. Treasury $ 428,797 $ — $ (10,323) $ — $ 418,474 Agency mortgage-backed securities 76,916 — (5,794) — 71,122 Total $ 505,713 $ — $ (16,117) $ — $ 489,596 Gross Gross Estimated Allowance Amortized Unrecognized Unrecognized Fair for Credit December 31, 2022 Cost Gains (Losses) Value Losses (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 677,381 $ 235 $ (99,977) $ 577,639 $ — Municipals - exempt from Federal tax 37,623 9 (819) 36,813 (14) Total $ 715,004 $ 244 $ (100,796) $ 614,452 $ (14) 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 year end, aggregated by investment category and length of time that individual securities have been in an unrealized loss position are as follows: Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2022 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: U.S. Treasury $ 418,474 $ (10,323) $ — $ — $ 418,474 $ (10,323) Agency mortgage-backed securities 71,122 (5,794) — — 71,122 (5,794) Total $ 489,596 $ (16,117) $ — $ — $ 489,596 $ (16,117) Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2022 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 136,264 $ (12,866) $ 429,257 $ (87,111) $ 565,521 $ (99,977) Municipals — exempt from Federal tax 31,007 (819) — — 31,007 (819) Total $ 167,271 $ (13,685) $ 429,257 $ (87,111) $ 596,528 $ (100,796) 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 December 31, 2022, the Company held 463 securities (173 available-for-sale and 290 held-to-maturity), of which 439 had fair values below amortized cost. At December 31, 2022, there were $418,474,000 of U.S. Treasury securities available-for-sale, $71,122,000 of agency mortgage-backed securities available-for-sale, $136,264,000 of agency mortgage-backed securities held-to-maturity, and $31,007,000 of municipal securities held-to-maturity, carried with an unrealized loss for less than 12 months, and $429,257,000 of agency mortgage-backed securities held-to-maturity, carried with an unrealized loss for 12 months or more. The total unrealized loss for securities less than 12 months was ($29,802,000) and the total unrealized loss for securities carried for 12 months or more was ($87,111,000) at December 31, 2022. The unrealized losses were due to higher interest rates at period end compared to when the securities were 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. The Company does not consider these securities to have credit-related losses at December 31, 2022. The proceeds from sales of securities and the resulting gains and losses are listed below: 2022 2021 2020 (Dollars in thousands) Proceeds $ — $ — $ 56,598 Gross gains — — 277 Gross losses — — — The amortized cost and fair value of debt securities as of December 31, 2022, by contractual maturity, are shown below. The expected maturities will differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately. Available-for-sale Amortized Estimated Cost Fair Value (Dollars in thousands) Due after 3 months through one year $ 46,065 $ 45,736 Due after one through five years 382,732 372,738 Agency mortgage-backed securities 76,916 71,122 Total $ 505,713 $ 489,596 Held-to-maturity Amortized Estimated Cost Fair Value (Dollars in thousands) Due after three months through one year $ 554 $ 553 Due after one through five years 7,681 7,613 Due after five through ten years 27,459 26,745 Due after ten years 1,929 1,902 Agency mortgage-backed securities 677,381 577,639 Total $ 715,004 $ 614,452 Securities with amortized cost of $66,272,000 and $42,473,000 as of December 31, 2022 and 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 year ended December 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 (29) Ending balance December 31, 2022 $ 14 For the year ended December 31, 2022, there was a reduction of $29,000 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. |
Loans and Allowance for Credit
Loans and Allowance for Credit Losses on Loans | 12 Months Ended |
Dec. 31, 2022 | |
Loans and Allowance for Credit Losses on Loans | |
Loans and Allowance for Credit Losses on Loans | 4) Loans and Allowance for Credit Losses on Loans The allowance for credit losses on loans was calculated by pooling loans of similar credit risk characteristics and credit monitoring procedures. The loan portfolio is classified into eight segments of loans - commercial, commercial real estate – owner occupied, commercial real estate – non-owner occupied, land and construction, home equity, multifamily, residential mortgage and consumer and other. See Note 1 – Summary of Significant Accounting Polices - Allowance for Credit Losses on Loans Loans by portfolio segment and the allowance for credit losses on loans were as follows for the periods indicated: December 31, December 31, 2022 2021 (Dollars in thousands) Loans held-for-investment: Commercial $ 533,915 $ 682,834 Real estate: CRE - owner occupied 614,663 595,934 CRE - non-owner occupied 1,066,368 902,326 Land and construction 163,577 147,855 Home equity 120,724 109,579 Multifamily 244,882 218,856 Residential mortgages 537,905 416,660 Consumer and other 17,033 16,744 Loans 3,299,067 3,090,788 Deferred loan fees, net (517) (3,462) Loans, net of deferred fees 3,298,550 3,087,326 Allowance for credit losses on loans (47,512) (43,290) Loans, net $ 3,251,038 $ 3,044,036 Changes in the allowance for credit losses on loans were as follows: Year Ended December 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 (434) — — — — — — — (434) Recoveries 427 15 — — 105 — — 3,343 3,890 Net recoveries (7) 15 — — 105 — — 3,343 3,456 Provision for (recapture of) credit losses on loans (1,790) (2,218) 5,010 1,110 (303) 570 1,775 (3,388) 766 End of period balance $ 6,617 $ 5,751 $ 22,135 $ 2,941 $ 666 $ 3,366 $ 5,907 $ 129 $ 47,512 Year Ended December 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 (520) — — — — — — — (520) Recoveries 1,354 16 — 884 93 — — 197 2,544 Net (charge-offs) recoveries 834 16 — 884 93 — — 197 2,024 Provision for (recapture of) credit losses on loans (4,007) (622) 709 (1,562) (526) (8) 3,189 (307) (3,134) End of period balance $ 8,414 $ 7,954 $ 17,125 $ 1,831 $ 864 $ 2,796 $ 4,132 $ 174 $ 43,290 Year Ended December 31, 2020 Owner Non-owner Land & Home Multi- Residential Consumer Commercial Occupied Occupied Construction Equity Family Mortgage and Other Total (Dollars in thousands) Beginning of period balance $ 10,453 $ 3,825 $ 3,760 $ 2,621 $ 2,244 $ 57 $ 243 $ 82 $ 23,285 Adoption of Topic 326 (3,663) 3,169 7,912 (1,163) (923) 1,196 435 1,607 8,570 Balance at adoption on January 1, 2020 6,790 6,994 11,672 1,458 1,321 1,253 678 1,689 31,855 Charge-offs (1,776) — — — — — — (104) (1,880) Recoveries 998 1 — 70 93 — — 30 1,192 Net (charge-offs) recoveries (778) 1 — 70 93 — — (74) (688) Provision for (recapture of) credit losses on loans 5,575 1,565 4,744 981 (117) 1,551 265 (1,331) 13,233 End of period balance $ 11,587 $ 8,560 $ 16,416 $ 2,509 $ 1,297 $ 2,804 $ 943 $ 284 $ 44,400 The following table presents the amortized cost basis of nonaccrual loans and loans past due over 90 days and still accruing at the periods indicated: December 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 $ 318 $ 324 $ 349 $ 991 Real estate: CRE - Non-Owner Occupied — — 1,336 1,336 Home equity 98 — — 98 Total $ 416 $ 324 $ 1,685 $ 2,425 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 presents the aging of past due loans by class for the periods indicated: December 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 $ 7,236 $ 2,519 $ 703 $ 10,458 $ 523,457 $ 533,915 Real estate: CRE - Owner Occupied 252 — — 252 614,411 614,663 CRE - Non-Owner Occupied — — 1,336 1,336 1,065,032 1,066,368 Land and construction — — — — 163,577 163,577 Home equity — 98 — 98 120,626 120,724 Multifamily — — — — 244,882 244,882 Residential mortgages 4,202 720 — 4,922 532,983 537,905 Consumer and other — — — 17,033 17,033 Total $ 11,690 $ 3,337 $ 2,039 $ 17,066 $ 3,282,001 $ 3,299,067 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 $17,066,000 and $5,015,000 at December 31, 2022 and December 31, 2021, respectively, of which $479,000 and $1,258,000 were on nonaccrual. At December 31, 2022, there were also $261,000 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. Substandard. Substandard-Nonaccrual. Doubtful. Loss. 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 December 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 December 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, and plus any loan purchase premiums. The loan categories are based on the loan segmentation in the Company's CECL reserve methodology based on loan purpose and type. Revolving Loans Term Loans Amortized Cost Basis by Originated Period as of December 31, 2022 Amortized Cost 2022 2021 2020 2019 2018 Prior Periods Basis Total (Dollars in thousands) Commercial: Pass $ 102,969 $ 36,752 $ 24,406 $ 19,272 $ 12,089 $ 21,127 $ 293,546 $ 510,161 Special Mention 3,408 1,060 192 1,123 - 6,031 5,551 17,365 Substandard 4 - - 145 - 102 5,496 5,747 Substandard-Nonaccrual - 279 - - 330 33 - 642 Total 106,381 38,091 24,598 20,540 12,419 27,293 304,593 533,915 CRE - Owner Occupied: Pass 92,689 116,266 75,007 59,887 58,180 194,584 8,758 605,371 Special Mention - 2,033 867 1,120 - 4,410 - 8,430 Substandard - 660 - - 193 9 - 862 Substandard-Nonaccrual - - - - - - - - Total 92,689 118,959 75,874 61,007 58,373 199,003 8,758 614,663 CRE - Non-Owner Occupied: Pass 239,556 278,051 31,848 101,854 63,905 337,048 3,245 1,055,507 Special Mention - - - - - 4,883 - 4,883 Substandard - - - - - 5,978 - 5,978 Substandard-Nonaccrual - - - - - - - - Total 239,556 278,051 31,848 101,854 63,905 347,909 3,245 1,066,368 Land and construction: Pass 62,241 72,847 22,459 6,030 - - - 163,577 Special Mention - - - - - - - - Substandard - - - - - - - - Substandard-Nonaccrual - - - - - - - - Total 62,241 72,847 22,459 6,030 - - - 163,577 Home equity: Pass - - - - - 44 117,950 117,994 Special Mention - - - - - - 2,346 2,346 Substandard - - - - - 144 142 286 Substandard-Nonaccrual - 98 - - - - 98 Total - 98 - - - 188 120,438 120,724 Multifamily: Pass 42,111 69,824 4,871 42,412 15,356 66,380 180 241,134 Special Mention - - 657 771 - 2,320 - 3,748 Substandard - - - - - - - - Substandard-Nonaccrual - - - - - - - - Total 42,111 69,824 5,528 43,183 15,356 68,700 180 244,882 Residential mortgage: Pass 191,907 296,270 1,068 6,788 2,724 33,290 - 532,047 Special Mention - - - 1,058 1,482 2,387 - 4,927 Substandard - - - - - 931 - 931 Substandard-Nonaccrual - - - - - - - - Total 191,907 296,270 1,068 7,846 4,206 36,608 - 537,905 Consumer and other: Pass 389 13 - - 1,364 1,283 13,647 16,696 Special Mention - 82 - 6 - - 249 337 Substandard - - - - - - - - Substandard-Nonaccrual - - - - - - - - Total 389 95 - 6 1,364 1,283 13,896 17,033 Total loans $ 735,274 $ 874,235 $ 161,375 $ 240,466 $ 155,623 $ 680,984 $ 451,110 $ 3,299,067 Risk Grades: Pass $ 731,862 $ 870,023 $ 159,659 $ 236,243 $ 153,618 $ 653,756 $ 437,326 $ 3,242,487 Special Mention 3,408 3,175 1,716 4,078 1,482 20,031 8,146 42,036 Substandard 4 660 - 145 193 7,164 5,638 13,804 Substandard-Nonaccrual - 377 - - 330 33 - 740 Grand Total $ 735,274 $ 874,235 $ 161,375 $ 240,466 $ 155,623 $ 680,984 $ 451,110 $ 3,299,067 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 at December 31, 2022 and December 31, 2021 was $324,000 and $1,028,000, respectively, and were secured by business assets. 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 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 December 31, 2022 was less than $1,000. 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. There were no specific reserves established with respect to these loans as of December 31, 2022, and approximately $290,000 in specific reserves were established with respect to these loans as of December 31, 2021. As of December 31, 2022 and December 31, 2021 respectively, the Company had no additional amounts committed on any loan classified as a troubled debt restructuring. There were no loans modified as a troubled debt restructuring during the year ended December 31, 2022. There was one new loan with total recorded investment of $3,000 that was modified as a troubled debt restructuring during the year ended December 31, 2021. The following table presents loans by class modified as troubled debt restructurings for the periods indicated: During the Year Ended December 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 years ended December 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. |
Loan Servicing
Loan Servicing | 12 Months Ended |
Dec. 31, 2022 | |
Loan Servicing | |
Loan Servicing | 5) Loan Servicing At December 31, 2022, 2021, and 2020, the Company serviced SBA loans sold to the secondary market of approximately $64,819,000, $73,256,000, and $77,973,000, respectively. Servicing assets represent the servicing spread generated from the sold guaranteed portions of SBA loans. The weighted average servicing rate for all loans serviced was 1.10%, 1.11%, and 1.12% at December 31, 2022, 2021, and 2020, respectively. Servicing rights are included in “accrued interest receivable and other assets” on the consolidated balance sheets. Activity for loan servicing rights follows: 2022 2021 2020 (Dollars in thousands) Beginning of year balance $ 655 $ 531 $ 583 Additions 124 384 213 Amortization (230) (260) (265) End of year balance $ 549 $ 655 $ 531 There was no valuation allowance for servicing rights at December 31, 2022, 2021, and 2020, because the estimated fair value of the servicing rights was greater than the carrying value. The estimated fair value of loan servicing rights was $813,000, $1,101,000, and $1,172,000, at December 31, 2022, 2021, and 2020, respectively. The fair value of servicing rights at December 31, 2022, was estimated using a weighted average constant prepayment rate (“CPR”) assumption of 15.12%, and a weighted average discount rate assumption of 20.75%. The fair value of servicing rights at December 31, 2021, was estimated using a weighted average CPR assumption of 13.40%, and a weighted average discount rate assumption of 13.88%. The fair value of servicing rights at December 31, 2020, was estimated using a weighted average CPR assumption of 14.65%, and a weighted average discount rate assumption of 12.91%. The weighted average discount rate and CPR assumptions used to estimate the fair value of the I/O strip receivables are the same as for the servicing rights. Management reviews the key economic assumptions used to estimate the fair value of I/O strip receivables on a quarterly basis. The fair value of the I/O strip can be adversely impacted by a significant increase in either the prepayment speed of the portfolio or the discount rate. I/O strip receivables are included in “accrued interest receivable and other assets” on the consolidated balance sheets. Activity for I/O strip receivables follows: 2022 2021 2020 (Dollars in thousands) Beginning of year balance $ 221 $ 305 $ 503 Unrealized loss (69) (84) (198) End of year balance $ 152 $ 221 $ 305 |
Premises and Equipment
Premises and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Premises and Equipment | |
Premises and Equipment | 6) Premises and Equipment Premises and equipment at year-end were as follows: 2022 2021 (Dollars in thousands) Building $ 3,508 $ 3,508 Land 2,900 2,900 Furniture and equipment 13,812 13,041 Leasehold improvements 5,597 5,441 25,817 24,890 Accumulated depreciation and amortization (16,516) (15,251) Premises and equipment, net $ 9,301 $ 9,639 Depreciation and amortization expense was $1,121,000, $1,072,000, and $951,000, in 2022, 2021, and 2020, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Leases | 7) Leases As of December 31, 2022 and December 31, 2021, operating lease right-of-use (“ROU”) assets, included in other assets and lease liabilities liabilities The following table presents the quantitative information for the Company’s leases: Year Ended December 31, 2022 2021 (Dollars in thousands) Operating Lease Cost (Cost resulting from lease payments) $ 6,625 $ 6,533 Operating Lease - Operating Cash Flows (Fixed Payments) $ 4,948 $ 5,011 Operating Lease - ROU assets $ 33,031 $ 34,879 Operating Lease - Liabilities $ 33,031 $ 34,879 Weighted Average Lease Term - Operating Leases 6.60 years 7.37 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: (Dollars in thousands) 2023 $ 6,351 2024 6,006 2025 5,459 2026 4,903 2027 4,730 Thereafter 10,988 Total undiscounted cash flows 38,437 Discount on cash flows (5,406) Total lease liability $ 33,031 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | 8) Goodwill and Other Intangible Assets Goodwill At December 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 impairment test is required. The quantitative assessment identifies if a reporting unit fair value is less than its carrying value. If it is, then the Company will recognize goodwill impairment equal to the difference between the carrying amount of the reporting unit and its fair value, not to exceed the carrying amount of goodwill. The Company completed its annual goodwill impairment analysis as of November 30, 2022 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, 2022 annual impairment test were noted that would indicate it was more likely than not a goodwill impairment exists, for either the Company’s banking or factoring reporting units. The following table summarizes the carrying amount of goodwill by segment for the periods indicated: December 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: December 31, 2022 Gross Remaining Carrying Accumulated Carrying Amount Amortization Amount (Dollars in thousands) Core deposit intangibles $ 25,023 $ (14,429) $ 10,594 Customer relationship and brokered relationship intangibles 1,900 (1,551) 349 Below market leases 110 (20) 90 Total $ 27,033 $ (16,000) $ 11,033 December 31, 2021 Gross Remaining Carrying Accumulated Carrying Amount Amortization Amount (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 Estimated amortization expense for each of the next five years and thereafter is as follows: Customer & Below/ Core Brokered (Above) Total Deposit Relationship Market Amortization Year Intangible Intangible Lease Expense (Dollars in thousands) 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 $ 10,594 $ 349 $ 90 $ 11,033 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 December 31, 2022 and December 31, 2021. |
Deposits
Deposits | 12 Months Ended |
Dec. 31, 2022 | |
Deposits. | |
Deposits | 9) Deposits The following table presents the scheduled maturities of all time deposits for the periods indicated: (Dollars in thousands) 2023 $ 133,517 2024 8,513 2025 1,283 2026 274 2027 91 Thereafter 280 Total $ 143,958 Time deposits of $250,000 and over were $108,192,000 and $94,700,000 at December 31, 2022 and 2021, respectively. At December 31, 2022, Certificate of Deposit Account Registry Service (“CDARS”) deposits totaled $30,374,000 which were comprised of interest-bearing demand deposits of $26,861,000 and money market deposits of $192,000, (which have no scheduled maturity date, and therefore, are excluded from the table above), and time deposits of $3,321,000, (which are included in the table above). At December 31, 2021, CDARS deposits totaled $38,271,000, which were comprised of interest-bearing demand deposits of $30,858,000 and money market deposits of $1,013,000, and time deposits of $6,400,000. The CDARS program allows customers with deposits in excess of FDIC-insured limits to obtain full coverage on time deposits through a network of banks within the CDARS program. Deposits gathered through these programs are not considered brokered deposits under current regulatory reporting guidelines. Deposits from executive officers, directors, and their affiliates were $712,000 and $766,000 at December 31, 2022 and 2021, respectively. |
Borrowing Arrangements
Borrowing Arrangements | 12 Months Ended |
Dec. 31, 2022 | |
Borrowing Arrangements | |
Borrowing Arrangements | 10) Borrowing Arrangements Federal Home Loan Bank Borrowings, Federal Reserve Bank Borrowings, and Available Lines of Credit HBC maintains a collateralized line of credit with the FHLB of San Francisco. Under this line, the Company can borrow from the FHLB on a short-term (typically overnight) or long-term (over one year) basis. As of December 31, 2022, and December 31, 2021, HBC had no overnight borrowings from the FHLB. HBC had $254,243,000 of loans and $1,085,000 of securities pledged to the FHLB as collateral on a line of credit of $162,631,000 at December 31, 2022, none of which was outstanding. HBC had $280,748,000 of loans and $1,551,000 of securities and pledged to the FHLB as collateral on a line of credit of $205,631,000 at December 31, 2021, none of which was outstanding. HBC can also borrow from the FRB’s discount window. HBC had approximately $1,000,207,000 of loans pledged to the FRB as collateral on an available line of credit of approximately $676,878,000 at December 31, 2022, none of which was outstanding. HBC had approximately $1,008,601,000 of loans pledged to the FRB as collateral on an available line of credit of approximately $567,873,000 at December 31, 2021, none of which was outstanding. At December 31, 2022, HBC had Federal funds purchase arrangements available of $80,000,000. There were no Federal funds purchased outstanding at December 31, 2022 and 2021. HCC has a $20,000,000 line of credit with a correspondent bank, of which none was outstanding at December 31, 2022 and 2022. HBC may also utilize securities sold under repurchase agreements to manage our liquidity position. There were no securities sold under agreements to repurchase at December 31, 2022, and 2021. Subordinated Debt used the net proceeds of the Sub Debt due 2032 for general corporate purposes, including the repayment on June 1, 2022 of the Company’s $40,000,000 aggregate principal amount of 5.25% fixed-to-floating rate subordinated notes due June 1, 2027 (“Sub Debt due 2027”). The Sub Debt due 2032, net of unamortized issuance costs of $650,000, totaled $39,350,000 at December 31, 2022, and qualifies as Tier 2 capital for the Company under the guidelines established by the Federal Reserve Bank. The debt issuance costs are amortized on a straight line basis through the maturity date of the subordinated notes. On May 26, 2017, the Company completed an underwritten public offering of $40,000,000 aggregate principal amount of its Sub Debt due 2027. The Sub Debt due 2027 had a fixed interest rate of 5.25% per year through June 1, 2022. On June 1, 2022, the Company completed the redemption of all of its outstanding $40,000,000 of Sub Debt due 2027, prior to resetting to a floating rate. The Sub Debt due 2027 was redeemed pursuant to the terms of the Subordinated Indenture, as supplemented by the First Supplemental Indenture, each dated as of May 26, 2017, between the Company and Wilmington Trust, National Association, as Trustee, at the redemption price of 100% of its principal amount, plus accrued and unpaid interest of $1,100,000. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | 11) Income Taxes Income tax expense consisted of the following for the year ended December 31, as follows: 2022 2021 2020 (Dollars in thousands) Currently payable tax: Federal $ 18,994 $ 10,207 $ 9,630 State 8,798 7,988 5,828 Total currently payable 27,792 18,195 15,458 Deferred tax expense (benefit): Federal (1,237) 1,175 (932) State 1,256 (1,200) (757) Total deferred tax 19 (25) (1,689) Income tax expense $ 27,811 $ 18,170 $ 13,769 The effective tax rate differs from the Federal statutory rate for the years ended December 31, as follows: 2022 2021 2020 Statutory Federal income tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal tax benefit 8.4 % 8.1 % 8.2 % Low income housing credits, net of investment losses (0.2) % (0.3) % (0.5) % Increase in cash surrender value of life insurance (0.4) % (0.6) % (0.8) % Stock option/restricted stock windfall tax benefit (0.1) % (0.2) % 0.6 % Non-taxable interest income (0.2) % (0.5) % (0.8) % Split-dollar term insurance 0.0 % 0.1 % 0.1 % ISO stock exercise 0.0 % (0.1) % 0.0 % Other, net 1.0 % 0.1 % 0.3 % Effective tax rate 29.5 % 27.6 % 28.1 % Deferred tax assets and liabilities that result from the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes at December 31, are as follows: 2022 2021 (Dollars in thousands) Deferred tax assets: Allowance for credit losses on loans $ 14,171 $ 12,716 Lease accounting 9,703 10,245 Defined postretirement benefit obligation 7,585 9,934 Securities available-for-sale 4,690 — Accrued expenses 3,440 2,681 State income taxes 1,924 1,164 Federal net operating loss carryforwards 1,719 2,206 Premises and equipment 1,677 2,173 Stock compensation 1,363 1,632 California net operating loss carryforwards 1,106 1,489 Nonaccrual interest 174 67 Split-dollar life insurance benefit plan 49 84 Other 201 869 Total deferred tax assets 47,802 45,260 Deferred tax liabilities: Lease accounting (9,703) (10,245) Loan fees (2,304) (2,174) Intangible liabilities (1,940) (1,916) Prepaid expenses (1,304) (972) FHLB stock (156) (166) I/O strips (40) (60) Securities available-for-sale — (823) Other (179) (147) Total deferred tax liabilities (15,626) (16,503) Net deferred tax assets $ 32,176 $ 28,757 At December 31, 2022, the Company's federal net operating loss (“NOL”) carryforwards were $8,186,000 and the Company's California net operating loss carryforwards were $13,452,000. These amounts are attributable to the prior merger transactions. The realization of these NOL carryforwards for Federal and State tax purposes are limited on the amount of net operating losses that can be utilized annually under the current tax law. The above NOL carryforwards are presented net of the losses that will expire unutilized under current tax law. Since the NOL carryforwards are already presented net of the amounts that will expire by operation of current tax law, there is no need for a valuation allowance as the Company fully expects to utilize the amounts disclosed. 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. As of December 31, 2022 and 2021 the Company’s recorded amount of uncertain tax positions was not considered significant for financial reporting and the Company does not expect this amount to significantly increase or decrease in the next twelve months. At December 31, 2022 and December 31, 2021, the Company had net deferred tax assets of $32,176,000 and $28,757,000, respectively. At December 31, 2022 and December 31, 2021, the Company determined that a valuation allowance for deferred tax assets was not necessary. The Company and its subsidiaries are subject to U.S. Federal income tax as well as income tax of the State of California. The Company is no longer subject to examination by Federal and state taxing authorities for years before 2019, and by the State of California taxing authority for years before 2018. 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: December 31, December 31, 2022 2021 (Dollars in thousands) Low income housing investments $ 3,537 $ 4,380 Future commitments $ 523 $ 568 The Company expects $27,000 of the future commitments to be paid in 2023, and $498,000 in 2024 through 2026. For tax purposes, the Company recognized low income housing tax credits of $839,000 for the years ended December 31, 2022 and December 31, 2021, respectively, and low income housing investment expense of $842,000 and $866,000, respectively. The Company recognizes low income housing investment expenses as a component of income tax expense. |
Equity Plan
Equity Plan | 12 Months Ended |
Dec. 31, 2022 | |
Equity Plan | |
Equity Plan | 12) 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. The Company’s shareholders approved the 2013 Equity Incentive Plan (the “2013 Plan”). 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. The 2013 Plan will terminate at the 2023 Annual Shareholders Meeting to be held May 25, 2023. The Company intends to propose a new 2023 Equity Incentive Plan at the 2023 Annual Shareholders Meeting. All equity awards outstanding under the 2013 Plan remain outstanding subject to the terms of the respective award agreement. In 2022, the Company granted 387,000 shares of nonqualified stock options and 238,811 shares of restricted stock subject to time vesting requirements. There were 1,475,594 shares available for the issuance of equity awards under the 2013 Plan as of December 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 Granted 387,000 $ 11.12 Exercised (305,880) $ 6.70 Forfeited or expired (138,579) $ 12.34 Outstanding at December 31, 2022 2,527,173 $ 10.44 5.52 $ 7,497,913 Vested or expected to vest 2,375,543 5.52 $ 7,048,038 Exercisable at December 31, 2022 1,900,047 4.48 $ 6,333,749 Information related to the equity plans for each of the last three years: December 31, 2022 2021 2020 Intrinsic value of options exercised $ 1,674,072 $ 1,543,711 $ 2,258,245 Cash received from option exercise $ 2,049,587 $ 1,469,255 $ 1,713,737 Tax benefit realized from option exercises $ 180,414 $ 153,745 $ 63,124 Weighted average fair value of options granted $ 2.22 $ 2.31 $ 1.15 As of December 31, 2022, there was $1,294,000 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 2.66 years. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model that uses the assumptions noted in the following table, including the weighted average assumptions for the option grants in each year. December 31, 2022 2021 2020 Expected life in months(1) 72 72 72 Volatility(1) 31 % 33 % 29 % Weighted average risk-free interest rate(2) 2.89 % 1.10 % 0.53 % Expected dividends(3) 4.68 % 4.32 % 5.71 % (1) The expected life of employee stock options represents the weighted average period the stock options are expected to remain outstanding based on historical experience. Volatility is based on the historical volatility of the stock price over the same period of the expected life of the option. (2) Based on the U.S. Treasury constant maturity interest rate with a term consistent with the expected life of the option granted. (3) Each grant’s dividend yield is calculated by annualizing the most recent quarterly cash dividend and dividing that amount by the market price of the Company’s common stock as of the grant date The Company estimates the impact of forfeitures based on historical experience. Should the Company’s current estimate change, additional expense could be recognized or reversed in future periods. The Company issues authorized shares of common stock to satisfy stock option exercises. 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 Granted 238,811 $ 11.16 Vested (252,081) $ 11.81 Forfeited or expired (31,805) $ 11.23 Nonvested shares at December 31, 2022 253,491 $ 11.05 As of December 31, 2022, there was $1,881,000 of total unrecognized compensation cost related to nonvested restricted stock awards granted under the 2013 Plan. The cost is expected to be recognized over a weighted-average period of approximately 1.90 years. Total compensation cost for the 2004 Plan and 2013 Plan charged against income was $3,178,000, $2,519,000, $2,248,000, for 2022, 2021, and 2020, respectively. The total income tax (benefit) expense was ($94,000), ($155,000), and $301,000 for the years ended December 31, 2022, and 2021, and 2020, respectively. |
Benefit Plans
Benefit Plans | 12 Months Ended |
Dec. 31, 2022 | |
Benefit Plans | |
Benefit Plans | 13) Benefit Plans 401(k) Savings Plan The Company offers a 401(k) savings plan that allows employees to contribute up to a maximum percentage of their compensation, as established by the Internal Revenue Code. The Company made a discretionary matching contribution of up to $3,000 for each employee’s contributions in 2022 and 2021. Contribution expense was $942,000, $944,000, and $942,000 in 2022, and 2021 and 2020, respectively. Employee Stock Ownership Plan The Company sponsors a non-contributory employee stock ownership plan (“ESOP”). To participate in this plan, an employee must have worked at least 1,000 hours during the year and must be employed by the Company at year-end. Employer contributions to the ESOP are discretionary. Contributions to the ESOP have been suspended since 2010 and ESOP was “frozen” as of January 1, 2019. At December 31, 2022, the ESOP owned 91,343 shares of the Company’s common stock. Deferred Compensation Plan The Company has a nonqualified deferred compensation plan for some of its employees. Under the deferred compensation plan, an employee may defer up to 100% of their bonus and 50% of their regular salary into a deferred account. Amounts deferred are invested in a portfolio of approved investment choices as directed by the employee. Amounts deferred by employees to the deferred compensation plan will be distributed at a future date that they have selected or upon termination of employment. There were ten employees who elected to participate in the deferred compensation plan during both 2022 and 2021. Nonqualified Defined Benefit Pension Plan The Company has a supplemental retirement plan (“SERP”) covering some current and some former key executives and directors. The SERP is an unfunded, nonqualified defined benefit plan. The combined number of active and retired/terminated participants in the SERP was 50 at December 31, 2022. The defined benefit represents a stated amount for key executives and directors that generally vests over nine years and is reduced for early retirement. The projected benefit obligation is included in “Accrued interest payable and other liabilities” on the consolidated balance sheets. The SERP has no assets and the projected benefit obligation is unfunded. The measurement date of the SERP is December 31. The following table sets forth the SERP’s status at December 31: 2022 2021 (Dollars in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 33,179 $ 35,404 Service cost 347 480 Actuarial gain (7,065) (917) Interest cost 865 759 Benefits paid (1,526) (2,547) Projected benefit obligation at end of year $ 25,800 $ 33,179 Amounts recognized in accumulated other comprehensive loss: Net actuarial loss $ 2,371 $ 7,668 Weighted-average assumptions used to determine the benefit obligation at year-end: 2022 2021 Discount rate 5.17 % 2.66 % Rate of compensation increase N/A N/A Estimated benefit payments over the next ten years, which reflect anticipated future events, service and other assumptions, are as follows: Estimated Benefit Year Payments (Dollars in thousands) 2023 $ 1,654 2024 1,969 2025 2,059 2026 2,179 2027 2,316 2028 to 2032 12,131 The components of pension cost for the SERP follow: Year Ended December 31, 2022 2021 Components of net periodic benefit cost: Service cost $ 347 $ 480 Interest cost 865 759 Amortization of prior service cost — 100 Amortization of net actuarial loss 455 543 Net periodic benefit cost $ 1,667 $ 1,882 Amount recognized in other comprehensive income $ 5,297 $ 1,098 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. The estimated net actuarial loss and prior service cost for the SERP that will be amortized from Accumulated Other Comprehensive Loss into net periodic benefit cost over the next fiscal year are $53,000 as of December 31, 2022. Net periodic benefit cost for the years ended December 31, 2022 and 2021 were determined using the following assumption: 2022 2021 Discount rate 2.66 % 2.26 % Rate of compensation increase N/A N/A Split-Dollar Life Insurance Benefit Plan The Company maintains life insurance policies for some current and some former directors and officers that are subject to split-dollar life insurance agreements, some of which continues after the participant’s employment and retirement. The policies acquired from Focus and Presidio do not include a post retirement benefit. All participants are fully vested in their split-dollar life insurance benefits. The accrued benefit liability for the split-dollar insurance agreements represents either the present value of the future death benefits payable to the participants’ beneficiaries or the present value of the estimated cost to maintain term life insurance, depending on the contractual terms of the participant’s underlying agreement. The split-dollar life insurance projected benefit obligation is included in “Accrued interest payable and other liabilities” on the consolidated balance sheets. The measurement date of the split-dollar life insurance benefit plan is December 31. The following sets forth the funded status of the split dollar life insurance benefits: December 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 246 219 Actuarial loss (2,430) (664) Projected benefit obligation at end of period $ 7,060 $ 9,244 Amounts recognized in accumulated other comprehensive loss at December 31 consist of: December 31, December 31, 2022 2021 (Dollars in thousands) Net actuarial loss $ 2,301 $ 4,601 Prior transition obligation 790 879 Accumulated other comprehensive loss $ 3,091 $ 5,480 Weighted-average assumption used to determine the benefit obligation at year-end follow: 2022 2021 Discount rate 5.17 % 2.66 % Components of net periodic benefit cost during the year are: Year Ended December 31, 2022 2021 Amortization of prior transition obligation and actuarial losses $ (41) $ (4) Interest cost 246 219 Net periodic benefit cost $ 205 $ 215 Amount recognized in other comprehensive income $ 2,389 $ 660 The estimated net actuarial loss and prior transition obligation for the split-dollar life insurance benefit plan that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year are ($191,000) and ($41,000) as of December 31, 2022 and 2021, respectively. Weighted-average assumption used to determine the net periodic benefit cost: 2022 2021 Discount rate 2.66 % 2.26 % |
Fair Value
Fair Value | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value | |
Fair Value | 14) 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 Company uses matrix pricing (Level 2 inputs) to establish the fair value of its securities available-for-sale. 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 December 31, 2022 Available-for-sale securities: U.S. Treasury $ 418,474 $ 418,474 $ — $ — Agency mortgage-backed securities 71,122 — 71,122 — I/O strip receivables 152 — 152 — Assets at December 31, 2021 Available-for-sale securities: Agency mortgage-backed securities $ 102,252 $ — $ 102,252 $ — I/O strip receivables 221 — 221 — 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. Assets carried at fair value on a non-recurring basis are immaterial. 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 December 31, 2022 and December 31, 2021, there were no foreclosed assets on the balance sheet. Fair Value of Financial Instruments The carrying amounts and estimated fair values of financial instruments at December 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 $ 306,603 $ 306,603 $ — $ — $ 306,603 Securities available-for-sale 489,596 418,474 71,122 — 489,596 Securities held-to-maturity, net 714,990 — 614,452 — 614,452 Loans (including loans held-for-sale), net 3,253,494 — 2,456 3,080,485 3,082,941 FHLB stock, FRB stock, and other investments 32,522 — — — N/A Accrued interest receivable 15,047 1,328 1,836 11,883 15,047 I/O strips receivables 152 — 152 — 152 Liabilities: Time deposits $ 143,958 $ — $ 144,702 $ — $ 144,702 Other deposits 4,245,646 — 4,245,646 — 4,245,646 Subordinated debt 39,350 — 36,025 — 36,025 Accrued interest payable 600 — 600 — 600 The carrying amounts and estimated fair values of financial instruments at December 31, 2021 are as follows: Estimated Fair Value Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Carrying Identical Assets Inputs Inputs Amounts (Level 1) (Level 2) (Level 3) Total (Dollars in thousands) Assets: Cash and cash equivalents $ 1,306,216 $ 1,306,216 $ — $ — $ 1,306,216 Securities available-for-sale 102,252 — 102,252 — 102,252 Securities held-to-maturity, net 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 |
Commitments and Loss Contingenc
Commitments and Loss Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Loss Contingencies | |
Commitments and Loss Contingencies | 15) Commitments and 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 December 31, 2022 follows: D.C. Solar Related: ● 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 was denied. On December 12, 2022, the court granted the Bank’s motion for judgment on the pleadings on one of the two remaining counts. The Bank has filed a motion for summary judgment against one of the 26 plaintiffs on the one remaining count. We intend to vigorously defend this action. ● 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. Employee Related: ● 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 a third former and a then-current bank employee alleging the same claims. The third former employee/claimant is being added as a plaintiff to the previously filed class/PAGA action. We intend to vigorously defend this action. ● In October 2021 the third employee/claimant above referenced 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 this action. ● In September 2022 the Bank moved to compel arbitration in both cases; hearings were held in Alameda County Superior Court in early November and early December 2022. The motions in both cases were denied and the Bank appealed the rulings. Both cases are stayed pending appeal. 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 $1,134,619,000 at December 31, 2022, compared to $1,150,811,000 at December 31, 2021. Unused commitments represented 34% outstanding gross loans at December 31, 2022, 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: December 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 $ 87,348 $ 1,036,847 $ 1,124,195 $ 119,071 $ 1,015,588 $ 1,134,659 Standby letters of credit 1,565 8,859 10,424 3,084 13,068 16,152 $ 88,913 $ 1,045,706 $ 1,134,619 $ 122,155 $ 1,028,656 $ 1,150,811 For the year ended December 31, 2022, there was an increase of $5,000 to the allowance for credit losses on loans for the Company’s off-balance sheet credit exposures, compared to the year ended December 31, 2021. The allowance for losses for the Company’s off-balance sheet credit exposures was $820,000 and $815,000 at December 31, 2022 and December 31, 2021, respectively. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share | |
Earnings Per Share | 16) Earnings Per Share Basic earnings per common share is computed by dividing net income, less dividends and discount accretion on preferred stock, 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 1,325,948 stock options for the year ended December 31, 2022, considered to be antidilutive and excluded from the computation of diluted earnings per share. There were 1,058,250 stock options for the year ended December 31, 2021, considered to be antidilutive and excluded from the computation of diluted earnings per share. There were 1,524,757 stock options for the year ended December 31, 2020, 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: Year Ended December 31, 2022 2021 2020 (Dollars in thousands, except per share amounts) Net income $ 66,555 $ 47,700 $ $ 35,299 Weighted average common shares outstanding for basic earnings per common share 60,602,962 60,133,821 59,478,343 Dilutive potential common shares 487,328 555,241 690,796 Shares used in computing diluted earnings per common share 61,090,290 60,689,062 60,169,139 Basic earnings per share $ 1.10 $ 0.79 $ 0.59 Diluted earnings per share $ 1.09 $ 0.79 $ 0.59 |
Capital Requirements
Capital Requirements | 12 Months Ended |
Dec. 31, 2022 | |
Capital Requirements | |
Capital Requirements | 17) 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 December 31, 2022. There are no conditions or events since December 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 December 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 as of December 31, 2022, and December 31, 2021. Required For Capital Adequacy Purposes Actual Under Basel III Amount Ratio Amount Ratio (1) (Dollars in thousands) As of December 31, 2022 Total Capital $ 554,810 14.8 % $ 393,461 10.5 % (to risk-weighted assets) Tier 1 Capital $ 475,609 12.7 % $ 318,516 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 475,609 12.7 % $ 262,307 7.0 % (to risk-weighted assets) Tier 1 Capital $ 475,609 9.2 % $ 207,852 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) (1) Includes 2.5% capital conservation buffer, except the Tier 1 Capital to average assets ratio. HBC’s actual capital amounts and ratios are presented in the following table, together with capital adequacy requirements, under the Basel III regulatory requirements as of December 31, 2022, and December 31, 2021. 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, 2022 Total Capital $ 532,576 14.2 % $ 374,572 10.0 % $ 393,301 10.5 % (to risk-weighted assets) Tier 1 Capital $ 492,725 13.2 % $ 299,658 8.0 % $ 318,387 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 492,725 13.2 % $ 243,472 6.5 % $ 262,201 7.0 % (to risk-weighted assets) Tier 1 Capital $ 492,725 9.5 % $ 259,740 5.0 % $ 207,792 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. The Subordinated Debt, net of unamortized issuance costs, totaled $39,350,000 at December 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 of December 31, 2022, HBC would not be required to obtain regulatory approval, and the amount available for cash dividends is $17,140,000. Similar restrictions applied to the amount and sum of loan advances and other transfers of funds from HBC to the parent company. HBC distributed to HCC dividends of $32,000,000 for both years ended December 31, 2022 and 2021. |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2022 | |
Revenue Recognition | |
Revenue Recognition | 18) 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: Year Ended December 31, 2022 2021 2020 (Dollars in thousands) Noninterest Income In-scope of Topic 606: Service charges and fees on deposit accounts $ 4,640 $ 2,488 $ 2,859 Gain on the disposition of foreclosed assets — — 791 Total noninterest income in-scope of Topic 606 4,640 2,488 3,650 Noninterest Income Out-of-scope of Topic 606 5,471 7,200 6,272 Total noninterest income $ 10,111 $ 9,688 $ 9,922 |
Noninterest Expense
Noninterest Expense | 12 Months Ended |
Dec. 31, 2022 | |
Noninterest Expense | |
Noninterest Expense | 19) Noninterest Expense The following table indicates the various components of the Company’s noninterest expense in each category for the periods indicated: Year Ended December 31, 2022 2021 2020 (Dollars in thousands) Salaries and employee benefits $ 55,331 $ 51,862 $ 50,927 Occupancy and equipment 9,639 9,038 8,018 Professional fees 5,015 5,901 5,338 Insurance expense 4,958 3,270 2,286 Amortization of intangible assets 2,635 2,996 3,751 Data processing 2,482 2,146 2,770 Reserve for litigation — 4,500 — Other 14,799 13,364 16,421 Total noninterest expense $ 94,859 $ 93,077 $ 89,511 The following table presents the merger-related costs by category for the periods indicated: For the Year Ended December 31, 2022 2021 2020 (Dollars in thousands) Salaries and employee benefits $ — $ — $ 356 Other — 27 2,245 Total merger-related costs $ — $ 27 $ 2,601 |
Business Segment Information
Business Segment Information | 12 Months Ended |
Dec. 31, 2022 | |
Business Segment Information | |
Business Segment Information | 20) 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 credit losses on loans 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. Year Ended December 31, 2022 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 176,010 $ 12,818 $ 188,828 Intersegment interest allocations 1,441 (1,441) — Total interest expense 8,948 — 8,948 Net interest income 168,503 11,377 179,880 Provision for (recapture of) credit losses on loans 526 240 766 Net interest income after provision 167,977 11,137 179,114 Noninterest income 9,722 389 10,111 Noninterest expense 88,531 6,328 94,859 Intersegment expense allocations 524 (524) — Income before income taxes 89,692 4,674 94,366 Income tax expense 26,429 1,382 27,811 Net income $ 63,263 $ 3,292 $ 66,555 Total assets $ 5,062,943 $ 94,637 $ 5,157,580 Loans, net of deferred fees $ 3,219,287 $ 79,263 $ 3,298,550 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations. Year Ended December 31, 2021 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 141,772 $ 11,484 $ 153,256 Intersegment interest allocations 868 (868) — Total interest expense 7,131 — 7,131 Net interest income 135,509 10,616 146,125 Provision (recapture) for credit losses on loans (2,926) (208) (3,134) Net interest income after provision 138,435 10,824 149,259 Noninterest income 8,651 1,037 9,688 Noninterest expense 87,466 5,611 93,077 Intersegment expense allocations 410 (410) — Income before income taxes 60,030 5,840 65,870 Income tax expense 16,444 1,726 18,170 Net income $ 43,586 $ 4,114 $ 47,700 Total assets $ 5,424,350 $ 75,059 $ 5,499,409 Loans, net of deferred fees $ 3,034,097 $ 53,229 $ 3,087,326 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations. Year Ended December 31, 2020 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 139,744 $ 10,727 $ 150,471 Intersegment interest allocations 923 (923) — Total interest expense 8,581 — 8,581 Net interest income 132,086 9,804 141,890 Provision for credit losses on loans 12,928 305 13,233 Net interest income after provision 119,158 9,499 128,657 Noninterest income 9,277 645 9,922 Noninterest expense (2) 83,149 9,362 89,511 Intersegment expense allocations 404 (404) — Income before income taxes 45,690 3,378 49,068 Income tax expense 12,770 999 13,769 Net income $ 32,920 $ 2,379 $ 35,299 Total assets $ 4,567,239 $ 66,875 $ 4,634,114 Loans, net of deferred fees $ 2,572,060 $ 47,201 $ 2,619,261 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations. (2) The banking segment’s noninterest expense includes merger-related costs of $2,601,000. |
Parent Company only Condensed F
Parent Company only Condensed Financial Information | 12 Months Ended |
Dec. 31, 2022 | |
Parent Company only Condensed Financial Information | |
Parent Company only Condensed Financial Information | 21) Parent Company only Condensed Financial Information The condensed financial statements of Heritage Commerce Corp (parent company only) are as follows: Condensed Balance Sheets December 31, 2022 2021 (Dollars in thousands) Assets Cash and cash equivalents $ 20,974 $ 19,487 Investment in subsidiary bank 649,545 616,108 Other assets 1,549 2,685 Total assets $ 672,068 $ 638,280 Liabilities and Shareholders' Equity Subordinated debt, net of issuance costs $ 39,350 $ 39,925 Other liabilities 262 327 Shareholders' equity 632,456 598,028 Total liabilities and shareholders' equity $ 672,068 $ 638,280 Condensed Statements of Operations Year Ended December 31, 2022 2021 2020 (Dollars in thousands) Dividend from subsidiary bank $ 32,000 $ 32,000 $ 32,000 Interest expense (2,179) (2,314) (2,321) Other expenses (3,675) (3,929) (3,263) Income before income taxes and equity in net income of subsidiary bank 26,146 25,757 26,416 Equity in undistributed net income of subsidiary bank 38,702 20,127 7,255 Income tax benefit 1,707 1,816 1,628 Net income $ 66,555 $ 47,700 $ 35,299 Condensed Statements of Cash Flows Year Ended December 31, 2022 2021 2020 (Dollars in thousands) Cash flows from operating activities: Net Income $ 66,555 $ 47,700 $ 35,299 Adjustments to reconcile net income to net cash provided by operations: Amortization of restricted stock awards, net 2,583 1,940 1,689 Equity in undistributed net income of subsidiary bank (38,702) (20,127) (7,255) Net change in other assets and liabilities 1,222 (603) (250) Net cash provided by operating activities 31,658 28,910 29,483 Cash flows from financing activities: Proceeds from issuance of long-term debt 39,274 — — Repayment of long-term debt (40,000) — — Payment of cash dividends (31,495) (31,270) (31,079) Proceeds from exercise of stock options 2,050 1,469 1,714 Net cash used in financing activities (30,171) (29,801) (29,365) Net increase (decrease) in cash and cash equivalents 1,487 (891) 118 Cash and cash equivalents, beginning of year 19,487 20,378 20,260 Cash and cash equivalents, end of year $ 20,974 $ 19,487 $ 20,378 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events | |
Subsequent Events | 22) Subsequent Events On January 26, 2023, the Company announced that its Board of Directors declared a $0.13 per share quarterly cash dividend to holders of common stock. The dividend was payable on February 23, 2023 to shareholders of record on February 9, 2023. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Heritage Commerce Corp (“HCC”) operates as a registered bank holding company for its wholly-owned subsidiary Heritage Bank of Commerce (“HBC” or the “Bank”), collectively referred to as the “Company”. HBC was incorporated on November 23, 1993 and commenced operations on June 8, 1994. HBC is a California state chartered bank which offers a full range of commercial and personal banking services to residents and the business/professional community 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. Bay View Funding’s primary business operation is purchasing and collecting factored receivables. Factored receivables are receivables that have been transferred by the originating organization and typically have not been subject to previous collection efforts. In a factoring transaction Bay View Funding directly purchases the receivables generated by its clients at a discount to their face value. The transactions are structured to provide the clients with immediate working capital when there is a mismatch between payments to the client for a good and service and the payment of operating costs incurred to provide such good or service. The consolidated financial statements are prepared in accordance with accounting policies generally accepted in the United States of America and general practices in the banking industry. The financial statements include the accounts of the Company. All inter-company accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand, amounts due from banks, amounts held at the Federal Reserve Bank, and Federal funds sold. In response to the COVID pandemic, the Federal Reserve lowered the reserve requirement ratios to 0% effective March 26, 2020, and therefore, the Bank had no required reserve balance at December 31, 2022 and 2021. one |
Cash Flows | Cash Flows Net cash flows are reported for customer loan and deposit transactions, notes payable, repurchase agreements and other short-term borrowings. |
Securities | Securities The Company classifies its securities as either available-for-sale or held-to-maturity at the time of purchase. Debt securities are classified as held-to-maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities not classified as held-to-maturity are classified as available-for-sale. Securities available-for-sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of taxes. Interest income includes amortization of purchase premiums or discounts. Premiums and discounts are amortized, or accreted, over the life of the related security, or the earliest call date for callable securities purchased at a premium, as an adjustment to income using a method that approximates the interest method. Realized gains and losses are recorded on the trade date and determined using the specific identification method for the cost of securities sold. |
Allowance for Credit Losses - Available-for-sale Securities | Allowance for Credit Losses – Available-for-sale Securities Changes in the allowance for credit losses are recorded as a provision (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. |
Allowance for Credit Losses - Held-to-Maturity Securities | Allowance for Credit Losses – Held-to-Maturity Securities Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type and bond rating. The estimate of expected credit losses considers historical loss information that is adjusted for current conditions and reasonable and supportable forecasts. Management classifies the held-to-maturity portfolio in the following major security types: Agency mortgage-backed and municipal securities. All the mortgage-backed securities held by the Company are issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies, and have a long history of no credit losses. Other securities are comprised primarily of tax exempt municipal securities. At December 31, 2022, all of these securities are rated A-Aaa (defined as investment grade). The issuers in these securities are primarily municipal entities and school districts. |
Loan Sales and Servicing | Loan Sales and Servicing The Company holds for sale the conditionally guaranteed portion of certain loans guaranteed by the Small Business Administration or the U.S. Department of Agriculture (collectively referred to as “SBA loans”). These loans are carried at the lower of aggregate cost or fair value. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings. Gains or losses on SBA loans held-for-sale are recognized upon completion of the sale, based on the difference between the selling price and the carrying value of the related loan sold. SBA loans are sold with servicing retained. Servicing assets recognized separately upon the sale of SBA loans consist of servicing rights and, for loans sold prior to 2009, interest-only strip receivables (“I/O strips”). The Company accounts for the sale and servicing of SBA loans based on the financial and servicing assets it controls and liabilities it has incurred, reversing recognition of financial assets when control has been surrendered, and reversing recognition of liabilities when extinguished. Servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sale of loans. Servicing rights are amortized in proportion to and over the period of net servicing income and are assessed for impairment on an ongoing basis. Impairment is determined by stratifying the servicing rights based on interest rates and terms. Any servicing assets in excess of the contractually specified servicing fees are reclassified at fair value as an I/O strip receivable and treated like an available for sale security. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance. The servicing rights, net of any required valuation allowance, and I/O strip receivable are included in other assets on the consolidated balance sheets. Servicing income, net of amortization of servicing rights, is recognized as noninterest income. The initial fair value of I/O strip receivables is amortized against interest income on loans. |
Loans | Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at the principal amount outstanding, net of deferred loan origination fees and costs on originated loans, or unamortized premiums or discounts on purchased or acquired loans, and an allowance for credit losses on loans. Accrued interest receivable is excluded from the estimate of credit losses. Interest on loans is accrued on the unpaid principal balance and is credited to income using the effective yield interest method. Interest on purchased or acquired loans and the accretion (amortization) of the related purchase discount (premium) is also credited to income using the effective yield interest method. A loan portfolio segment is defined as the level at which the Company uses a systematic methodology to determine the allowance for credit losses on loans. A loan portfolio class is defined as a group of loans having similar risk characteristics and methods for monitoring and assessing risk. For all loan classes, when a loan is classified as nonaccrual, the accrual of interest is discontinued, any accrued and unpaid interest is reversed, and the amortization of deferred loan fees and costs is discontinued. For all loan classes, loans are classified as nonaccrual when the payment of principal or interest is 90 days past due, unless the loan is well secured and in the process of collection. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for credit loss and individually evaluated loans. In certain circumstances, loans that are under 90 days past due may also be classified as nonaccrual. Any interest or principal payments received on nonaccrual loans are applied toward reduction of principal. Nonaccrual loans generally are not returned to performing status until the obligation is brought current, the loan has performed in accordance with the contract terms for a reasonable period of time, and the ultimate collectability of the contractual principal and interest is no longer in doubt. Non-refundable loan fees and direct origination costs are deferred and recognized over the expected lives of the related loans using the effective yield interest method. |
Allowance for Credit Losses on Loans | Allowance for Credit Losses on Loans On January 1, 2020, the Company adopted the current expected credit loss (“CECL”) model under Accounting Standards Update (“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 loans. The risk characteristics of each loan portfolio segment are as follows: Commercial Commercial loans primarily rely on the identified cash flows of the borrower for repayment and secondarily on the underlying collateral provided by the borrower. However, the cash flows of the borrowers may not be as expected and the collateral securing these loans may vary in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable, inventory or equipment and may incorporate a personal guarantee; however, some loans may be unsecured. Included in commercial loans are $1,166,000 of SBA Paycheck Protection Program (“PPP”) loans and $79,263,000 of Bay View Funding factored receivables at December 31, 2022, compared to $88,726,000 and $53,229,000, respectively 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 by the value of the property securing the loan which can be impacted by changes in economic conditions such as the unemployment rate and property values. 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 and are acquired. Consumer and Other Consumer and other loans are secured by personal property or are unsecured and rely primarily on the income of the borrower for repayment and secondarily on the collateral value for secured loans. Borrower income and collateral value can vary dependent on economic conditions. |
Loan Commitments and Related Financial Instruments | Loan Commitments and Related Financial Instruments Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded. The notional amount of these commitments is not reflected in the consolidated financial statement until they are funded. The Company maintains an allowance for credit losses on unfunded commercial lending commitments and letters of credit to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the allowance for credit losses for loans, modified to take into account the probability of a drawdown on the commitment. The allowance for credit losses on unfunded loan commitments is classified as a liability account on the balance sheet and is adjusted as a provision for credit loss expense included in other noninterest expense. |
Federal Home Loan Bank and Federal Reserve Bank Stock | Federal Home Loan Bank and Federal Reserve Bank Stock As a member of the Federal Home Loan Bank (“FHLB”) system, the Bank is required to own common stock in the FHLB based on the Bank’s level of borrowings and outstanding FHLB advances. FHLB stock is carried at cost and classified as a restricted security. Both cash and stock dividends from the FHLB are reported as income. As a member of the Federal Reserve Bank (“FRB”) of San Francisco, the Bank is required to own stock in the FRB of San Francisco based on a specified ratio relative to our capital. FRB stock is carried at cost and may be sold back to the FRB at its carrying value. Cash dividends received from the FRB are reported as income. |
Company Owned Life Insurance and Split-Dollar Life Insurance Benefit Plan | Company-Owned Life Insurance and Split-Dollar Life Insurance Benefit Plan The Company has purchased life insurance policies on certain directors and officers. Company-owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for charges or other amounts due that are probable at settlement. The purchased insurance is subject to split-dollar insurance agreements with the insured participants, which continues after the participant’s employment and retirement. Accounting guidance requires that a liability be recorded primarily over the participant’s service period when a split-dollar life insurance agreement continues after a participant’s employment or retirement. The required accrued liability is based on either the post-employment benefit cost for the continuing life insurance or the future death benefit depending on the contractual terms of the underlying agreement. |
Premises and Equipment | Premises and Equipment Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Depreciation and amortization are computed on the straight-line basis over the lesser of the respective lease terms or estimated useful lives. The Company owns one building which is being depreciated over 40 years. Furniture, equipment and improvements depreciated five |
Operating Lease Right of Use Assets and Liabilities | Operating Lease Right of Use Assets and Liabilities The Company determines if a lease is present at the inception of an agreement. Operating leases are capitalized at commencement and are discounted using the Company’s FHLB borrowing rate for a similar term borrowing unless the lease defines an implicit rate within the contract. The operating lease right of use assets represent the Company’s right to use an underlying asset for the lease term, and the operating lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease right of use assets and operating lease liabilities are recognized on the lease commencement date based on the present value of lease payments over the lease term. No significant judgments or assumptions were involved in developing the estimated operating lease liabilities as the Company’s operating lease liabilities largely represent future rental expenses associated with operating leases and the borrowing rates are based on publicly available interest rates. |
Business Combinations | Business Combinations The Company accounts for acquisitions of businesses using the acquisition method of accounting. Under the acquisition method, assets acquired and liabilities assumed are recorded at their estimated fair values at the date of acquisition. Management utilizes various valuation techniques including discounted cash flow analyses to determine these fair values. Any excess of the purchase price over amounts allocated to the acquired assets, including identifiable intangible assets, and liabilities assumed is recorded as goodwill. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill resulting from business combinations represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill is assessed at least annually for impairment and any such impairment is recognized in the period identified. The Company’s annual goodwill impairment testing date is November 30. Other intangible assets consist of a core deposit intangible, a below market lease, an above market lease liability, a customer relationship and brokered relationship intangible assets. They are initially measured at fair value and then are amortized over their estimated useful lives. The core deposits intangible assets from the acquisitions are being amortized on an accelerated method over ten years. The below market value lease intangible assets are being amortized on the straight line method over three years. The above market lease adjustment is being amortized on the straight line method over 60 months. The customer relationship and brokered relationship intangible assets are being amortized over ten years. |
Foreclosed Assets | Foreclosed Assets Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through operations. Operating costs after acquisition are expensed. Gains and losses on disposition are included in noninterest expense. There were no foreclosed assets at December 31, 2022 and 2021. |
Retirement Plans | Retirement Plans Expenses for the Company’s non-qualified, unfunded defined benefits plan consists of service and interest cost and amortization of gains and losses not immediately recognized. Employee 401(k) and profit sharing plan expense is the amount of matching contributions. Deferred compensation and supplemental retirement plan expense allocates the benefits over years of service. |
Loss Contingencies | Loss Contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. The Company’s accounting policy for legal costs related to loss contingencies is to accrue for the probable fees that can be reasonably estimated. The Company’s accounting policy for uncertain recoveries is to recognize the anticipated recovery when realization is deemed probable. |
Income Taxes | Income Taxes The Company files consolidated Federal and combined and separate state income tax returns. Income tax expense is the total of the current year income tax payable or refunded, the change in deferred tax assets and liabilities, and low income housing investment losses, net of tax benefits received. Some items of income and expense are recognized in different years for tax purposes when applying generally accepted accounting principles, leading to timing differences between the Company’s actual 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. Realization of the Company’s deferred tax assets is primarily dependent upon the Company generating sufficient taxable income to obtain benefit from the reversal of net deductible temporary differences and utilization of tax credit carryforwards for Federal and California state income tax purposes. The amount of deferred tax assets considered realizable is subject to adjustment in future periods based on estimates of future taxable income. Under generally accepted accounting principles, a valuation allowance is required to be recognized 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. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. |
Stock-Based Compensation | Stock-Based Compensation Compensation cost is recognized for stock options and restricted stock awards issued to employees and directors, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. Compensation cost recognized reflects estimated forfeitures, adjusted as necessary for actual forfeitures. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Total comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to gains and losses that are included in comprehensive income (loss) but are excluded from net income (loss) because they have been recorded directly in equity, net of tax, under the provisions of certain accounting guidance. The Company’s sources of other comprehensive income (loss) are unrealized gains and losses on securities available-for-sale, and I/O strips, which are treated like available-for-sale securities, and the liabilities related to the Company’s defined benefit pension plan and the split-dollar life insurance benefit plan. Reclassification adjustments result from gains or losses that were realized and included in net income (loss) of the current period that also had been included in other comprehensive income as unrealized holding gains and losses. |
Segment Reporting | Segment Reporting HBC is a commercial bank serving customers located in Alameda, Contra Costa, Marin, San Benito, San Francisco, San Mateo, and Santa Clara counties of California. Bay View Funding provides business essential working capital factoring financing to various industries throughout the United States. No customer accounts for more than 10 percent of revenue for HBC or the Company. With the previous acquisition of Bay View Funding, the Company has two reportable segments consisting of Banking and Factoring. |
Reclassifications | Reclassifications Certain items in the consolidated financial statements for the years ended December 31, 2021 and 2020 were reclassified to conform to the 2022 presentation. These reclassifications did not affect previously reported net income or shareholders’ equity. |
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 not - also provides numerous optional expedients for derivative accounting. In December 2022, to ensure relief in Topic 848 covers the period of time during which a significant number of modifications may take place, the FASB issued ASU No. 2022-06, which defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply relief in Topic 848. Once elected for a Topic or an Industry Subtopic within the Codification, the amendments in this ASU must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic. The Company does 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, however, the impact is not expected to be material. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accumulated Other Comprehensive Income ("AOCI") | |
Schedule of changes in AOCI by component | Year Ended December 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 (13,547) — 7,395 (6,152) Amounts reclassified from other comprehensive income, net of taxes — — 292 292 Net current period other comprehensive income (loss), net of taxes (13,547) — 7,687 (5,860) Ending balance December 31, 2022, net of taxes $ (11,394) $ — $ (5,462) $ (16,856) Beginning balance January 1, 2021, net of taxes $ 3,929 $ 261 $ (14,907) $ (10,717) Other comprehensive (loss) before reclassification, net of taxes (1,776) — 1,308 (468) Amounts reclassified from other comprehensive income (loss), net of taxes — (261) 450 189 Net current period other comprehensive income (loss), net of taxes (1,776) (261) 1,758 (279) Ending balance December 31, 2021, net of taxes $ 2,153 $ — $ (13,149) $ (10,996) (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 13—Benefit Plans) and includes split-dollar life insurance benefit plan. |
Schedule of reclassifications out of AOCI into net income | Amounts Reclassified from AOCI Year Ended December 31, Affected Line Item Where Details About AOCI Components 2022 2021 2020 Net Income is Presented (Dollars in thousands) Unrealized gains on available-for-sale securities and I/O strips $ — $ — $ 277 Gain on sales of securities — — (82) Income tax expense — — 195 Net of tax Amortization of unrealized gain on securities available-for-sale that were reclassified to securities held-to-maturity $ — $ 371 52 Interest income on taxable securities — (110) (15) Income tax expense — 261 37 Net of tax Amortization of defined benefit pension plan items (1) Prior transition obligation and actuarial losses (2) 41 4 60 Prior service cost and actuarial losses (3) (455) (643) (387) (414) (639) (327) Other noninterest expense 122 189 97 Income tax expense (292) (450) (230) Net of tax Total reclassification from AOCI for the period $ (292) $ (189) $ 2 (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 13 — 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) | 12 Months Ended |
Dec. 31, 2022 | |
Securities | |
Schedule of amortized cost and estimated fair value of securities | Gross Gross Allowance Estimated Amortized Unrealized Unrealized for Credit Fair December 31, 2022 Cost Gains (Losses) Losses Value (Dollars in thousands) Securities available-for-sale: U.S. Treasury $ 428,797 $ — $ (10,323) $ — $ 418,474 Agency mortgage-backed securities 76,916 — (5,794) — 71,122 Total $ 505,713 $ — $ (16,117) $ — $ 489,596 Gross Gross Estimated Allowance Amortized Unrecognized Unrecognized Fair for Credit December 31, 2022 Cost Gains (Losses) Value Losses (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 677,381 $ 235 $ (99,977) $ 577,639 $ — Municipals - exempt from Federal tax 37,623 9 (819) 36,813 (14) Total $ 715,004 $ 244 $ (100,796) $ 614,452 $ (14) 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 December 31, 2022 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: U.S. Treasury $ 418,474 $ (10,323) $ — $ — $ 418,474 $ (10,323) Agency mortgage-backed securities 71,122 (5,794) — — 71,122 (5,794) Total $ 489,596 $ (16,117) $ — $ — $ 489,596 $ (16,117) Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2022 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 136,264 $ (12,866) $ 429,257 $ (87,111) $ 565,521 $ (99,977) Municipals — exempt from Federal tax 31,007 (819) — — 31,007 (819) Total $ 167,271 $ (13,685) $ 429,257 $ (87,111) $ 596,528 $ (100,796) 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 proceeds from sales of securities and the resulting gains and losses | 2022 2021 2020 (Dollars in thousands) Proceeds $ — $ — $ 56,598 Gross gains — — 277 Gross losses — — — |
Schedule of amortized cost and estimated fair values of securities, by contractual maturity | Available-for-sale Amortized Estimated Cost Fair Value (Dollars in thousands) Due after 3 months through one year $ 46,065 $ 45,736 Due after one through five years 382,732 372,738 Agency mortgage-backed securities 76,916 71,122 Total $ 505,713 $ 489,596 Held-to-maturity Amortized Estimated Cost Fair Value (Dollars in thousands) Due after three months through one year $ 554 $ 553 Due after one through five years 7,681 7,613 Due after five through ten years 27,459 26,745 Due after ten years 1,929 1,902 Agency mortgage-backed securities 677,381 577,639 Total $ 715,004 $ 614,452 |
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 (29) Ending balance December 31, 2022 $ 14 |
Loans and Allowance for Credi_2
Loans and Allowance for Credit Losses on Loans (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Loans and Allowance for Credit Losses on Loans | |
Schedule of loans | December 31, December 31, 2022 2021 (Dollars in thousands) Loans held-for-investment: Commercial $ 533,915 $ 682,834 Real estate: CRE - owner occupied 614,663 595,934 CRE - non-owner occupied 1,066,368 902,326 Land and construction 163,577 147,855 Home equity 120,724 109,579 Multifamily 244,882 218,856 Residential mortgages 537,905 416,660 Consumer and other 17,033 16,744 Loans 3,299,067 3,090,788 Deferred loan fees, net (517) (3,462) Loans, net of deferred fees 3,298,550 3,087,326 Allowance for credit losses on loans (47,512) (43,290) Loans, net $ 3,251,038 $ 3,044,036 |
Schedule of changes in allowance for loan (credit) losses | Year Ended December 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 (434) — — — — — — — (434) Recoveries 427 15 — — 105 — — 3,343 3,890 Net recoveries (7) 15 — — 105 — — 3,343 3,456 Provision for (recapture of) credit losses on loans (1,790) (2,218) 5,010 1,110 (303) 570 1,775 (3,388) 766 End of period balance $ 6,617 $ 5,751 $ 22,135 $ 2,941 $ 666 $ 3,366 $ 5,907 $ 129 $ 47,512 Year Ended December 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 (520) — — — — — — — (520) Recoveries 1,354 16 — 884 93 — — 197 2,544 Net (charge-offs) recoveries 834 16 — 884 93 — — 197 2,024 Provision for (recapture of) credit losses on loans (4,007) (622) 709 (1,562) (526) (8) 3,189 (307) (3,134) End of period balance $ 8,414 $ 7,954 $ 17,125 $ 1,831 $ 864 $ 2,796 $ 4,132 $ 174 $ 43,290 Year Ended December 31, 2020 Owner Non-owner Land & Home Multi- Residential Consumer Commercial Occupied Occupied Construction Equity Family Mortgage and Other Total (Dollars in thousands) Beginning of period balance $ 10,453 $ 3,825 $ 3,760 $ 2,621 $ 2,244 $ 57 $ 243 $ 82 $ 23,285 Adoption of Topic 326 (3,663) 3,169 7,912 (1,163) (923) 1,196 435 1,607 8,570 Balance at adoption on January 1, 2020 6,790 6,994 11,672 1,458 1,321 1,253 678 1,689 31,855 Charge-offs (1,776) — — — — — — (104) (1,880) Recoveries 998 1 — 70 93 — — 30 1,192 Net (charge-offs) recoveries (778) 1 — 70 93 — — (74) (688) Provision for (recapture of) credit losses on loans 5,575 1,565 4,744 981 (117) 1,551 265 (1,331) 13,233 End of period balance $ 11,587 $ 8,560 $ 16,416 $ 2,509 $ 1,297 $ 2,804 $ 943 $ 284 $ 44,400 |
Schedule of nonperforming loans | December 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 $ 318 $ 324 $ 349 $ 991 Real estate: CRE - Non-Owner Occupied — — 1,336 1,336 Home equity 98 — — 98 Total $ 416 $ 324 $ 1,685 $ 2,425 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 | December 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 $ 7,236 $ 2,519 $ 703 $ 10,458 $ 523,457 $ 533,915 Real estate: CRE - Owner Occupied 252 — — 252 614,411 614,663 CRE - Non-Owner Occupied — — 1,336 1,336 1,065,032 1,066,368 Land and construction — — — — 163,577 163,577 Home equity — 98 — 98 120,626 120,724 Multifamily — — — — 244,882 244,882 Residential mortgages 4,202 720 — 4,922 532,983 537,905 Consumer and other — — — 17,033 17,033 Total $ 11,690 $ 3,337 $ 2,039 $ 17,066 $ 3,282,001 $ 3,299,067 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 December 31, 2022 Amortized Cost 2022 2021 2020 2019 2018 Prior Periods Basis Total (Dollars in thousands) Commercial: Pass $ 102,969 $ 36,752 $ 24,406 $ 19,272 $ 12,089 $ 21,127 $ 293,546 $ 510,161 Special Mention 3,408 1,060 192 1,123 - 6,031 5,551 17,365 Substandard 4 - - 145 - 102 5,496 5,747 Substandard-Nonaccrual - 279 - - 330 33 - 642 Total 106,381 38,091 24,598 20,540 12,419 27,293 304,593 533,915 CRE - Owner Occupied: Pass 92,689 116,266 75,007 59,887 58,180 194,584 8,758 605,371 Special Mention - 2,033 867 1,120 - 4,410 - 8,430 Substandard - 660 - - 193 9 - 862 Substandard-Nonaccrual - - - - - - - - Total 92,689 118,959 75,874 61,007 58,373 199,003 8,758 614,663 CRE - Non-Owner Occupied: Pass 239,556 278,051 31,848 101,854 63,905 337,048 3,245 1,055,507 Special Mention - - - - - 4,883 - 4,883 Substandard - - - - - 5,978 - 5,978 Substandard-Nonaccrual - - - - - - - - Total 239,556 278,051 31,848 101,854 63,905 347,909 3,245 1,066,368 Land and construction: Pass 62,241 72,847 22,459 6,030 - - - 163,577 Special Mention - - - - - - - - Substandard - - - - - - - - Substandard-Nonaccrual - - - - - - - - Total 62,241 72,847 22,459 6,030 - - - 163,577 Home equity: Pass - - - - - 44 117,950 117,994 Special Mention - - - - - - 2,346 2,346 Substandard - - - - - 144 142 286 Substandard-Nonaccrual - 98 - - - - 98 Total - 98 - - - 188 120,438 120,724 Multifamily: Pass 42,111 69,824 4,871 42,412 15,356 66,380 180 241,134 Special Mention - - 657 771 - 2,320 - 3,748 Substandard - - - - - - - - Substandard-Nonaccrual - - - - - - - - Total 42,111 69,824 5,528 43,183 15,356 68,700 180 244,882 Residential mortgage: Pass 191,907 296,270 1,068 6,788 2,724 33,290 - 532,047 Special Mention - - - 1,058 1,482 2,387 - 4,927 Substandard - - - - - 931 - 931 Substandard-Nonaccrual - - - - - - - - Total 191,907 296,270 1,068 7,846 4,206 36,608 - 537,905 Consumer and other: Pass 389 13 - - 1,364 1,283 13,647 16,696 Special Mention - 82 - 6 - - 249 337 Substandard - - - - - - - - Substandard-Nonaccrual - - - - - - - - Total 389 95 - 6 1,364 1,283 13,896 17,033 Total loans $ 735,274 $ 874,235 $ 161,375 $ 240,466 $ 155,623 $ 680,984 $ 451,110 $ 3,299,067 Risk Grades: Pass $ 731,862 $ 870,023 $ 159,659 $ 236,243 $ 153,618 $ 653,756 $ 437,326 $ 3,242,487 Special Mention 3,408 3,175 1,716 4,078 1,482 20,031 8,146 42,036 Substandard 4 660 - 145 193 7,164 5,638 13,804 Substandard-Nonaccrual - 377 - - 330 33 - 740 Grand Total $ 735,274 $ 874,235 $ 161,375 $ 240,466 $ 155,623 $ 680,984 $ 451,110 $ 3,299,067 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 | During the Year Ended December 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 |
Loan Servicing (Tables)
Loan Servicing (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Loan Servicing | |
Schedule of activity for loan servicing rights | 2022 2021 2020 (Dollars in thousands) Beginning of year balance $ 655 $ 531 $ 583 Additions 124 384 213 Amortization (230) (260) (265) End of year balance $ 549 $ 655 $ 531 |
Schedule of activity for IO strip receivables | 2022 2021 2020 (Dollars in thousands) Beginning of year balance $ 221 $ 305 $ 503 Unrealized loss (69) (84) (198) End of year balance $ 152 $ 221 $ 305 |
Premises and Equipment (Tables)
Premises and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Premises and Equipment | |
Schedule of premises and equipment | 2022 2021 (Dollars in thousands) Building $ 3,508 $ 3,508 Land 2,900 2,900 Furniture and equipment 13,812 13,041 Leasehold improvements 5,597 5,441 25,817 24,890 Accumulated depreciation and amortization (16,516) (15,251) Premises and equipment, net $ 9,301 $ 9,639 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Schedule of leases | Year Ended December 31, 2022 2021 (Dollars in thousands) Operating Lease Cost (Cost resulting from lease payments) $ 6,625 $ 6,533 Operating Lease - Operating Cash Flows (Fixed Payments) $ 4,948 $ 5,011 Operating Lease - ROU assets $ 33,031 $ 34,879 Operating Lease - Liabilities $ 33,031 $ 34,879 Weighted Average Lease Term - Operating Leases 6.60 years 7.37 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) 2023 $ 6,351 2024 6,006 2025 5,459 2026 4,903 2027 4,730 Thereafter 10,988 Total undiscounted cash flows 38,437 Discount on cash flows (5,406) Total lease liability $ 33,031 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Other Intangible Assets | |
Schedule of carrying amount of goodwill by segment | December 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 | December 31, 2022 Gross Remaining Carrying Accumulated Carrying Amount Amortization Amount (Dollars in thousands) Core deposit intangibles $ 25,023 $ (14,429) $ 10,594 Customer relationship and brokered relationship intangibles 1,900 (1,551) 349 Below market leases 110 (20) 90 Total $ 27,033 $ (16,000) $ 11,033 December 31, 2021 Gross Remaining Carrying Accumulated Carrying Amount Amortization Amount (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) 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 $ 10,594 $ 349 $ 90 $ 11,033 |
Deposits (Tables)
Deposits (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Deposits. | |
Schedule of maturities of time deposits including brokered deposits | (Dollars in thousands) 2023 $ 133,517 2024 8,513 2025 1,283 2026 274 2027 91 Thereafter 280 Total $ 143,958 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Schedule of income tax (benefit) | 2022 2021 2020 (Dollars in thousands) Currently payable tax: Federal $ 18,994 $ 10,207 $ 9,630 State 8,798 7,988 5,828 Total currently payable 27,792 18,195 15,458 Deferred tax expense (benefit): Federal (1,237) 1,175 (932) State 1,256 (1,200) (757) Total deferred tax 19 (25) (1,689) Income tax expense $ 27,811 $ 18,170 $ 13,769 |
Schedule of effective tax rate differs from the federal statutory rate | 2022 2021 2020 Statutory Federal income tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal tax benefit 8.4 % 8.1 % 8.2 % Low income housing credits, net of investment losses (0.2) % (0.3) % (0.5) % Increase in cash surrender value of life insurance (0.4) % (0.6) % (0.8) % Stock option/restricted stock windfall tax benefit (0.1) % (0.2) % 0.6 % Non-taxable interest income (0.2) % (0.5) % (0.8) % Split-dollar term insurance 0.0 % 0.1 % 0.1 % ISO stock exercise 0.0 % (0.1) % 0.0 % Other, net 1.0 % 0.1 % 0.3 % Effective tax rate 29.5 % 27.6 % 28.1 % |
Schedule of deferred tax assets and liabilities | 2022 2021 (Dollars in thousands) Deferred tax assets: Allowance for credit losses on loans $ 14,171 $ 12,716 Lease accounting 9,703 10,245 Defined postretirement benefit obligation 7,585 9,934 Securities available-for-sale 4,690 — Accrued expenses 3,440 2,681 State income taxes 1,924 1,164 Federal net operating loss carryforwards 1,719 2,206 Premises and equipment 1,677 2,173 Stock compensation 1,363 1,632 California net operating loss carryforwards 1,106 1,489 Nonaccrual interest 174 67 Split-dollar life insurance benefit plan 49 84 Other 201 869 Total deferred tax assets 47,802 45,260 Deferred tax liabilities: Lease accounting (9,703) (10,245) Loan fees (2,304) (2,174) Intangible liabilities (1,940) (1,916) Prepaid expenses (1,304) (972) FHLB stock (156) (166) I/O strips (40) (60) Securities available-for-sale — (823) Other (179) (147) Total deferred tax liabilities (15,626) (16,503) Net deferred tax assets $ 32,176 $ 28,757 |
Summary of carrying amount of low income tax housing investment | December 31, December 31, 2022 2021 (Dollars in thousands) Low income housing investments $ 3,537 $ 4,380 Future commitments $ 523 $ 568 |
Equity Plan (Tables)
Equity Plan (Tables) | 12 Months Ended |
Dec. 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 Granted 387,000 $ 11.12 Exercised (305,880) $ 6.70 Forfeited or expired (138,579) $ 12.34 Outstanding at December 31, 2022 2,527,173 $ 10.44 5.52 $ 7,497,913 Vested or expected to vest 2,375,543 5.52 $ 7,048,038 Exercisable at December 31, 2022 1,900,047 4.48 $ 6,333,749 |
Schedule of information related to the equity Plan | December 31, 2022 2021 2020 Intrinsic value of options exercised $ 1,674,072 $ 1,543,711 $ 2,258,245 Cash received from option exercise $ 2,049,587 $ 1,469,255 $ 1,713,737 Tax benefit realized from option exercises $ 180,414 $ 153,745 $ 63,124 Weighted average fair value of options granted $ 2.22 $ 2.31 $ 1.15 |
Schedule of assumptions used to estimate the fair value of each option grant on the date of grant | December 31, 2022 2021 2020 Expected life in months(1) 72 72 72 Volatility(1) 31 % 33 % 29 % Weighted average risk-free interest rate(2) 2.89 % 1.10 % 0.53 % Expected dividends(3) 4.68 % 4.32 % 5.71 % (1) The expected life of employee stock options represents the weighted average period the stock options are expected to remain outstanding based on historical experience. Volatility is based on the historical volatility of the stock price over the same period of the expected life of the option. (2) Based on the U.S. Treasury constant maturity interest rate with a term consistent with the expected life of the option granted. (3) Each grant’s dividend yield is calculated by annualizing the most recent quarterly cash dividend and dividing that amount by the market price of the Company’s common stock as of the grant date |
Schedule of restricted stock activity under the equity plans | Weighted Average Grant Number Date Fair Total Restricted Stock Award of Shares Value Nonvested shares at January 1, 2022 298,566 $ 11.03 Granted 238,811 $ 11.16 Vested (252,081) $ 11.81 Forfeited or expired (31,805) $ 11.23 Nonvested shares at December 31, 2022 253,491 $ 11.05 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Supplemental Retirement Plan | |
Benefit plans | |
Schedule of change in projected benefit obligation | 2022 2021 (Dollars in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 33,179 $ 35,404 Service cost 347 480 Actuarial gain (7,065) (917) Interest cost 865 759 Benefits paid (1,526) (2,547) Projected benefit obligation at end of year $ 25,800 $ 33,179 Amounts recognized in accumulated other comprehensive loss: Net actuarial loss $ 2,371 $ 7,668 |
Schedule of weighted-average assumptions used to determine the benefit obligation | 2022 2021 Discount rate 5.17 % 2.66 % Rate of compensation increase N/A N/A |
Schedule of estimated benefit payments over the next ten years, which reflect anticipated future events, service and other assumptions | Estimated Benefit Year Payments (Dollars in thousands) 2023 $ 1,654 2024 1,969 2025 2,059 2026 2,179 2027 2,316 2028 to 2032 12,131 |
Schedule of components of net periodic benefit cost | Year Ended December 31, 2022 2021 Components of net periodic benefit cost: Service cost $ 347 $ 480 Interest cost 865 759 Amortization of prior service cost — 100 Amortization of net actuarial loss 455 543 Net periodic benefit cost $ 1,667 $ 1,882 Amount recognized in other comprehensive income $ 5,297 $ 1,098 |
Schedule of assumption used to determine the net periodic benefit cost | 2022 2021 Discount rate 2.66 % 2.26 % Rate of compensation increase N/A N/A |
Split-Dollar Life Insurance Benefit Plan | |
Benefit plans | |
Schedule of change in projected benefit obligation | December 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 246 219 Actuarial loss (2,430) (664) Projected benefit obligation at end of period $ 7,060 $ 9,244 |
Schedule of weighted-average assumptions used to determine the benefit obligation | 2022 2021 Discount rate 5.17 % 2.66 % |
Schedule of amounts recognized in accumulated other comprehensive loss | December 31, December 31, 2022 2021 (Dollars in thousands) Net actuarial loss $ 2,301 $ 4,601 Prior transition obligation 790 879 Accumulated other comprehensive loss $ 3,091 $ 5,480 |
Schedule of components of net periodic benefit cost | Year Ended December 31, 2022 2021 Amortization of prior transition obligation and actuarial losses $ (41) $ (4) Interest cost 246 219 Net periodic benefit cost $ 205 $ 215 Amount recognized in other comprehensive income $ 2,389 $ 660 |
Schedule of assumption used to determine the net periodic benefit cost | 2022 2021 Discount rate 2.66 % 2.26 % |
Fair Value (Tables)
Fair Value (Tables) | 12 Months Ended |
Dec. 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 December 31, 2022 Available-for-sale securities: U.S. Treasury $ 418,474 $ 418,474 $ — $ — Agency mortgage-backed securities 71,122 — 71,122 — I/O strip receivables 152 — 152 — 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 $ 306,603 $ 306,603 $ — $ — $ 306,603 Securities available-for-sale 489,596 418,474 71,122 — 489,596 Securities held-to-maturity, net 714,990 — 614,452 — 614,452 Loans (including loans held-for-sale), net 3,253,494 — 2,456 3,080,485 3,082,941 FHLB stock, FRB stock, and other investments 32,522 — — — N/A Accrued interest receivable 15,047 1,328 1,836 11,883 15,047 I/O strips receivables 152 — 152 — 152 Liabilities: Time deposits $ 143,958 $ — $ 144,702 $ — $ 144,702 Other deposits 4,245,646 — 4,245,646 — 4,245,646 Subordinated debt 39,350 — 36,025 — 36,025 Accrued interest payable 600 — 600 — 600 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, net 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 |
Commitments and Loss Continge_2
Commitments and Loss Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Loss Contingencies | |
Schedule of commitments to extend credit | December 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 $ 87,348 $ 1,036,847 $ 1,124,195 $ 119,071 $ 1,015,588 $ 1,134,659 Standby letters of credit 1,565 8,859 10,424 3,084 13,068 16,152 $ 88,913 $ 1,045,706 $ 1,134,619 $ 122,155 $ 1,028,656 $ 1,150,811 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share | |
Schedule of reconciliation of factors used in computing basic and diluted earnings per common share | Year Ended December 31, 2022 2021 2020 (Dollars in thousands, except per share amounts) Net income $ 66,555 $ 47,700 $ $ 35,299 Weighted average common shares outstanding for basic earnings per common share 60,602,962 60,133,821 59,478,343 Dilutive potential common shares 487,328 555,241 690,796 Shares used in computing diluted earnings per common share 61,090,290 60,689,062 60,169,139 Basic earnings per share $ 1.10 $ 0.79 $ 0.59 Diluted earnings per share $ 1.09 $ 0.79 $ 0.59 |
Capital Requirements (Tables)
Capital Requirements (Tables) | 12 Months Ended |
Dec. 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 December 31, 2022 Total Capital $ 554,810 14.8 % $ 393,461 10.5 % (to risk-weighted assets) Tier 1 Capital $ 475,609 12.7 % $ 318,516 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 475,609 12.7 % $ 262,307 7.0 % (to risk-weighted assets) Tier 1 Capital $ 475,609 9.2 % $ 207,852 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) (1) 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 December 31, 2022 Total Capital $ 532,576 14.2 % $ 374,572 10.0 % $ 393,301 10.5 % (to risk-weighted assets) Tier 1 Capital $ 492,725 13.2 % $ 299,658 8.0 % $ 318,387 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 492,725 13.2 % $ 243,472 6.5 % $ 262,201 7.0 % (to risk-weighted assets) Tier 1 Capital $ 492,725 9.5 % $ 259,740 5.0 % $ 207,792 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. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue Recognition | |
Schedule of noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606 | Year Ended December 31, 2022 2021 2020 (Dollars in thousands) Noninterest Income In-scope of Topic 606: Service charges and fees on deposit accounts $ 4,640 $ 2,488 $ 2,859 Gain on the disposition of foreclosed assets — — 791 Total noninterest income in-scope of Topic 606 4,640 2,488 3,650 Noninterest Income Out-of-scope of Topic 606 5,471 7,200 6,272 Total noninterest income $ 10,111 $ 9,688 $ 9,922 |
Noninterest Expense (Tables)
Noninterest Expense (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Noninterest Expense | |
Schedule of noninterest expense | Year Ended December 31, 2022 2021 2020 (Dollars in thousands) Salaries and employee benefits $ 55,331 $ 51,862 $ 50,927 Occupancy and equipment 9,639 9,038 8,018 Professional fees 5,015 5,901 5,338 Insurance expense 4,958 3,270 2,286 Amortization of intangible assets 2,635 2,996 3,751 Data processing 2,482 2,146 2,770 Reserve for litigation — 4,500 — Other 14,799 13,364 16,421 Total noninterest expense $ 94,859 $ 93,077 $ 89,511 The following table presents the merger-related costs by category for the periods indicated: For the Year Ended December 31, 2022 2021 2020 (Dollars in thousands) Salaries and employee benefits $ — $ — $ 356 Other — 27 2,245 Total merger-related costs $ — $ 27 $ 2,601 |
Business Segment Information (T
Business Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Business Segment Information | |
Schedule of information by operating segment | Year Ended December 31, 2022 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 176,010 $ 12,818 $ 188,828 Intersegment interest allocations 1,441 (1,441) — Total interest expense 8,948 — 8,948 Net interest income 168,503 11,377 179,880 Provision for (recapture of) credit losses on loans 526 240 766 Net interest income after provision 167,977 11,137 179,114 Noninterest income 9,722 389 10,111 Noninterest expense 88,531 6,328 94,859 Intersegment expense allocations 524 (524) — Income before income taxes 89,692 4,674 94,366 Income tax expense 26,429 1,382 27,811 Net income $ 63,263 $ 3,292 $ 66,555 Total assets $ 5,062,943 $ 94,637 $ 5,157,580 Loans, net of deferred fees $ 3,219,287 $ 79,263 $ 3,298,550 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations. Year Ended December 31, 2021 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 141,772 $ 11,484 $ 153,256 Intersegment interest allocations 868 (868) — Total interest expense 7,131 — 7,131 Net interest income 135,509 10,616 146,125 Provision (recapture) for credit losses on loans (2,926) (208) (3,134) Net interest income after provision 138,435 10,824 149,259 Noninterest income 8,651 1,037 9,688 Noninterest expense 87,466 5,611 93,077 Intersegment expense allocations 410 (410) — Income before income taxes 60,030 5,840 65,870 Income tax expense 16,444 1,726 18,170 Net income $ 43,586 $ 4,114 $ 47,700 Total assets $ 5,424,350 $ 75,059 $ 5,499,409 Loans, net of deferred fees $ 3,034,097 $ 53,229 $ 3,087,326 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations. Year Ended December 31, 2020 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 139,744 $ 10,727 $ 150,471 Intersegment interest allocations 923 (923) — Total interest expense 8,581 — 8,581 Net interest income 132,086 9,804 141,890 Provision for credit losses on loans 12,928 305 13,233 Net interest income after provision 119,158 9,499 128,657 Noninterest income 9,277 645 9,922 Noninterest expense (2) 83,149 9,362 89,511 Intersegment expense allocations 404 (404) — Income before income taxes 45,690 3,378 49,068 Income tax expense 12,770 999 13,769 Net income $ 32,920 $ 2,379 $ 35,299 Total assets $ 4,567,239 $ 66,875 $ 4,634,114 Loans, net of deferred fees $ 2,572,060 $ 47,201 $ 2,619,261 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations. (2) The banking segment’s noninterest expense includes merger-related costs of $2,601,000. |
Parent Company only Condensed_2
Parent Company only Condensed Financial Information (Tables) - Parent Company | 12 Months Ended |
Dec. 31, 2022 | |
Condensed financial statements | |
Schedule of condensed balance sheets | Condensed Balance Sheets December 31, 2022 2021 (Dollars in thousands) Assets Cash and cash equivalents $ 20,974 $ 19,487 Investment in subsidiary bank 649,545 616,108 Other assets 1,549 2,685 Total assets $ 672,068 $ 638,280 Liabilities and Shareholders' Equity Subordinated debt, net of issuance costs $ 39,350 $ 39,925 Other liabilities 262 327 Shareholders' equity 632,456 598,028 Total liabilities and shareholders' equity $ 672,068 $ 638,280 |
Schedule of condensed statements of income | Condensed Statements of Operations Year Ended December 31, 2022 2021 2020 (Dollars in thousands) Dividend from subsidiary bank $ 32,000 $ 32,000 $ 32,000 Interest expense (2,179) (2,314) (2,321) Other expenses (3,675) (3,929) (3,263) Income before income taxes and equity in net income of subsidiary bank 26,146 25,757 26,416 Equity in undistributed net income of subsidiary bank 38,702 20,127 7,255 Income tax benefit 1,707 1,816 1,628 Net income $ 66,555 $ 47,700 $ 35,299 |
Schedule of condensed statements of cash flows | Condensed Statements of Cash Flows Year Ended December 31, 2022 2021 2020 (Dollars in thousands) Cash flows from operating activities: Net Income $ 66,555 $ 47,700 $ 35,299 Adjustments to reconcile net income to net cash provided by operations: Amortization of restricted stock awards, net 2,583 1,940 1,689 Equity in undistributed net income of subsidiary bank (38,702) (20,127) (7,255) Net change in other assets and liabilities 1,222 (603) (250) Net cash provided by operating activities 31,658 28,910 29,483 Cash flows from financing activities: Proceeds from issuance of long-term debt 39,274 — — Repayment of long-term debt (40,000) — — Payment of cash dividends (31,495) (31,270) (31,079) Proceeds from exercise of stock options 2,050 1,469 1,714 Net cash used in financing activities (30,171) (29,801) (29,365) Net increase (decrease) in cash and cash equivalents 1,487 (891) 118 Cash and cash equivalents, beginning of year 19,487 20,378 20,260 Cash and cash equivalents, end of year $ 20,974 $ 19,487 $ 20,378 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Cash and Cash Equivalents (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Cash and Cash Equivalents | |
Period for which federal funds are sold and purchased | 1 day |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Allowance for Credit Losses on Loans (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 |
Allowance for credit losses on loans | $ 47,512,000 | $ 43,290,000 | $ 44,400,000 | $ 31,855,000 | $ 23,285,000 |
Loans, net of deferred fees | 3,299,067,000 | 3,090,788,000 | |||
Loans, net | 3,251,038,000 | 3,044,036,000 | |||
Commercial. | SBA Paycheck Protection Program ("PPP") | |||||
Allowance for credit losses on loans | 0 | ||||
SBA Paycheck Protection Program ("PPP") loans | |||||
Loans, net of deferred fees | 1,166,000 | ||||
Loans, net | 88,726,000 | ||||
Bay View Funding | |||||
Loans, net | $ 79,263,000 | $ 53,229,000 | |||
ASU 2016-03 - Topic 326 | |||||
Allowance for credit losses on loans | $ 8,570,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Premises and Equipment (Details) | 12 Months Ended |
Dec. 31, 2022 building | |
Premises and Equipment | |
Number of buildings owned | 1 |
Building | |
Premises and Equipment | |
Estimated useful life | 40 years |
Furniture | Minimum | |
Premises and Equipment | |
Estimated useful life | 5 years |
Furniture | Maximum | |
Premises and Equipment | |
Estimated useful life | 15 years |
Equipment | Minimum | |
Premises and Equipment | |
Estimated useful life | 5 years |
Equipment | Maximum | |
Premises and Equipment | |
Estimated useful life | 15 years |
Leasehold improvements | Minimum | |
Premises and Equipment | |
Estimated useful life | 5 years |
Leasehold improvements | Maximum | |
Premises and Equipment | |
Estimated useful life | 15 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Goodwill and Other Intangible Assets (Details) | 1 Months Ended | |||
Oct. 11, 2019 | May 04, 2018 | Aug. 01, 2015 | Nov. 30, 2014 | |
United American Bank | ||||
Goodwill and Other Intangible Assets | ||||
Useful life, amortization period | 3 years | |||
Core deposit | Focus | ||||
Goodwill and Other Intangible Assets | ||||
Useful life, amortization period | 10 years | |||
Below/ (Above) market-value lease | Presidio bank | ||||
Goodwill and Other Intangible Assets | ||||
Useful life, amortization period | 60 months | |||
Customer relationship and brokered relationship | BVF/CSNK | ||||
Goodwill and Other Intangible Assets | ||||
Useful life, amortization period | 10 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Foreclosed Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Foreclosed Assets | ||
Foreclosed assets | $ 0 | $ 0 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Segment Reporting (Details) | 12 Months Ended |
Dec. 31, 2022 customer segment | |
Segment Reporting | |
Number of customers accounting for more than 10 percent of revenue for HBC or the Company | customer | 0 |
Number of Reportable Segments | segment | 2 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income - Changes in AOCI by Component (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
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 | (5,860) | $ (279) | $ (939) |
Balance at the end of the period, net of taxes | (16,856) | (10,996) | |
Accumulated Other Comprehensive 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 | (6,152) | (468) | |
Amounts reclassified from other comprehensive income (loss), net of taxes | 292 | 189 | |
Net current period other comprehensive income (loss), net of taxes | (5,860) | (279) | (939) |
Balance at the end of the period, net of taxes | (16,856) | (10,996) | (10,717) |
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 | (13,547) | (1,776) | |
Net current period other comprehensive income (loss), net of taxes | (13,547) | (1,776) | |
Balance at the end of the period, net of taxes | (11,394) | 2,153 | 3,929 |
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 | (261) | ||
Net current period other comprehensive income (loss), net of taxes | (261) | ||
Balance at the end of the period, net of taxes | 261 | ||
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 | 7,395 | 1,308 | |
Amounts reclassified from other comprehensive income (loss), net of taxes | 292 | 450 | |
Net current period other comprehensive income (loss), net of taxes | 7,687 | 1,758 | |
Balance at the end of the period, net of taxes | $ (5,462) | $ (13,149) | $ (14,907) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income - Amount Reclassified from AOCI (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Amount Reclassified from AOCI | |||
Gain on sales of securities | $ 277 | ||
Interest income on taxable securities | $ 20,666 | $ 8,678 | 11,637 |
Income tax expense | (27,811) | (18,170) | (13,769) |
Net income | 66,555 | 47,700 | 35,299 |
Unrealized Gains (Losses) on Available-for-Sale Securities and I/O Strips | Amount Reclassified from AOCI | |||
Amount Reclassified from AOCI | |||
Gain on sales of securities | 277 | ||
Income tax expense | (82) | ||
Net income | 195 | ||
Amortization of unrealized gain on securities available-for-sale that were reclassified to securities held-to-maturity | |||
Amount Reclassified from AOCI | |||
Net of tax | 261 | ||
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 | 371 | 52 | |
Income tax expense | (110) | (15) | |
Net income | 261 | 37 | |
Defined Benefit Pension Plan Items | |||
Amount Reclassified from AOCI | |||
Net of tax | (292) | (450) | |
Defined Benefit Pension Plan Items | Amount Reclassified from AOCI | |||
Amount Reclassified from AOCI | |||
Other noninterest expense | (414) | (639) | (327) |
Income tax benefit | 122 | 189 | 97 |
Net of tax | (292) | (450) | (230) |
Prior transition obligation | Amount Reclassified from AOCI | |||
Amount Reclassified from AOCI | |||
Other noninterest expense | 41 | 4 | 60 |
Prior service cost | Amount Reclassified from AOCI | |||
Amount Reclassified from AOCI | |||
Other noninterest expense | (455) | (643) | (387) |
Accumulated Other Comprehensive Loss | |||
Amount Reclassified from AOCI | |||
Net of tax | (292) | (189) | |
Accumulated Other Comprehensive Loss | Amount Reclassified from AOCI | |||
Amount Reclassified from AOCI | |||
Net of tax | $ (292) | $ (189) | $ 2 |
Securities - Amortized Cost and
Securities - Amortized Cost and Estimated Fair Value of Securities - Securities Available-for-sale (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Securities available-for-sale: | ||
Amortized Cost | $ 505,713 | $ 99,359 |
Gross Unrealized Gains | 2,893 | |
Gross Unrealized (Losses) | (16,117) | |
Estimated Fair Value | 489,596 | 102,252 |
U.S. Treasury | ||
Securities available-for-sale: | ||
Amortized Cost | 428,797 | |
Gross Unrealized (Losses) | (10,323) | |
Estimated Fair Value | 418,474 | |
Agency mortgage-backed securities | ||
Securities available-for-sale: | ||
Amortized Cost | 76,916 | 99,359 |
Gross Unrealized Gains | 2,893 | |
Gross Unrealized (Losses) | (5,794) | |
Estimated Fair Value | $ 71,122 | $ 102,252 |
Securities - Amortized Cost a_2
Securities - Amortized Cost and Estimated Fair Value of Securities - Securities Held-to-maturity (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Securities held-to-maturity: | ||
Total | $ 715,004 | $ 658,440 |
Gross Unrecognized Gains | 244 | 3,961 |
Gross Unrecognized (Losses) | (100,796) | (4,752) |
Estimated Fair Value | 614,452 | 657,649 |
Allowance for credit losses | (14) | (43) |
Agency mortgage-backed securities | ||
Securities held-to-maturity: | ||
Total | 677,381 | 607,377 |
Gross Unrecognized Gains | 235 | 3,157 |
Gross Unrecognized (Losses) | (99,977) | (4,752) |
Estimated Fair Value | 577,639 | 605,782 |
Municipals - exempt from Federal tax | ||
Securities held-to-maturity: | ||
Total | 37,623 | 51,063 |
Gross Unrecognized Gains | 9 | 804 |
Gross Unrecognized (Losses) | (819) | |
Estimated Fair Value | 36,813 | 51,867 |
Allowance for credit losses | $ (14) | $ (43) |
Securities - Securities with Un
Securities - Securities with Unrealized Losses - Securities Held-to-maturity (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Securities, Fair Value | ||
Less Than 12 Months | $ 489,596,000 | |
Total | 489,596,000 | |
Less Than 12 Months | 167,271,000 | $ 408,856,000 |
12 Months or More | 429,257,000 | 27,997,000 |
Total | 596,528,000 | 436,853,000 |
Securities, Unrealized (Losses) | ||
Less Than 12 Months | (16,117,000) | |
Total | (16,117,000) | |
Less Than 12 Months | (13,685,000) | (3,319,000) |
12 Months or More | (87,111,000) | (1,433,000) |
Total | (100,796,000) | (4,752,000) |
Agency mortgage-backed securities | ||
Securities, Fair Value | ||
Less Than 12 Months | 71,122,000 | |
Total | 71,122,000 | |
Less Than 12 Months | 136,264,000 | 408,856,000 |
12 Months or More | 429,257,000 | 27,997,000 |
Total | 565,521,000 | 436,853,000 |
Securities, Unrealized (Losses) | ||
Less Than 12 Months | (5,794,000) | |
Total | (5,794,000) | |
Less Than 12 Months | (12,866,000) | (3,319,000) |
12 Months or More | (87,111,000) | (1,433,000) |
Total | (99,977,000) | $ (4,752,000) |
U.S. Treasury | ||
Securities, Fair Value | ||
Less Than 12 Months | 418,474,000 | |
Total | 418,474,000 | |
Securities, Unrealized (Losses) | ||
Less Than 12 Months | (10,323,000) | |
Total | (10,323,000) | |
Municipals - exempt from Federal tax | ||
Securities, Fair Value | ||
Less Than 12 Months | 31,007,000 | |
Total | 31,007,000 | |
Securities, Unrealized (Losses) | ||
Less Than 12 Months | (819,000) | |
Total | $ (819,000) |
Securities - Additional Informa
Securities - Additional Information (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) item security | Dec. 31, 2021 USD ($) | |
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% | |
Number of securities held | item | 463 | |
Number of available for sale securities held | item | 173 | |
Number of held to maturity securities held | item | 290 | |
Number of securities with fair values below amortized cost | item | 439 | |
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months | $ 489,596,000 | |
Debt Securities, Held-to-Maturity, Continuous Unrealized Losses Position, Less than 12 Months, Fair Value | 167,271,000 | $ 408,856,000 |
Debt Securities, Held-to-Maturity, Continuous Unrealized Losses Position, 12 Months or Longer, Fair Value | 429,257,000 | 27,997,000 |
Total unrealized loss for securities carried less than 12 months | (29,802,000) | |
Total unrealized loss for securities carried for 12 months or more | (87,111,000) | |
Agency mortgage-backed securities | ||
Additional Information | ||
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months | 71,122,000 | |
Debt Securities, Held-to-Maturity, Continuous Unrealized Losses Position, Less than 12 Months, Fair Value | 136,264,000 | 408,856,000 |
Debt Securities, Held-to-Maturity, Continuous Unrealized Losses Position, 12 Months or Longer, Fair Value | 429,257,000 | $ 27,997,000 |
U.S. Treasury | ||
Additional Information | ||
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months | 418,474,000 | |
Municipals - exempt from Federal tax | ||
Additional Information | ||
Debt Securities, Held-to-Maturity, Continuous Unrealized Losses Position, Less than 12 Months, Fair Value | $ 31,007,000 |
Securities - Proceeds from Sale
Securities - Proceeds from Sales of Securities and the Resulting Gains and Losses (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020 USD ($) | |
Proceeds from Sales of Securities and the Resulting Gains and Losses | |
Proceeds | $ 56,598 |
Gross gains | $ 277 |
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 | Dec. 31, 2022 | Dec. 31, 2021 |
Available-for-sale, Amortized Cost | ||
Due after 3 months through one year | $ 46,065 | |
Due after one year through five years | 382,732 | |
Agency mortgage-backed securities | 76,916 | |
Total | 505,713 | $ 99,359 |
Available-for-sale, Estimated Fair Value | ||
Due after 3 months through one year | 45,736 | |
Due after one year through five years | 372,738 | |
Agency mortgage-backed securities | 71,122 | |
Total | $ 489,596 | $ 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 | Dec. 31, 2022 | Dec. 31, 2021 |
Held-to-maturity, Amortized Cost | ||
Due after 3 months through one year | $ 554 | |
Due after one year through five years | 7,681 | |
Due after five years through ten years | 27,459 | |
Due after ten years | 1,929 | |
Agency mortgage-backed securities | 677,381 | |
Total | 715,004 | |
Held-to-maturity, Estimated Fair Value | ||
Due after 3 months through one year | 553 | |
Due after one year through five years | 7,613 | |
Due after five years through ten years | 26,745 | |
Due after ten years | 1,902 | |
Agency mortgage-backed securities | 577,639 | |
Total | $ 614,452 | $ 657,649 |
Securities - Securities Pledged
Securities - Securities Pledged to Secure Public Deposits and for Other Purposes (Details) - USD ($) | Dec. 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 | $ 66,272,000 | $ 42,473,000 |
Securities - Roll-forward by ma
Securities - Roll-forward by major security type (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Securities | |
Debt Securities, Held-to-maturity, Allowance for Credit Loss, Beginning Balance | $ 43,000 |
Provision for (recapture of) credit losses | (29,000) |
Debt Securities, Held-to-maturity, Allowance for Credit Loss, Ending Balance | $ 14,000 |
Loans and Allowance for Credi_3
Loans and Allowance for Credit Losses on Loans - Loans Balance (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 |
Loans held-for-investment: | |||||
Total loan balance | $ 3,299,067,000 | $ 3,090,788,000 | |||
Deferred loan fees, net | (517,000) | (3,462,000) | |||
Loans, net of deferred fees | 3,298,550,000 | 3,087,326,000 | $ 2,619,261,000 | ||
Allowance for credit losses on loans | (47,512,000) | (43,290,000) | (44,400,000) | $ (31,855,000) | $ (23,285,000) |
Loans, net | 3,251,038,000 | 3,044,036,000 | |||
Commercial. | SBA Paycheck Protection Program ("PPP") | |||||
Loans held-for-investment: | |||||
Allowance for credit losses on loans | 0 | ||||
Commercial | |||||
Loans held-for-investment: | |||||
Total loan balance | 533,915,000 | 682,834,000 | |||
Allowance for credit losses on loans | (6,617,000) | (8,414,000) | (11,587,000) | (6,790,000) | (10,453,000) |
Commercial | Commercial. | |||||
Loans held-for-investment: | |||||
Total loan balance | 533,915,000 | 682,834,000 | |||
SBA Paycheck Protection Program ("PPP") loans | |||||
Loans held-for-investment: | |||||
Total loan balance | 1,166,000 | ||||
Loans, net | 88,726,000 | ||||
CRE - Owner Occupied | |||||
Loans held-for-investment: | |||||
Total loan balance | 614,663,000 | 595,934,000 | |||
Allowance for credit losses on loans | (5,751,000) | (7,954,000) | (8,560,000) | (6,994,000) | (3,825,000) |
CRE - Owner Occupied | Real estate | |||||
Loans held-for-investment: | |||||
Total loan balance | 614,663,000 | 595,934,000 | |||
CRE - Non-Owner Occupied | |||||
Loans held-for-investment: | |||||
Total loan balance | 1,066,368,000 | 902,326,000 | |||
Allowance for credit losses on loans | (22,135,000) | (17,125,000) | (16,416,000) | (11,672,000) | (3,760,000) |
CRE - Non-Owner Occupied | Real estate | |||||
Loans held-for-investment: | |||||
Total loan balance | 1,066,368,000 | 902,326,000 | |||
Land & Construction | |||||
Loans held-for-investment: | |||||
Total loan balance | 163,577,000 | 147,855,000 | |||
Allowance for credit losses on loans | (2,941,000) | (1,831,000) | (2,509,000) | (1,458,000) | (2,621,000) |
Land & Construction | Real estate | |||||
Loans held-for-investment: | |||||
Total loan balance | 163,577,000 | 147,855,000 | |||
Home Equity | |||||
Loans held-for-investment: | |||||
Total loan balance | 120,724,000 | 109,579,000 | |||
Allowance for credit losses on loans | (666,000) | (864,000) | (1,297,000) | (1,321,000) | (2,244,000) |
Home Equity | Real estate | |||||
Loans held-for-investment: | |||||
Total loan balance | 120,724,000 | 109,579,000 | |||
Multi-Family | |||||
Loans held-for-investment: | |||||
Total loan balance | 244,882,000 | 218,856,000 | |||
Allowance for credit losses on loans | (3,366,000) | (2,796,000) | (2,804,000) | (1,253,000) | (57,000) |
Multi-Family | Real estate | |||||
Loans held-for-investment: | |||||
Total loan balance | 244,882,000 | 218,856,000 | |||
Residential Mortgage | |||||
Loans held-for-investment: | |||||
Total loan balance | 537,905,000 | 416,660,000 | |||
Allowance for credit losses on loans | (5,907,000) | (4,132,000) | (943,000) | (678,000) | (243,000) |
Residential Mortgage | Real estate | |||||
Loans held-for-investment: | |||||
Total loan balance | 537,905,000 | 416,660,000 | |||
Consumer and Other | |||||
Loans held-for-investment: | |||||
Total loan balance | 17,033,000 | 16,744,000 | |||
Allowance for credit losses on loans | (129,000) | (174,000) | $ (284,000) | $ (1,689,000) | (82,000) |
Consumer and Other | Consumer | |||||
Loans held-for-investment: | |||||
Total loan balance | $ 17,033,000 | $ 16,744,000 | |||
ASU 2016-03 - Topic 326 | |||||
Loans held-for-investment: | |||||
Allowance for credit losses on loans | (8,570,000) | ||||
ASU 2016-03 - Topic 326 | Commercial | |||||
Loans held-for-investment: | |||||
Allowance for credit losses on loans | 3,663,000 | ||||
ASU 2016-03 - Topic 326 | CRE - Owner Occupied | |||||
Loans held-for-investment: | |||||
Allowance for credit losses on loans | (3,169,000) | ||||
ASU 2016-03 - Topic 326 | CRE - Non-Owner Occupied | |||||
Loans held-for-investment: | |||||
Allowance for credit losses on loans | (7,912,000) | ||||
ASU 2016-03 - Topic 326 | Land & Construction | |||||
Loans held-for-investment: | |||||
Allowance for credit losses on loans | 1,163,000 | ||||
ASU 2016-03 - Topic 326 | Home Equity | |||||
Loans held-for-investment: | |||||
Allowance for credit losses on loans | 923,000 | ||||
ASU 2016-03 - Topic 326 | Multi-Family | |||||
Loans held-for-investment: | |||||
Allowance for credit losses on loans | (1,196,000) | ||||
ASU 2016-03 - Topic 326 | Residential Mortgage | |||||
Loans held-for-investment: | |||||
Allowance for credit losses on loans | (435,000) | ||||
ASU 2016-03 - Topic 326 | Consumer and Other | |||||
Loans held-for-investment: | |||||
Allowance for credit losses on loans | $ (1,607,000) |
Loans and Allowance for Credi_4
Loans and Allowance for Credit Losses on Loans - Changes in the Allowance for Loan Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | $ 43,290 | $ 44,400 | $ 23,285 |
Charge-offs | (434) | (520) | (1,880) |
Recoveries | 3,890 | 2,544 | 1,192 |
Net recoveries | 3,456 | 2,024 | (688) |
Provision for (recapture of) credit losses on loans | 766 | (3,134) | 13,233 |
End of period balance | 47,512 | 43,290 | 44,400 |
ASU 2016-03 - Topic 326 | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | 8,570 | ||
Commercial | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | 8,414 | 11,587 | 10,453 |
Charge-offs | (434) | (520) | (1,776) |
Recoveries | 427 | 1,354 | 998 |
Net recoveries | (7) | 834 | (778) |
Provision for (recapture of) credit losses on loans | (1,790) | (4,007) | 5,575 |
End of period balance | 6,617 | 8,414 | 11,587 |
Commercial | ASU 2016-03 - Topic 326 | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | (3,663) | ||
CRE - Owner Occupied | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | 7,954 | 8,560 | 3,825 |
Recoveries | 15 | 16 | 1 |
Net recoveries | 15 | 16 | 1 |
Provision for (recapture of) credit losses on loans | (2,218) | (622) | 1,565 |
End of period balance | 5,751 | 7,954 | 8,560 |
CRE - Owner Occupied | ASU 2016-03 - Topic 326 | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | 3,169 | ||
CRE - Non-Owner Occupied | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | 17,125 | 16,416 | 3,760 |
Provision for (recapture of) credit losses on loans | 5,010 | 709 | 4,744 |
End of period balance | 22,135 | 17,125 | 16,416 |
CRE - Non-Owner Occupied | ASU 2016-03 - Topic 326 | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | 7,912 | ||
Land & Construction | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | 1,831 | 2,509 | 2,621 |
Recoveries | 884 | 70 | |
Net recoveries | 884 | 70 | |
Provision for (recapture of) credit losses on loans | 1,110 | (1,562) | 981 |
End of period balance | 2,941 | 1,831 | 2,509 |
Land & Construction | ASU 2016-03 - Topic 326 | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | (1,163) | ||
Home Equity | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | 864 | 1,297 | 2,244 |
Recoveries | 105 | 93 | 93 |
Net recoveries | 105 | 93 | 93 |
Provision for (recapture of) credit losses on loans | (303) | (526) | (117) |
End of period balance | 666 | 864 | 1,297 |
Home Equity | ASU 2016-03 - Topic 326 | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | (923) | ||
Multi-Family | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | 2,796 | 2,804 | 57 |
Provision for (recapture of) credit losses on loans | 570 | (8) | 1,551 |
End of period balance | 3,366 | 2,796 | 2,804 |
Multi-Family | ASU 2016-03 - Topic 326 | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | 1,196 | ||
Residential Mortgage | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | 4,132 | 943 | 243 |
Provision for (recapture of) credit losses on loans | 1,775 | 3,189 | 265 |
End of period balance | 5,907 | 4,132 | 943 |
Residential Mortgage | ASU 2016-03 - Topic 326 | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | 435 | ||
Consumer and Other | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | 174 | 284 | 82 |
Charge-offs | (104) | ||
Recoveries | 3,343 | 197 | 30 |
Net recoveries | 3,343 | 197 | (74) |
Provision for (recapture of) credit losses on loans | (3,388) | (307) | (1,331) |
End of period balance | $ 129 | $ 174 | 284 |
Consumer and Other | ASU 2016-03 - Topic 326 | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Beginning of period balance | $ 1,607 |
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 | Dec. 31, 2022 | Dec. 31, 2021 |
Nonperforming Loans by Class | ||
Nonaccrual Financing Receivable, no Specific Allowance for Credit Losses | $ 416 | $ 2,432 |
Nonaccrual Financing Receivable, with Special Allowance for Credit Losses | 324 | 1,028 |
Loans Over 90 Days Past Due and Still Accruing | 1,685 | 278 |
Total | 2,425 | 3,738 |
Commercial. | ||
Nonperforming Loans by Class | ||
Nonaccrual Financing Receivable, no Specific Allowance for Credit Losses | 318 | 94 |
Nonaccrual Financing Receivable, with Special Allowance for Credit Losses | 324 | 1,028 |
Loans Over 90 Days Past Due and Still Accruing | 349 | 278 |
Total | 991 | 1,400 |
Real Estate. | Real estate | ||
Nonperforming Loans by Class | ||
Loans Over 90 Days Past Due and Still Accruing | 1,336 | |
Total | 1,336 | |
CRE - Owner Occupied | Real estate | ||
Nonperforming Loans by Class | ||
Nonaccrual Financing Receivable, no Specific Allowance for Credit Losses | 1,126 | |
Total | 1,126 | |
Home Equity | Real estate | ||
Nonperforming Loans by Class | ||
Nonaccrual Financing Receivable, no Specific Allowance for Credit Losses | 98 | 84 |
Total | $ 98 | 84 |
Multi-Family | Real estate | ||
Nonperforming Loans by Class | ||
Nonaccrual Financing Receivable, no Specific Allowance for Credit Losses | 1,128 | |
Total | $ 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 ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Aging of Past Due Loans by Class of Loans | |||
Loan balance | $ 3,298,550,000 | $ 3,087,326,000 | $ 2,619,261,000 |
Total | 3,299,067,000 | 3,090,788,000 | |
30-59 Days Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 11,690,000 | 3,313,000 | |
60-89 Days Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 3,337,000 | 168,000 | |
90 Days or Greater Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 2,039,000 | 1,534,000 | |
Past due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 17,066,000 | 5,015,000 | |
Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 3,282,001,000 | 3,085,773,000 | |
Commercial | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 533,915,000 | 682,834,000 | |
Commercial | Commercial. | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 533,915,000 | 682,834,000 | |
Commercial | Commercial. | 30-59 Days Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 7,236,000 | 2,714,000 | |
Commercial | Commercial. | 60-89 Days Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 2,519,000 | 168,000 | |
Commercial | Commercial. | 90 Days or Greater Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 703,000 | 408,000 | |
Commercial | Commercial. | Past due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 10,458,000 | 3,290,000 | |
Commercial | Commercial. | Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 523,457,000 | 679,544,000 | |
CRE - Owner Occupied | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 614,663,000 | 595,934,000 | |
CRE - Owner Occupied | Real estate | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 614,663,000 | 595,934,000 | |
CRE - Owner Occupied | Real estate | 30-59 Days Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 252,000 | ||
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 | ||
CRE - Owner Occupied | Real estate | Past due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 252,000 | 1,126,000 | |
CRE - Owner Occupied | Real estate | Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 614,411,000 | 594,808,000 | |
CRE - Non-Owner Occupied | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 1,066,368,000 | 902,326,000 | |
CRE - Non-Owner Occupied | Real estate | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 1,066,368,000 | 902,326,000 | |
CRE - Non-Owner Occupied | Real estate | 90 Days or Greater Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 1,336,000 | ||
CRE - Non-Owner Occupied | Real estate | Past due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 1,336,000 | ||
CRE - Non-Owner Occupied | Real estate | Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 1,065,032,000 | 902,326,000 | |
Land & Construction | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 163,577,000 | 147,855,000 | |
Land & Construction | Real estate | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 163,577,000 | 147,855,000 | |
Land & Construction | Real estate | Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 163,577,000 | 147,855,000 | |
Home Equity | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 120,724,000 | 109,579,000 | |
Home Equity | Real estate | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 120,724,000 | 109,579,000 | |
Home Equity | Real estate | 60-89 Days Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 98,000 | ||
Home Equity | Real estate | Past due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 98,000 | ||
Home Equity | Real estate | Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 120,626,000 | 109,579,000 | |
Multi-Family | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 244,882,000 | 218,856,000 | |
Multi-Family | Real estate | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 244,882,000 | 218,856,000 | |
Multi-Family | Real estate | Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 244,882,000 | 218,856,000 | |
Residential Mortgage | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 537,905,000 | 416,660,000 | |
Residential Mortgage | Real estate | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 537,905,000 | 416,660,000 | |
Residential Mortgage | Real estate | 30-59 Days Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 4,202,000 | 599,000 | |
Residential Mortgage | Real estate | 60-89 Days Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 720,000 | ||
Residential Mortgage | Real estate | Past due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 4,922,000 | 599,000 | |
Residential Mortgage | Real estate | Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 532,983,000 | 416,061,000 | |
Consumer and Other | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 17,033,000 | 16,744,000 | |
Consumer and Other | Consumer | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 17,033,000 | 16,744,000 | |
Consumer and Other | Consumer | Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | $ 17,033,000 | $ 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 ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Aging of Past Due Loans by Class of Loans | |||
Loans, net of deferred fees | $ 3,298,550,000 | $ 3,087,326,000 | $ 2,619,261,000 |
30 days or greater past due | |||
Aging of Past Due Loans by Class of Loans | |||
Nonaccrual loans | 479,000 | 1,258,000 | |
Less than 30 days past due | |||
Aging of Past Due Loans by Class of Loans | |||
Nonaccrual loans | 261,000 | 2,202,000 | |
Past due | |||
Aging of Past Due Loans by Class of Loans | |||
Loans, net of deferred fees | $ 17,066,000 | $ 5,015,000 |
Loans and Allowance for Credi_8
Loans and Allowance for Credit Losses on Loans - Credit Quality Indicators (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Loans | ||
2022/ 2021 | $ 735,274,000 | $ 1,359,286,000 |
2021/ 2020 | 874,235,000 | 421,591,000 |
2020/ 2019 | 161,375,000 | 244,397,000 |
2019/ 2018 | 240,466,000 | 138,204,000 |
2018/ 2017 | 155,623,000 | 131,061,000 |
Prior Periods | 680,984,000 | 294,461,000 |
Revolving | 451,110,000 | 501,788,000 |
Total loan balance | 3,299,067,000 | 3,090,788,000 |
Balance to report | 3,251,038,000 | 3,044,036,000 |
Loan classified as loss | ||
Loans | ||
Balance to report | 0 | 0 |
Commercial | ||
Loans | ||
2022/ 2021 | 106,381,000 | 215,159,000 |
2021/ 2020 | 38,091,000 | 67,141,000 |
2020/ 2019 | 24,598,000 | 15,342,000 |
2019/ 2018 | 20,540,000 | 13,058,000 |
2018/ 2017 | 12,419,000 | 7,856,000 |
Prior Periods | 27,293,000 | 5,761,000 |
Revolving | 304,593,000 | 358,517,000 |
Total loan balance | 533,915,000 | 682,834,000 |
Commercial | Pass [Member] | ||
Loans | ||
2022/ 2021 | 102,969,000 | |
2021/ 2020 | 36,752,000 | |
2020/ 2019 | 24,406,000 | |
2019/ 2018 | 19,272,000 | |
2018/ 2017 | 12,089,000 | |
Prior Periods | 21,127,000 | |
Revolving | 293,546,000 | |
Total loan balance | 510,161,000 | |
Commercial | Pass And Watch [Member] | ||
Loans | ||
2022/ 2021 | 208,645,000 | |
2021/ 2020 | 65,257,000 | |
2020/ 2019 | 15,086,000 | |
2019/ 2018 | 12,281,000 | |
2018/ 2017 | 7,311,000 | |
Prior Periods | 5,507,000 | |
Revolving | 349,717,000 | |
Total loan balance | 663,804,000 | |
Commercial | Special Mention [Member] | ||
Loans | ||
2022/ 2021 | 3,408,000 | 2,210,000 |
2021/ 2020 | 1,060,000 | 512,000 |
2020/ 2019 | 192,000 | 219,000 |
2019/ 2018 | 1,123,000 | 764,000 |
2018/ 2017 | 243,000 | |
Prior Periods | 6,031,000 | 204,000 |
Revolving | 5,551,000 | 4,024,000 |
Total loan balance | 17,365,000 | 8,176,000 |
Commercial | Substandard [Member] | ||
Loans | ||
2022/ 2021 | 4,000 | 3,709,000 |
2021/ 2020 | 930,000 | |
2019/ 2018 | 145,000 | 13,000 |
2018/ 2017 | 302,000 | |
Prior Periods | 102,000 | 2,000 |
Revolving | 5,496,000 | 4,776,000 |
Total loan balance | 5,747,000 | 9,732,000 |
Commercial | Substandard-Nonaccrual [Member] | ||
Loans | ||
2022/ 2021 | 595,000 | |
2021/ 2020 | 279,000 | 442,000 |
2020/ 2019 | 37,000 | |
2018/ 2017 | 330,000 | |
Prior Periods | 33,000 | 48,000 |
Total loan balance | 642,000 | 1,122,000 |
CRE - Owner Occupied | ||
Loans | ||
2022/ 2021 | 92,689,000 | 172,057,000 |
2021/ 2020 | 118,959,000 | 144,499,000 |
2020/ 2019 | 75,874,000 | 66,268,000 |
2019/ 2018 | 61,007,000 | 58,494,000 |
2018/ 2017 | 58,373,000 | 31,657,000 |
Prior Periods | 199,003,000 | 108,473,000 |
Revolving | 8,758,000 | 14,486,000 |
Total loan balance | 614,663,000 | 595,934,000 |
CRE - Owner Occupied | Pass [Member] | ||
Loans | ||
2022/ 2021 | 92,689,000 | |
2021/ 2020 | 116,266,000 | |
2020/ 2019 | 75,007,000 | |
2019/ 2018 | 59,887,000 | |
2018/ 2017 | 58,180,000 | |
Prior Periods | 194,584,000 | |
Revolving | 8,758,000 | |
Total loan balance | 605,371,000 | |
CRE - Owner Occupied | Pass And Watch [Member] | ||
Loans | ||
2022/ 2021 | 170,504,000 | |
2021/ 2020 | 135,103,000 | |
2020/ 2019 | 65,596,000 | |
2019/ 2018 | 57,017,000 | |
2018/ 2017 | 31,657,000 | |
Prior Periods | 107,203,000 | |
Revolving | 14,486,000 | |
Total loan balance | 581,566,000 | |
CRE - Owner Occupied | Special Mention [Member] | ||
Loans | ||
2022/ 2021 | 568,000 | |
2021/ 2020 | 2,033,000 | 2,254,000 |
2020/ 2019 | 867,000 | 672,000 |
2019/ 2018 | 1,120,000 | |
Prior Periods | 4,410,000 | 355,000 |
Total loan balance | 8,430,000 | 3,849,000 |
CRE - Owner Occupied | Substandard [Member] | ||
Loans | ||
2022/ 2021 | 985,000 | |
2021/ 2020 | 660,000 | 6,042,000 |
2019/ 2018 | 1,477,000 | |
2018/ 2017 | 193,000 | |
Prior Periods | 9,000 | 889,000 |
Total loan balance | 862,000 | 9,393,000 |
CRE - Owner Occupied | Substandard-Nonaccrual [Member] | ||
Loans | ||
2021/ 2020 | 1,100,000 | |
Prior Periods | 26,000 | |
Total loan balance | 1,126,000 | |
CRE - Non-Owner Occupied | ||
Loans | ||
2022/ 2021 | 239,556,000 | 374,470,000 |
2021/ 2020 | 278,051,000 | 152,634,000 |
2020/ 2019 | 31,848,000 | 115,170,000 |
2019/ 2018 | 101,854,000 | 45,959,000 |
2018/ 2017 | 63,905,000 | 69,258,000 |
Prior Periods | 347,909,000 | 142,767,000 |
Revolving | 3,245,000 | 2,068,000 |
Total loan balance | 1,066,368,000 | 902,326,000 |
CRE - Non-Owner Occupied | Pass [Member] | ||
Loans | ||
2022/ 2021 | 239,556,000 | |
2021/ 2020 | 278,051,000 | |
2020/ 2019 | 31,848,000 | |
2019/ 2018 | 101,854,000 | |
2018/ 2017 | 63,905,000 | |
Prior Periods | 337,048,000 | |
Revolving | 3,245,000 | |
Total loan balance | 1,055,507,000 | |
CRE - Non-Owner Occupied | Pass And Watch [Member] | ||
Loans | ||
2022/ 2021 | 374,470,000 | |
2021/ 2020 | 141,404,000 | |
2020/ 2019 | 115,170,000 | |
2019/ 2018 | 45,959,000 | |
2018/ 2017 | 68,125,000 | |
Prior Periods | 134,454,000 | |
Revolving | 2,068,000 | |
Total loan balance | 881,650,000 | |
CRE - Non-Owner Occupied | Special Mention [Member] | ||
Loans | ||
2021/ 2020 | 5,388,000 | |
2018/ 2017 | 1,133,000 | |
Prior Periods | 4,883,000 | 3,816,000 |
Total loan balance | 4,883,000 | 10,337,000 |
CRE - Non-Owner Occupied | Substandard [Member] | ||
Loans | ||
2021/ 2020 | 5,842,000 | |
Prior Periods | 5,978,000 | 4,497,000 |
Total loan balance | 5,978,000 | 10,339,000 |
Land & Construction | ||
Loans | ||
2022/ 2021 | 62,241,000 | 127,203,000 |
2021/ 2020 | 72,847,000 | 11,401,000 |
2020/ 2019 | 22,459,000 | 4,385,000 |
2019/ 2018 | 6,030,000 | |
Prior Periods | 1,300,000 | |
Revolving | 3,566,000 | |
Total loan balance | 163,577,000 | 147,855,000 |
Land & Construction | Pass [Member] | ||
Loans | ||
2022/ 2021 | 62,241,000 | |
2021/ 2020 | 72,847,000 | |
2020/ 2019 | 22,459,000 | |
2019/ 2018 | 6,030,000 | |
Total loan balance | 163,577,000 | |
Land & Construction | Pass And Watch [Member] | ||
Loans | ||
2022/ 2021 | 125,844,000 | |
2021/ 2020 | 11,401,000 | |
2020/ 2019 | 4,385,000 | |
Prior Periods | 1,300,000 | |
Revolving | 3,566,000 | |
Total loan balance | 146,496,000 | |
Land & Construction | Special Mention [Member] | ||
Loans | ||
2022/ 2021 | 1,359,000 | |
Total loan balance | 1,359,000 | |
Home Equity | ||
Loans | ||
2021/ 2020 | 98,000 | 84,000 |
2019/ 2018 | 46,000 | |
Prior Periods | 188,000 | 54,000 |
Revolving | 120,438,000 | 109,395,000 |
Total loan balance | 120,724,000 | 109,579,000 |
Home Equity | Pass [Member] | ||
Loans | ||
Prior Periods | 44,000 | |
Revolving | 117,950,000 | |
Total loan balance | 117,994,000 | |
Home Equity | Pass And Watch [Member] | ||
Loans | ||
2019/ 2018 | 46,000 | |
Revolving | 106,738,000 | |
Total loan balance | 106,784,000 | |
Home Equity | Special Mention [Member] | ||
Loans | ||
Revolving | 2,346,000 | 1,931,000 |
Total loan balance | 2,346,000 | 1,931,000 |
Home Equity | Substandard [Member] | ||
Loans | ||
Prior Periods | 144,000 | 54,000 |
Revolving | 142,000 | 726,000 |
Total loan balance | 286,000 | 780,000 |
Home Equity | Substandard-Nonaccrual [Member] | ||
Loans | ||
2021/ 2020 | 98,000 | 84,000 |
Total loan balance | 98,000 | 84,000 |
Multi-Family | ||
Loans | ||
2022/ 2021 | 42,111,000 | 109,467,000 |
2021/ 2020 | 69,824,000 | 27,955,000 |
2020/ 2019 | 5,528,000 | 35,127,000 |
2019/ 2018 | 43,183,000 | 16,151,000 |
2018/ 2017 | 15,356,000 | 16,261,000 |
Prior Periods | 68,700,000 | 13,895,000 |
Revolving | 180,000 | |
Total loan balance | 244,882,000 | 218,856,000 |
Multi-Family | Pass [Member] | ||
Loans | ||
2022/ 2021 | 42,111,000 | |
2021/ 2020 | 69,824,000 | |
2020/ 2019 | 4,871,000 | |
2019/ 2018 | 42,412,000 | |
2018/ 2017 | 15,356,000 | |
Prior Periods | 66,380,000 | |
Revolving | 180,000 | |
Total loan balance | 241,134,000 | |
Multi-Family | Pass And Watch [Member] | ||
Loans | ||
2022/ 2021 | 102,535,000 | |
2021/ 2020 | 27,955,000 | |
2020/ 2019 | 30,820,000 | |
2019/ 2018 | 16,151,000 | |
2018/ 2017 | 16,261,000 | |
Prior Periods | 13,895,000 | |
Total loan balance | 207,617,000 | |
Multi-Family | Special Mention [Member] | ||
Loans | ||
2022/ 2021 | 5,804,000 | |
2020/ 2019 | 657,000 | 4,307,000 |
2019/ 2018 | 771,000 | |
Prior Periods | 2,320,000 | |
Total loan balance | 3,748,000 | 10,111,000 |
Multi-Family | Substandard-Nonaccrual [Member] | ||
Loans | ||
2022/ 2021 | 1,128,000 | |
Total loan balance | 1,128,000 | |
Residential Mortgage | ||
Loans | ||
2022/ 2021 | 191,907,000 | 360,424,000 |
2021/ 2020 | 296,270,000 | 17,875,000 |
2020/ 2019 | 1,068,000 | 8,065,000 |
2019/ 2018 | 7,846,000 | 3,070,000 |
2018/ 2017 | 4,206,000 | 6,015,000 |
Prior Periods | 36,608,000 | 21,211,000 |
Total loan balance | 537,905,000 | 416,660,000 |
Residential Mortgage | Pass [Member] | ||
Loans | ||
2022/ 2021 | 191,907,000 | |
2021/ 2020 | 296,270,000 | |
2020/ 2019 | 1,068,000 | |
2019/ 2018 | 6,788,000 | |
2018/ 2017 | 2,724,000 | |
Prior Periods | 33,290,000 | |
Total loan balance | 532,047,000 | |
Residential Mortgage | Pass And Watch [Member] | ||
Loans | ||
2022/ 2021 | 360,424,000 | |
2021/ 2020 | 17,875,000 | |
2020/ 2019 | 8,065,000 | |
2019/ 2018 | 3,070,000 | |
2018/ 2017 | 6,015,000 | |
Prior Periods | 19,967,000 | |
Total loan balance | 415,416,000 | |
Residential Mortgage | Special Mention [Member] | ||
Loans | ||
2019/ 2018 | 1,058,000 | |
2018/ 2017 | 1,482,000 | |
Prior Periods | 2,387,000 | 1,244,000 |
Total loan balance | 4,927,000 | 1,244,000 |
Residential Mortgage | Substandard [Member] | ||
Loans | ||
Prior Periods | 931,000 | |
Total loan balance | 931,000 | |
Consumer and Other | ||
Loans | ||
2022/ 2021 | 389,000 | 506,000 |
2021/ 2020 | 95,000 | 2,000 |
2020/ 2019 | 40,000 | |
2019/ 2018 | 6,000 | 1,426,000 |
2018/ 2017 | 1,364,000 | 14,000 |
Prior Periods | 1,283,000 | 1,000,000 |
Revolving | 13,896,000 | 13,756,000 |
Total loan balance | 17,033,000 | 16,744,000 |
Consumer and Other | Pass [Member] | ||
Loans | ||
2022/ 2021 | 389,000 | |
2021/ 2020 | 13,000 | |
2018/ 2017 | 1,364,000 | |
Prior Periods | 1,283,000 | |
Revolving | 13,647,000 | |
Total loan balance | 16,696,000 | |
Consumer and Other | Pass And Watch [Member] | ||
Loans | ||
2022/ 2021 | 491,000 | |
2021/ 2020 | 2,000 | |
2020/ 2019 | 40,000 | |
2019/ 2018 | 1,426,000 | |
2018/ 2017 | 14,000 | |
Prior Periods | 1,000,000 | |
Revolving | 13,756,000 | |
Total loan balance | 16,729,000 | |
Consumer and Other | Special Mention [Member] | ||
Loans | ||
2021/ 2020 | 82,000 | |
2019/ 2018 | 6,000 | |
Revolving | 249,000 | |
Total loan balance | 337,000 | |
Consumer and Other | Substandard [Member] | ||
Loans | ||
2022/ 2021 | 15,000 | |
Total loan balance | 15,000 | |
Risk Grades [Member] | ||
Loans | ||
2022/ 2021 | 735,274,000 | 1,359,286,000 |
2021/ 2020 | 874,235,000 | 421,591,000 |
2020/ 2019 | 161,375,000 | 244,397,000 |
2019/ 2018 | 240,466,000 | 138,204,000 |
2018/ 2017 | 155,623,000 | 131,061,000 |
Prior Periods | 680,984,000 | 294,461,000 |
Revolving | 451,110,000 | 501,788,000 |
Total loan balance | 3,299,067,000 | 3,090,788,000 |
Risk Grades [Member] | Pass [Member] | ||
Loans | ||
2022/ 2021 | 731,862,000 | |
2021/ 2020 | 870,023,000 | |
2020/ 2019 | 159,659,000 | |
2019/ 2018 | 236,243,000 | |
2018/ 2017 | 153,618,000 | |
Prior Periods | 653,756,000 | |
Revolving | 437,326,000 | |
Total loan balance | 3,242,487,000 | |
Risk Grades [Member] | Pass And Watch [Member] | ||
Loans | ||
2022/ 2021 | 1,342,913,000 | |
2021/ 2020 | 398,997,000 | |
2020/ 2019 | 239,162,000 | |
2019/ 2018 | 135,950,000 | |
2018/ 2017 | 129,383,000 | |
Prior Periods | 283,326,000 | |
Revolving | 490,331,000 | |
Total loan balance | 3,020,062,000 | |
Risk Grades [Member] | Special Mention [Member] | ||
Loans | ||
2022/ 2021 | 3,408,000 | 9,941,000 |
2021/ 2020 | 3,175,000 | 8,154,000 |
2020/ 2019 | 1,716,000 | 5,198,000 |
2019/ 2018 | 4,078,000 | 764,000 |
2018/ 2017 | 1,482,000 | 1,376,000 |
Prior Periods | 20,031,000 | 5,619,000 |
Revolving | 8,146,000 | 5,955,000 |
Total loan balance | 42,036,000 | 37,007,000 |
Risk Grades [Member] | Substandard [Member] | ||
Loans | ||
2022/ 2021 | 4,000 | 4,709,000 |
2021/ 2020 | 660,000 | 12,814,000 |
2019/ 2018 | 145,000 | 1,490,000 |
2018/ 2017 | 193,000 | 302,000 |
Prior Periods | 7,164,000 | 5,442,000 |
Revolving | 5,638,000 | 5,502,000 |
Total loan balance | 13,804,000 | 30,259,000 |
Risk Grades [Member] | Substandard-Nonaccrual [Member] | ||
Loans | ||
2022/ 2021 | 1,723,000 | |
2021/ 2020 | 377,000 | 1,626,000 |
2020/ 2019 | 37,000 | |
2018/ 2017 | 330,000 | |
Prior Periods | 33,000 | 74,000 |
Total loan balance | $ 740,000 | $ 3,460,000 |
Loans and Allowance for Credi_9
Loans and Allowance for Credit Losses on Loans - Amortized Cost Basis of Collateral-dependent Loans (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Business Assets | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Collateral dependent loans | $ 324,000 | $ 1,028,000 |
Loans and Allowance for Cred_10
Loans and Allowance for Credit Losses on Loans - Troubled Debt Restructurings (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Loans and Allowance for Credit Losses on Loans | ||
Recorded investment of troubled debt restructurings | $ 1,000 | $ 500,000 |
Troubled debt restructurings, nonaccrual loans | 372,000 | |
Troubled debt restructurings, accruing loans | 128,000 | |
Specific reserves | 0 | 290,000 |
Additional loan committed on any loans classified as troubled debt restructuring. | $ 0 | $ 0 |
Loans and Allowance for Cred_11
Loans and Allowance for Credit Losses on Loans - Troubled Debt Restructurings by Class (Details) | 12 Months Ended | |||
Dec. 31, 2022 loan | Dec. 31, 2022 USD ($) | Dec. 31, 2022 item | Dec. 31, 2021 USD ($) loan | |
Troubled Debt Restructurings by Class | ||||
Number of loans modified as troubled debt restructurings during the period | 0 | 1 | 1 | |
Pre-modification Outstanding Recorded Investment | $ 3,000 | $ 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 | item | 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 | 12 Months Ended | |
Dec. 31, 2022 | Dec. 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 |
Loan Servicing - SBA Loans (Det
Loan Servicing - SBA Loans (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Loans and Allowance for Credit Losses on Loans | |||
Serviced SBA loans sold to secondary market | $ 64,819,000 | $ 73,256,000 | $ 77,973,000 |
Weighted average servicing rate for loans serviced (as a percent) | 1.10% | 1.11% | 1.12% |
Loan Servicing - Activity for L
Loan Servicing - Activity for Loan Servicing Rights (Details) - Loan servicing rights - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Activity for Loan Servicing Rights | |||
Balance, beginning of year | $ 655 | $ 531 | $ 583 |
Additions | 124 | 384 | 213 |
Amortization | (230) | (260) | (265) |
Balance, end of year | $ 549 | $ 655 | $ 531 |
Loan Servicing - Loan Servicing
Loan Servicing - Loan Servicing Rights - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Loan Servicing | |||
Carrying amount/fair value | $ 813,000 | $ 1,101,000 | $ 1,172,000 |
Prepayment speed assumption (annual rate) (as a percent) | 15.12% | 13.40% | 14.65% |
Residual cash flow discount rate assumption (annual) (as a percent) | 20.75% | 13.88% | 12.91% |
Loan servicing rights | |||
Loan Servicing | |||
Valuation allowance | $ 0 | $ 0 | $ 0 |
Loan Servicing - Activity for I
Loan Servicing - Activity for IQ Strip Receivables (Details) - I/O strip receivables - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Activity for I/O Strip Receivables | |||
Balance, beginning of year | $ 221 | $ 305 | $ 503 |
Unrealized loss | (69) | (84) | (198) |
Balance, end of year | $ 152 | $ 221 | $ 305 |
Premises and Equipment - Premis
Premises and Equipment - Premises and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Premises and Equipment | ||
Premises and equipment, gross | $ 25,817 | $ 24,890 |
Accumulated depreciation and amortization | (16,516) | (15,251) |
Premises and equipment, net | 9,301 | 9,639 |
Building | ||
Premises and Equipment | ||
Premises and equipment, gross | 3,508 | 3,508 |
Land | ||
Premises and Equipment | ||
Premises and equipment, gross | 2,900 | 2,900 |
Furniture and equipment | ||
Premises and Equipment | ||
Premises and equipment, gross | 13,812 | 13,041 |
Leasehold improvements | ||
Premises and Equipment | ||
Premises and equipment, gross | $ 5,597 | $ 5,441 |
Premises and Equipment - Deprec
Premises and Equipment - Depreciation and Amortization Expense (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Premises and Equipment | |||
Depreciation and amortization | $ 1,121,000 | $ 1,072,000 | $ 951,000 |
Leases (Details)
Leases (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases | ||
Operating Lease Cost (Cost resulting from lease payments) | $ 6,625,000 | $ 6,533,000 |
Operating Lease - Operating Cash Flows (Fixed Payments) | 4,948,000 | 5,011,000 |
Operating Lease - ROU assets | $ 33,031,000 | $ 34,879,000 |
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 | $ 33,031,000 | $ 34,879,000 |
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 | 6 years 7 months 6 days | 7 years 4 months 13 days |
Weighted Average Discount Rate - Operating Leases | 4.49% | 4.49% |
Leases - Maturity Analysis (Det
Leases - Maturity Analysis (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Operating Lease Payments Due | ||
2023 | $ 6,351,000 | |
2024 | 6,006,000 | |
2025 | 5,459,000 | |
2026 | 4,903,000 | |
2026 | 4,730,000 | |
Thereafter | 10,988,000 | |
Total undiscounted cash flows | 38,437,000 | |
Discount on cash flows | (5,406,000) | |
Total lease liability | $ 33,031,000 | $ 34,879,000 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
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 | Dec. 31, 2022 | Dec. 31, 2021 |
Other Intangible Assets | ||
Gross Carrying amount | $ 27,033 | $ 27,033 |
Accumulated Amortization | (16,000) | (13,365) |
Total | 11,033 | 13,668 |
Core deposit | ||
Other Intangible Assets | ||
Gross Carrying amount | 25,023 | 25,023 |
Accumulated Amortization | (14,429) | (11,982) |
Total | 10,594 | 13,041 |
Below/ (Above) market-value lease | ||
Other Intangible Assets | ||
Gross Carrying amount | 110 | 110 |
Accumulated Amortization | (20) | (22) |
Total | 90 | 88 |
Customer relationship and brokered relationship | ||
Other Intangible Assets | ||
Gross Carrying amount | 1,900 | 1,900 |
Accumulated Amortization | (1,551) | (1,361) |
Total | $ 349 | $ 539 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Estimated Amortization Expense (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Estimated Amortization Expense | ||
2023 | $ 2,405 | |
2024 | 2,187 | |
2025 | 1,813 | |
2026 | 1,530 | |
2027 | 1,456 | |
Thereafter | 1,642 | |
Total | 11,033 | $ 13,668 |
Core deposit | ||
Estimated Amortization Expense | ||
2023 | 2,217 | |
2024 | 2,023 | |
2025 | 1,795 | |
2026 | 1,512 | |
2027 | 1,438 | |
Thereafter | 1,609 | |
Total | 10,594 | 13,041 |
Customer relationship and brokered relationship | ||
Estimated Amortization Expense | ||
2023 | 190 | |
2024 | 159 | |
Total | 349 | 539 |
Below/ (Above) market-value lease | ||
Estimated Amortization Expense | ||
2023 | (2) | |
2024 | 5 | |
2025 | 18 | |
2026 | 18 | |
2027 | 18 | |
Thereafter | 33 | |
Total | $ 90 | $ 88 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Impairment of Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Impairment of Intangible Assets | ||
Impairment of intangible assets | $ 0 | $ 0 |
Deposits - Scheduled Maturities
Deposits - Scheduled Maturities of all Time Deposits and Brokered Deposits for the Next Five Years (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Scheduled Maturities of Time Deposits Including Brokered Deposits for the Next Five Years | |
2023 | $ 133,517 |
2024 | 8,513 |
2025 | 1,283 |
2026 | 274 |
2027 | 91 |
Thereafter | 280 |
Total | $ 143,958 |
Deposits - Time Deposits (Detai
Deposits - Time Deposits (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Deposits. | ||
Time deposits, including deposits within the CDARS and brokered deposits, $250,000 or more | $ 108,192,000 | $ 94,700,000 |
Deposits - Additional Informati
Deposits - Additional Information (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Additional Information | ||
CDARS deposits | $ 30,374,000 | $ 38,271,000 |
Interest-bearing demand deposits | 26,861,000 | 30,858,000 |
Money market accounts under CDARS program | 192,000 | 1,013,000 |
Time deposits under CDARS program | 3,321,000 | 6,400,000 |
Deposits from executive officers, directors, and their affiliates | 712,000 | 766,000 |
FHLB | ||
Additional Information | ||
Securities pledged as collateral | 1,085,000 | |
Line of credit | $ 205,631,000 | |
Amount outstanding | $ 0 |
Borrowing Arrangements - Federa
Borrowing Arrangements - Federal Home Loan Bank Borrowings, Federal Reserve Bank Borrowings, and Available Lines of Credit (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Borrowing Arrangements | |||
Loans, net of deferred fees | $ 3,298,550,000 | $ 3,087,326,000 | $ 2,619,261,000 |
FHLB | Line of credit | |||
Borrowing Arrangements | |||
Loans, net of deferred fees | 1,000,207,000 | 1,008,601,000 | |
FHLB | Line of credit | FHLB of San Francisco | |||
Borrowing Arrangements | |||
FHLB overnight borrowings | 0 | 0 | |
FHLB | |||
Borrowing Arrangements | |||
Loans, net of deferred fees | 280,748,000 | ||
Securities pledged as collateral | 1,085,000 | ||
Amount outstanding | 0 | ||
Line of credit | 205,631,000 | ||
FHLB | Line of credit | |||
Borrowing Arrangements | |||
Securities pledged as collateral | 1,551,000 | ||
Amount outstanding | $ 0 | ||
FHLB | Line of credit | FHLB of San Francisco | |||
Borrowing Arrangements | |||
Loans, net of deferred fees | 254,243,000 | ||
Line of credit | $ 162,631,000 |
Borrowing Arrangements - Fede_2
Borrowing Arrangements - Federal Reserve Bank Borrowings (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Borrowing Arrangements | |||
Loans, net of deferred fees | $ 3,298,550,000 | $ 3,087,326,000 | $ 2,619,261,000 |
Line of credit | FRB | |||
Borrowing Arrangements | |||
Line of credit | 676,878,000 | 567,873,000 | |
Amount outstanding | $ 0 | $ 0 |
Borrowing Arrangements - Availa
Borrowing Arrangements - Available Lines of Credit (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Borrowing Arrangements | ||
Federal funds purchased | $ 0 | $ 0 |
Federal funds purchase arrangement | ||
Borrowing Arrangements | ||
Federal funds purchase arrangements available | $ 80,000,000 |
Borrowing Arrangements - Line o
Borrowing Arrangements - Line of Credit with a Corresponding Bank (Details) - Line of credit - Parent Company | Dec. 31, 2022 USD ($) |
Borrowing Arrangements | |
Line of credit | $ 20,000,000 |
Amount outstanding | $ 0 |
Borrowing Arrangements - Securi
Borrowing Arrangements - Securities Sold under Repurchase Agreements (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Borrowing Arrangements | ||
Amount of securities sold under agreements | $ 0 | $ 0 |
Borrowing Arrangements - Subord
Borrowing Arrangements - Subordinated Debt (Details) - USD ($) | May 26, 2017 | Dec. 31, 2022 | Jun. 01, 2022 | May 11, 2022 | Dec. 31, 2021 |
Subordinated debt, net of issuance costs | $ 39,350,000 | $ 39,925,000 | |||
Sub Debt Due 2032 | |||||
Principal amount | $ 40,000,000 | ||||
Fixed interest rate (as a percent) | 0.05% | ||||
Debt Issuance Costs | 650,000 | ||||
Subordinated debt, net of issuance costs | $ 39,350,000 | ||||
Sub Debt Due 2027 | |||||
Principal amount | $ 40,000,000 | $ 40,000,000 | $ 40,000,000 | ||
Fixed interest rate (as a percent) | 5.25% | 5.25% | |||
Redemption price | 100% | ||||
Accrued and unpaid interest | $ 1,100,000 |
Income Taxes - Income Tax (Bene
Income Taxes - Income Tax (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Currently payable tax: | |||
Federal | $ 18,994 | $ 10,207 | $ 9,630 |
State | 8,798 | 7,988 | 5,828 |
Total currently payable | 27,792 | 18,195 | 15,458 |
Deferred tax (benefit): | |||
Federal | (1,237) | 1,175 | (932) |
State | 1,256 | (1,200) | (757) |
Total deferred tax | 19 | (25) | (1,689) |
Income tax expense | $ 27,811 | $ 18,170 | $ 13,769 |
Income Taxes - Effective Tax Ra
Income Taxes - Effective Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Effective tax rate differs from the federal statutory rate | |||
Statutory Federal income tax rate (as a percent) | 21% | 21% | 21% |
State income taxes, net of federal tax benefit (as a percent) | 8.40% | 8.10% | 8.20% |
Low income housing credits, net of investment losses (as a percent) | (0.20%) | (0.30%) | (0.50%) |
Increase in cash surrender value of life insurance (as a percent) | (0.40%) | (0.60%) | (0.80%) |
Stock option/restricted stock windfall tax benefit | (0.10%) | (0.20%) | 0.60% |
Non-taxable interest income (as a percent) | (0.20%) | (0.50%) | (0.80%) |
Split dollar term insurance (as a percent) | 0% | 0.10% | 0.10% |
ISO stock exercise | 0% | (0.10%) | 0% |
Other, net (as a percent) | 1% | 0.10% | 0.30% |
Effective tax rate (as a percent) | 29.50% | 27.60% | 28.10% |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Allowance for credit losses on loans | $ 14,171 | $ 12,716 |
Lease accounting | 9,703 | 10,245 |
Defined postretirement benefit obligation | 7,585 | 9,934 |
Securities available-for-sale | 4,690 | |
Accrued expenses | 3,440 | 2,681 |
State income taxes | 1,924 | 1,164 |
Federal net operating loss carryforwards | 1,719 | 2,206 |
Premises and equipment | 1,677 | 2,173 |
Stock compensation | 1,363 | 1,632 |
California net operating loss carryforwards | 1,106 | 1,489 |
Nonaccrual interest | 174 | 67 |
Split-dollar life insurance benefit plan | 49 | 84 |
Other | 201 | 869 |
Total deferred tax assets | 47,802 | 45,260 |
Deferred tax liabilities: | ||
Lease accounting | (9,703) | (10,245) |
Loan fees | (2,304) | (2,174) |
Intangible liabilities | (1,940) | (1,916) |
Prepaid expenses | (1,304) | (972) |
FHLB stock | (156) | (166) |
I/O strips | (40) | (60) |
Securities available-for-sale | (823) | |
Other | (179) | (147) |
Total deferred tax liabilities | (15,626) | (16,503) |
Net deferred tax assets | $ 32,176 | $ 28,757 |
Income Taxes - Operating Loss C
Income Taxes - Operating Loss Carryforward (Details) | Dec. 31, 2022 USD ($) |
Federal | IRS | |
Operating Loss Carryforward | |
Net operating loss carryforward | $ 8,186,000 |
State | California | |
Operating Loss Carryforward | |
Net operating loss carryforward | $ 13,452,000 |
Income Taxes - Carry Amounts of
Income Taxes - Carry Amounts of the Low Income Housing Investments (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Income Taxes | ||
Low income housing investments | $ 3,537 | $ 4,380 |
Future commitments | $ 523 | $ 568 |
Income Taxes - Future Commitmen
Income Taxes - Future Commitments of the Low Income Housing Investments (Details) - Low income housing investments | Dec. 31, 2022 USD ($) |
Future Commitments | |
2023 | $ 27,000 |
2024 through 2026 | $ 498,000 |
Income Taxes - Components of Lo
Income Taxes - Components of Low Income Housing Investment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
Low income housing tax credits | $ 839,000 | $ 839,000 |
Low income housing investment expense | $ 842,000 | $ 866,000 |
Equity Plan - General Disclosur
Equity Plan - General Disclosures (Details) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Equity Plan | ||
Number of shares available for future grants | 1,475,594 | |
Options | ||
Equity Plan | ||
Vesting period | 4 years | |
Expiration term | 10 years | |
Restricted stock | ||
Equity Plan | ||
Number of equity awards issued (in shares) | 238,811 | |
Nonqualified stock options | ||
Equity Plan | ||
Number of equity awards issued (in shares) | 387,000 |
Equity Plan - Stock Option Acti
Equity Plan - Stock Option Activity (Details) - Options | 12 Months Ended |
Dec. 31, 2022 USD ($) $ / shares shares | |
Number of Shares | |
Outstanding at the beginning of the period (in shares) | 2,584,632 |
Granted (in shares) | 387,000 |
Exercised (in shares) | 305,880 |
Forfeited or expired (in shares) | (138,579) |
Outstanding at the end of the period (in shares) | 2,527,173 |
Vested or expected to vest (in shares) | 2,375,543 |
Exercisable at the end of the period (in shares) | 1,900,047 |
Weighted Average Exercise Price | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 10 |
Granted (in dollars per share) | $ / shares | 11.12 |
Exercised (in dollars per share) | $ / shares | 6.70 |
Forfeited or expired (in dollars per share) | $ / shares | 12.34 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 10.44 |
Additional Information | |
Weighted Average Remaining Contractual Life - Outstanding at the end of the period (in years) | 5 years 6 months 7 days |
Weighted Average Remaining Contractual Life - Vested or expected to vest (in years) | 5 years 6 months 7 days |
Weighted Average Remaining Contractual Life - Exercisable at the end of the period (in years) | 4 years 5 months 23 days |
Aggregate Intrinsic Value - Outstanding at the end of the period (in dollars) | $ | $ 7,497,913 |
Aggregate Intrinsic Value - Vested or expected to vest (in dollars) | $ | 7,048,038 |
Aggregate Intrinsic Value - Exercisable at the end of the period (in dollars) | $ | $ 6,333,749 |
Equity Plan - Information Relat
Equity Plan - Information Related to the Equity Plans for each of the Last Three Years (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Information Related to the Equity Plans | |||
Cash received from option exercise | $ 2,050,000 | $ 1,469,000 | $ 1,714,000 |
Options | |||
Information Related to the Equity Plans | |||
Intrinsic value of options exercised | 1,674,072 | 1,543,711 | 2,258,245 |
Cash received from option exercise | 2,049,587 | 1,469,255 | 1,713,737 |
Tax benefit realized from option exercises | $ 180,414 | $ 153,745 | $ 63,124 |
Weighted average fair value of options granted (in dollars per share) | $ 2.22 | $ 2.31 | $ 1.15 |
Equity Plan - Unrecognized Comp
Equity Plan - Unrecognized Compensation Cost -Nonvested Stock Options (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Options | |
Unrecognized Compensation Cost | |
Total unrecognized compensation cost related to nonvested stock options granted | $ 1,294,000 |
Expected weighted-average period for recognition of compensation costs related to nonvested stock options | 2 years 7 months 28 days |
Restricted stock | |
Unrecognized Compensation Cost | |
Expected weighted-average period for recognition of compensation costs related to nonvested stock options | 1 year 10 months 24 days |
Equity Plan - Assumptions Used
Equity Plan - Assumptions Used to Estimate Fair Value (Details) - Options | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Assumptions Used to Estimate Fair Value | |||
Expected life in months | 72 months | 72 months | 72 months |
Volatility (as a percent) | 31% | 33% | 29% |
Weighted average risk-free interest rate (as a percent) | 2.89% | 1.10% | 0.53% |
Expected dividends (as a percent) | 4.68% | 4.32% | 5.71% |
Equity Plan - Restricted Stock
Equity Plan - Restricted Stock Activity (Details) - Restricted stock | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Number of Shares | |
Nonvested shares at the beginning of the period (in shares) | shares | 298,566 |
Granted (in shares) | shares | 238,811 |
Vested (in shares) | shares | (252,081) |
Forfeited or expired (in shares) | shares | (31,805) |
Nonvested shares at the end of the period (in shares) | shares | 253,491 |
Weighted Average Grant Date Fair Value | |
Nonvested shares at the beginning of the period (in dollars per share) | $ / shares | $ 11.03 |
Granted (in dollars per share) | $ / shares | 11.16 |
Vested (in dollars per share) | $ / shares | 11.81 |
Forfeited or expired (in dollars per share) | $ / shares | 11.23 |
Nonvested shares at the end of the period (in dollars per share) | $ / shares | $ 11.05 |
Equity Plan - Unrecognized Co_2
Equity Plan - Unrecognized Compensation Cost - Nonvested Restricted Stock Awards (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Unrecognized Compensation Cost | |||
Total compensation cost | $ 3,178,000 | $ 2,519,000 | $ 2,248,000 |
Total income tax expense (benefit) on share-based compensation cost | (94,000) | $ (155,000) | $ 301,000 |
Restricted stock | |||
Unrecognized Compensation Cost | |||
Total unrecognized compensation cost related to nonvested restricted stock awards | $ 1,881,000 | ||
Expected weighted-average period for recognition of compensation costs related to nonvested restricted stock awards | 1 year 10 months 24 days |
Benefit Plans - 401(k) Savings
Benefit Plans - 401(k) Savings Plan (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
401(k) Savings Plan | |||
Maximum discretionary contribution matched by employer for each employee's contribution | $ 3,000 | $ 3,000 | |
Contribution expense | $ 942,000 | $ 944,000 | $ 942,000 |
Benefit Plans - Employee Stock
Benefit Plans - Employee Stock Ownership Plan (Details) | 12 Months Ended |
Dec. 31, 2022 item shares | |
Employee Stock Ownership Plan | |
Minimum number of hours of service required for plan eligibility | item | 1,000 |
Number of shares of Company's common stock owned by ESOP | shares | 91,343 |
Benefit Plans - Deferred Compen
Benefit Plans - Deferred Compensation Plan (Details) - employee | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Deferred Compensation Plan | ||
Maximum percentage of bonus into deferred account | 100% | |
Percentage of regular salary into deferred account | 50% | |
Number of employees elected to participate in deferred compensation | 10 | 10 |
Benefit Plans - Defined Benefit
Benefit Plans - Defined Benefit Plans - Nonqualified Defined Benefit Pension Plan (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) person | |
Supplemental Retirement Plan | |
Combined number of active and retired/terminated participants in the SERP | person | 50 |
Supplemental Retirement Plan | |
Supplemental Retirement Plan | |
Plan assets associated with the plan | $ | $ 0 |
Vesting period of defined benefit stated amount, minimum | 9 years |
Benefit Plans - Defined Benef_2
Benefit Plans - Defined Benefit Plans - Change in Projected Benefit Obligation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Split-Dollar Life Insurance Benefit Plan | ||
Change in projected benefit obligation: | ||
Projected benefit obligation at beginning of year | $ 9,244 | $ 9,689 |
Interest cost | 246 | 219 |
Actuarial (gain) loss | (2,430) | (664) |
Projected benefit obligation at end of period | 7,060 | 9,244 |
Supplemental Retirement Plan | ||
Change in projected benefit obligation: | ||
Projected benefit obligation at beginning of year | 33,179 | 35,404 |
Service cost | 347 | 480 |
Interest cost | 865 | 759 |
Actuarial (gain) loss | 7,065 | 917 |
Benefits paid | (1,526) | (2,547) |
Projected benefit obligation at end of period | $ 25,800 | $ 33,179 |
Benefit Plans - Defined Benef_3
Benefit Plans - Defined Benefit Plans - Amounts Recognized in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Split-Dollar Life Insurance Benefit Plan | ||
Amounts Recognized in Accumulated Other Comprehensive Loss | ||
Net actuarial loss | $ 2,301 | $ 4,601 |
Prior transition obligation | 790 | 879 |
Accumulated other comprehensive loss | 3,091 | 5,480 |
Supplemental Retirement Plan | ||
Amounts Recognized in Accumulated Other Comprehensive Loss | ||
Net actuarial loss | $ 2,371 | $ 7,668 |
Benefit Plans - Defined Benef_4
Benefit Plans - Defined Benefit Plans - Weighted-average Assumptions Used to Determine the Benefit Obligation at Year-end (Details) | Dec. 31, 2022 | Dec. 31, 2021 |
Supplemental Retirement Plan | ||
Weighted-average Assumptions Used to Determine the Benefit Obligation at Year-end | ||
Discount rate | 5.17% | 2.66% |
Split-Dollar Life Insurance Benefit Plan | ||
Weighted-average Assumptions Used to Determine the Benefit Obligation at Year-end | ||
Discount rate | 5.17% | 2.66% |
Benefit Plans - Defined Benef_5
Benefit Plans - Defined Benefit Plans - Estimated Benefit Payments over the Next Ten Years (Details) - Supplemental Retirement Plan $ in Thousands | Dec. 31, 2022 USD ($) |
Estimated Benefit Payments | |
2023 | $ 1,654 |
2024 | 1,969 |
2025 | 2,059 |
2026 | 2,179 |
2027 | 2,316 |
2028 to 2032 | $ 12,131 |
Benefit Plans - Defined Benef_6
Benefit Plans - Defined Benefit Plans - Components of Pension Cost (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Supplemental Retirement Plan | ||
Components of net periodic benefit cost: | ||
Service cost | $ 347,000 | $ 480,000 |
Interest cost | 865,000 | 759,000 |
Amortization of prior transition obligation | 100,000 | |
Amortization of net actuarial loss | 455,000 | 543,000 |
Net periodic benefit cost | 1,667,000 | 1,882,000 |
Amount recognized in other comprehensive income | 5,297,000 | 1,098,000 |
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 | (41,000) | (4,000) |
Interest cost | 246,000 | 219,000 |
Net periodic benefit cost | 205,000 | 215,000 |
Amount recognized in other comprehensive income | $ 2,389,000 | $ 660,000 |
Benefit Plans - Defined Benef_7
Benefit Plans - Defined Benefit Plans - Estimated Net Actuarial Loss and Prior Service Cost (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Supplemental Retirement Plan | ||
Estimated net actuarial loss and prior service cost that will be amortized from accumulated other comprehensive loss into net periodic cost over next fiscal year | ||
Estimated net actuarial loss and prior service cost that will be amortized from accumulated other comprehensive loss into net periodic cost over next fiscal year | $ 53,000 | |
Split-Dollar Life Insurance Benefit Plan | ||
Estimated net actuarial loss and prior service cost that will be amortized from accumulated other comprehensive loss into net periodic cost over next fiscal year | ||
Projected benefit obligation included in other comprehensive loss | $ (191,000) | $ (41,000) |
Benefit Plans - Defined Benef_8
Benefit Plans - Defined Benefit Plans - Weighted-average Assumptions Used to Determine Net Periodic Cost (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Supplemental Retirement Plan | ||
Weighted-average Assumption Used to Determine Net Periodic Benefit Cost: | ||
Discount rate | 2.66% | 2.26% |
Split-Dollar Life Insurance Benefit Plan | ||
Weighted-average Assumption Used to Determine Net Periodic Benefit Cost: | ||
Discount rate | 2.66% | 2.26% |
Fair Value - Financial Assets a
Fair Value - Financial Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | $ 489,596 | $ 102,252 |
I/O strip receivables | 152 | 221 |
U.S. Treasury | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 418,474 | |
Agency mortgage-backed securities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 71,122 | 102,252 |
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 | 418,474 | |
Significant Other Observable Inputs (Level 2) | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
I/O strip receivables | 152 | 221 |
Significant Other Observable Inputs (Level 2) | Agency mortgage-backed securities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | $ 71,122 | $ 102,252 |
Fair Value - Impaired Loans Hel
Fair Value - Impaired Loans Held-for-investment - Additional Disclosures (Details) - USD ($) $ in Thousands | Dec. 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 ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Securities available-for-sale | $ 489,596,000 | $ 102,252,000 |
Securities held-to-maturity, net | 614,452,000 | 657,649,000 |
Federal Home Loan Bank, Federal Reserve Bank stock and other investments, at cost | 32,522,000 | 32,504,000 |
I/O strips receivables | 152,000 | 221,000 |
Liabilities | ||
Subordinated debt | 39,350,000 | 39,925,000 |
Significant Other Observable Inputs (Level 2) | ||
Assets | ||
I/O strips receivables | 152,000 | 221,000 |
Carrying Amounts | ||
Assets | ||
Cash and cash equivalents | 306,603,000 | 1,306,216,000 |
Securities available-for-sale | 489,596,000 | 102,252,000 |
Securities held-to-maturity, net | 714,990,000 | 658,397,000 |
Loans (including loans held-for-sale), net | 3,253,494,000 | 3,046,403,000 |
Federal Home Loan Bank, Federal Reserve Bank stock and other investments, at cost | 32,522,000 | 32,504,000 |
Accrued interest receivable | 15,047,000 | 10,781,000 |
I/O strips receivables | 152,000 | 221,000 |
Liabilities | ||
Time deposits | 143,958,000 | 139,834,000 |
Other deposits | 4,245,646,000 | 4,619,578,000 |
Subordinated debt | 39,350,000 | 39,925,000 |
Accrued interest payable | 600,000 | 477,000 |
Balance | ||
Assets | ||
Cash and cash equivalents | 306,603,000 | 1,306,216,000 |
Securities available-for-sale | 489,596,000 | 102,252,000 |
Securities held-to-maturity, net | 614,452,000 | 657,649,000 |
Loans (including loans held-for-sale), net | 3,082,941,000 | 3,063,925,000 |
Accrued interest receivable | 15,047,000 | 10,781,000 |
I/O strips receivables | 152,000 | 221,000 |
Liabilities | ||
Time deposits | 144,702,000 | 140,086,000 |
Other deposits | 4,245,646,000 | 4,619,578,000 |
Subordinated debt | 36,025,000 | 40,425,000 |
Accrued interest payable | 600,000 | 477,000 |
Balance | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets | ||
Cash and cash equivalents | 306,603,000 | 1,306,216,000 |
Securities available-for-sale | 418,474,000 | |
Accrued interest receivable | 1,328,000 | |
Balance | Significant Other Observable Inputs (Level 2) | ||
Assets | ||
Securities available-for-sale | 71,122,000 | 102,252,000 |
Securities held-to-maturity, net | 614,452,000 | 657,649,000 |
Loans (including loans held-for-sale), net | 2,456,000 | 2,367,000 |
Accrued interest receivable | 1,836,000 | 1,719,000 |
I/O strips receivables | 152,000 | 221,000 |
Liabilities | ||
Time deposits | 144,702,000 | 140,086,000 |
Other deposits | 4,245,646,000 | 4,619,578,000 |
Subordinated debt | 36,025,000 | 40,425,000 |
Accrued interest payable | 600,000 | 477,000 |
Balance | Significant Unobservable Inputs (Level 3) | ||
Assets | ||
Loans (including loans held-for-sale), net | 3,080,485,000 | 3,061,558,000 |
Accrued interest receivable | $ 11,883,000 | $ 9,062,000 |
Commitments and Loss Continge_3
Commitments and Loss Contingencies - Financial Instruments with Off-Balance Sheet Risk (Details) | 12 Months Ended | ||||
Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 12, 2022 item plaintiff | Dec. 11, 2022 item | Dec. 31, 2020 item | |
Commitments and Contingencies | |||||
Reserve for legal settlement | $ 4,500,000 | ||||
Number of counts not sustained by court without leave to amend | item | 2 | 2 | |||
Number of count on which court granted the Bank's motion for judgement | item | 1 | 1 | |||
Number of plaintiff on whom bank filed motion | plaintiff | 1 | ||||
Total number of plaintiffs | plaintiff | 26 | ||||
Commitments to extend credit, fixed rate | $ 88,913,000 | 122,155,000 | |||
Commitments to extend credit, variable rate | 1,045,706,000 | 1,028,656,000 | |||
Commitment to extend credit, total | $ 1,134,619,000 | $ 1,150,811,000 | |||
Percentage of unused commitments to outstanding gross loans | 34% | 37% | |||
Increase (decrease) to the allowance for credit losses on loans | $ (5,000) | ||||
Off-balance sheet, credit loss liability increase due to offsetting increase in loss factors in CECL model | 820,000 | $ 815,000 | |||
Unused lines of credit and commitments to make loans | |||||
Commitments and Contingencies | |||||
Commitments to extend credit, fixed rate | 87,348,000 | 119,071,000 | |||
Commitments to extend credit, variable rate | 1,036,847,000 | 1,015,588,000 | |||
Commitment to extend credit, total | 1,124,195,000 | 1,134,659,000 | |||
Standby letters of credit | |||||
Commitments and Contingencies | |||||
Commitments to extend credit, fixed rate | 1,565,000 | 3,084,000 | |||
Commitments to extend credit, variable rate | 8,859,000 | 13,068,000 | |||
Commitment to extend credit, total | $ 10,424,000 | $ 16,152,000 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings Per Share | |||
Common stock, shares authorized | 100,000,000 | 100,000,000 | |
Reconciliation of factors used in computing basic and diluted earnings per common share | |||
Net income | $ 66,555 | $ 47,700 | $ 35,299 |
Weighted average common shares outstanding for basic earnings per common share (in shares) | 60,602,962 | 60,133,821 | 59,478,343 |
Dilutive potential common shares | 487,328 | 555,241 | 690,796 |
Shares used in computing diluted earnings per common share (in shares) | 61,090,290 | 60,689,062 | 60,169,139 |
Basic earnings per share (in dollars per share) | $ 1.10 | $ 0.79 | $ 0.59 |
Diluted earnings per share (in dollars per share) | $ 1.09 | $ 0.79 | $ 0.59 |
Number of shares in computing diluted earnings per common share | 1,325,948 | 1,058,250 | 1,524,757 |
Capital Requirements - General
Capital Requirements - General Information (Details) | 12 Months Ended | ||
Mar. 27, 2020 | Dec. 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 | 0.25% | ||
2022 | |||
Capital Requirements | |||
Percentage of impact on allowances for credit losses on delayed adoption of CECL standard | 0.75% | ||
2023 | |||
Capital Requirements | |||
Percentage of impact on allowances for credit losses on delayed adoption of CECL standard | 0.50% | ||
2024 | |||
Capital Requirements | |||
Percentage of impact on allowances for credit losses on delayed adoption of CECL standard | 0.25% | ||
HBC | |||
Capital Requirements | |||
Capital conservation buffer (as a percent) | 0.025% | 0.025% |
Capital Requirements - Tabular
Capital Requirements - Tabular Disclosure (Details) $ in Thousands | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Total Capital (to risk-weighted assets) | ||
Actual, Amount | $ 554,810 | $ 506,209 |
Required For Capital Adequacy Purposes, Amount | $ 393,461 | $ 369,711 |
Actual, Ratio (as a percent) | 0.148 | 0.144 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.105 | 0.105 |
Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 475,609 | $ 433,488 |
Required For Capital Adequacy Purposes, Amount | $ 318,516 | $ 299,290 |
Actual, Ratio (as a percent) | 0.127 | 0.123 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.085 | 0.085 |
Common Equity Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 475,609 | $ 433,488 |
Required For Capital Adequacy Purposes, Amount | $ 262,307 | $ 246,474 |
Actual, Ratio (as a percent) | 0.127% | 0.123% |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.07% | 0.07% |
Tier 1 Capital (to average assets) | ||
Actual, Amount | $ 475,609 | $ 433,488 |
Required For Capital Adequacy Purposes, Amount | $ 207,852 | $ 220,193 |
Actual, Ratio (as a percent) | 0.092 | 0.079 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.040 | 0.040 |
HBC | ||
Total Capital (to risk-weighted assets) | ||
Actual, Amount | $ 532,576 | $ 484,382 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 374,572 | 351,839 |
Required For Capital Adequacy Purposes, Amount | $ 393,301 | $ 369,431 |
Actual, Ratio (as a percent) | 0.142 | 0.138 |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 0.100 | 0.100 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.105 | 0.105 |
Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 492,725 | $ 451,586 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 299,658 | 281,471 |
Required For Capital Adequacy Purposes, Amount | $ 318,387 | $ 299,063 |
Actual, Ratio (as a percent) | 0.132 | 0.128 |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 0.080 | 0.080 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.085 | 0.085 |
Common Equity Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 492,725 | $ 451,586 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 243,472 | 228,695 |
Required For Capital Adequacy Purposes, Amount | $ 262,201 | $ 246,287 |
Actual, Ratio (as a percent) | 0.132% | 0.128% |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 0.065% | 0.065% |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.07% | 0.07% |
Tier 1 Capital (to average assets) | ||
Actual, Amount | $ 492,725 | $ 451,586 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 259,740 | 275,109 |
Required For Capital Adequacy Purposes, Amount | $ 207,792 | $ 220,087 |
Actual, Ratio (as a percent) | 0.095 | 0.082 |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 0.050 | 0.050 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.040 | 0.040 |
Capital Requirements - Dividend
Capital Requirements - Dividends to Parent (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash dividend | ||
Subordinated Debt. | $ 39,350,000 | $ 39,925,000 |
Parent Company | ||
Cash dividend | ||
Subordinated Debt. | 39,350,000 | 39,925,000 |
HBC | ||
Cash dividend | ||
Cash dividend available | 17,140,000 | |
Dividends paid to parent company | $ 32,000,000 | $ 32,000,000 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Non-interest Income In-scope of Topic 606 | $ 4,640 | $ 2,488 | $ 3,650 |
Non-interest Income Out-of-scope of Topic 606 | 5,471 | 7,200 | 6,272 |
Total noninterest income | $ 10,111 | $ 9,688 | $ 9,922 |
Revenue, Product and Service [Extensible List] | Service charges and fees on deposit accounts | Service charges and fees on deposit accounts | Service charges and fees on deposit accounts |
Service charges and fees on deposit accounts | |||
Disaggregation of Revenue [Line Items] | |||
Non-interest Income In-scope of Topic 606 | $ 4,640 | $ 2,488 | $ 2,859 |
Gain on the disposition of foreclosed assets | |||
Disaggregation of Revenue [Line Items] | |||
Non-interest Income In-scope of Topic 606 | $ 791 |
Noninterest Expense (Details)
Noninterest Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Noninterest Expense | |||
Salaries and employee benefits | $ 55,331 | $ 51,862 | $ 50,927 |
Occupancy and equipment | 9,639 | 9,038 | 8,018 |
Insurance expense | 4,958 | 3,270 | 2,286 |
Professional fees | 5,015 | 5,901 | 5,338 |
Amortization of intangible assets | 2,635 | 2,996 | 3,751 |
Data processing | 2,482 | 2,146 | 2,770 |
Reserve for litigation | 4,500 | ||
Other | 14,799 | 13,364 | 16,421 |
Total noninterest expense | $ 94,859 | 93,077 | 89,511 |
Salaries and employee benefits merger-related costs | 356 | ||
Other | 27 | 2,245 | |
Total merger-related costs | $ 27 | $ 2,601 |
Business Segment Information -
Business Segment Information - Business Segments (Details) | 12 Months Ended |
Dec. 31, 2022 segment | |
Focus | |
Business Segment Information | |
Number of business segments | 2 |
Business Segment Information _2
Business Segment Information - Operating Statements (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Income | |||
Interest income | $ 188,828,000 | $ 153,256,000 | $ 150,471,000 |
Total interest expense | 8,948,000 | 7,131,000 | 8,581,000 |
Net interest income | 179,880,000 | 146,125,000 | 141,890,000 |
Provision for (recapture of) credit losses on loans | 766,000 | (3,134,000) | 13,233,000 |
Net interest income after provision | 179,114,000 | 149,259,000 | 128,657,000 |
Noninterest income | 10,111,000 | 9,688,000 | 9,922,000 |
Noninterest expense | 94,859,000 | 93,077,000 | 89,511,000 |
Income before income taxes | 94,366,000 | 65,870,000 | 49,068,000 |
Income tax expense | 27,811,000 | 18,170,000 | 13,769,000 |
Net income | 66,555,000 | 47,700,000 | 35,299,000 |
Total assets | 5,157,580,000 | 5,499,409,000 | 4,634,114,000 |
Loans, net of deferred fees | 3,298,550,000 | 3,087,326,000 | 2,619,261,000 |
Goodwill | 167,631,000 | 167,631,000 | 167,631,000 |
Noninterest expense includes merger-related costs | 27,000 | 2,601,000 | |
Banking | |||
Operating Income | |||
Interest income | 176,010,000 | 141,772,000 | 139,744,000 |
Intersegment interest allocations | 1,441,000 | 868,000 | 923,000 |
Total interest expense | 8,948,000 | 7,131,000 | 8,581,000 |
Net interest income | 168,503,000 | 135,509,000 | 132,086,000 |
Provision for (recapture of) credit losses on loans | 526,000 | (2,926,000) | 12,928,000 |
Net interest income after provision | 167,977,000 | 138,435,000 | 119,158,000 |
Noninterest income | 9,722,000 | 8,651,000 | 9,277,000 |
Noninterest expense | 88,531,000 | 87,466,000 | 83,149,000 |
Intersegment expense allocations | 524,000 | 410,000 | 404,000 |
Income before income taxes | 89,692,000 | 60,030,000 | 45,690,000 |
Income tax expense | 26,429,000 | 16,444,000 | 12,770,000 |
Net income | 63,263,000 | 43,586,000 | 32,920,000 |
Total assets | 5,062,943,000 | 5,424,350,000 | 4,567,239,000 |
Loans, net of deferred fees | 3,219,287,000 | 3,034,097,000 | 2,572,060,000 |
Goodwill | 154,587,000 | 154,587,000 | 154,587,000 |
Noninterest expense includes merger-related costs | 2,601,000 | ||
Factoring | |||
Operating Income | |||
Interest income | 12,818,000 | 11,484,000 | 10,727,000 |
Intersegment interest allocations | (1,441,000) | (868,000) | (923,000) |
Net interest income | 11,377,000 | 10,616,000 | 9,804,000 |
Provision for (recapture of) credit losses on loans | 240,000 | (208,000) | 305,000 |
Net interest income after provision | 11,137,000 | 10,824,000 | 9,499,000 |
Noninterest income | 389,000 | 1,037,000 | 645,000 |
Noninterest expense | 6,328,000 | 5,611,000 | 9,362,000 |
Intersegment expense allocations | (524,000) | (410,000) | (404,000) |
Income before income taxes | 4,674,000 | 5,840,000 | 3,378,000 |
Income tax expense | 1,382,000 | 1,726,000 | 999,000 |
Net income | 3,292,000 | 4,114,000 | 2,379,000 |
Total assets | 94,637,000 | 75,059,000 | 66,875,000 |
Loans, net of deferred fees | 79,263,000 | 53,229,000 | 47,201,000 |
Goodwill | 13,044,000 | 13,044,000 | 13,044,000 |
Parent Company | |||
Operating Income | |||
Total interest expense | 2,179,000 | 2,314,000 | 2,321,000 |
Income tax expense | (1,707,000) | (1,816,000) | (1,628,000) |
Net income | 66,555,000 | 47,700,000 | $ 35,299,000 |
Total assets | $ 672,068,000 | $ 638,280,000 |
Parent Company only Condensed_3
Parent Company only Condensed Financial Information - Balance Sheets (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Assets | ||||
Cash and cash equivalents | $ 306,603,000 | $ 1,306,216,000 | ||
Total assets | 5,157,580,000 | 5,499,409,000 | $ 4,634,114,000 | |
Liabilities and Shareholders' Equity | ||||
Subordinated debt, net of issuance costs | 39,350,000 | 39,925,000 | ||
Shareholder's equity | 632,456,000 | 598,028,000 | $ 577,889,000 | $ 576,708,000 |
Total liabilities and shareholders' equity | 5,157,580,000 | 5,499,409,000 | ||
Parent Company | ||||
Assets | ||||
Cash and cash equivalents | 20,974,000 | 19,487,000 | ||
Investment in subsidiary bank | 649,545,000 | 616,108,000 | ||
Other assets | 1,549,000 | 2,685,000 | ||
Total assets | 672,068,000 | 638,280,000 | ||
Liabilities and Shareholders' Equity | ||||
Subordinated debt, net of issuance costs | 39,350,000 | 39,925,000 | ||
Other liabilities | 262,000 | 327,000 | ||
Shareholder's equity | 632,456,000 | 598,028,000 | ||
Total liabilities and shareholders' equity | $ 672,068,000 | $ 638,280,000 |
Parent Company only Condensed_4
Parent Company only Condensed Financial Information - Statements of Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Condensed statements of income | |||
Interest expense | $ (8,948) | $ (7,131) | $ (8,581) |
Income tax benefit | (27,811) | (18,170) | (13,769) |
Net income | 66,555 | 47,700 | 35,299 |
Parent Company | |||
Condensed statements of income | |||
Dividend from subsidiary bank | 32,000 | 32,000 | 32,000 |
Interest expense | (2,179) | (2,314) | (2,321) |
Other expenses | (3,675) | (3,929) | (3,263) |
Income before income taxes and equity in net income of subsidiary bank | 26,146 | 25,757 | 26,416 |
Equity in undistributed net income of subsidiary bank | 38,702 | 20,127 | 7,255 |
Income tax benefit | 1,707 | 1,816 | 1,628 |
Net income | $ 66,555 | $ 47,700 | $ 35,299 |
Parent Company only Condensed_5
Parent Company only Condensed Financial Information - Statements of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net Income | $ 66,555 | $ 47,700 | $ 35,299 |
Adjustments to reconcile net income to net cash provided by operations: | |||
Amortization of restricted stock award, net | 2,583 | 1,940 | 1,689 |
Net cash provided by operating activities | 69,853 | 56,849 | 57,295 |
Cash flows from financing activities: | |||
Issuance of subordinated debt, net of issuance costs | 39,274 | ||
Proceeds from exercise of stock options | 2,050 | 1,469 | 1,714 |
Net cash (used-in) provided by financing activities | (399,979) | 815,125 | 470,025 |
Net (decrease) increase in cash and cash equivalents | (999,613) | 175,143 | 673,703 |
Cash and cash equivalents, beginning of period | 1,306,216 | 1,131,073 | 457,370 |
Cash and cash equivalents, end of period | 306,603 | 1,306,216 | 1,131,073 |
Parent Company | |||
Cash flows from operating activities: | |||
Net Income | 66,555 | 47,700 | 35,299 |
Adjustments to reconcile net income to net cash provided by operations: | |||
Amortization of restricted stock award, net | 2,583 | 1,940 | 1,689 |
Equity in undistributed net income of subsidiary bank | (38,702) | (20,127) | (7,255) |
Net change in other assets and liabilities | 1,222 | (603) | (250) |
Net cash provided by operating activities | 31,658 | 28,910 | 29,483 |
Cash flows from financing activities: | |||
Proceeds from issuance of long-term debt | 39,274 | ||
Repayment of long-term debt | (40,000) | ||
Payment of cash dividends | (31,495) | (31,270) | (31,079) |
Proceeds from exercise of stock options | 2,050 | 1,469 | 1,714 |
Net cash (used-in) provided by financing activities | (30,171) | (29,801) | (29,365) |
Net (decrease) increase in cash and cash equivalents | 1,487 | (891) | 118 |
Cash and cash equivalents, beginning of period | 19,487 | 20,378 | 20,260 |
Cash and cash equivalents, end of period | $ 20,974 | $ 19,487 | $ 20,378 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | 12 Months Ended | |||
Jan. 26, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Subsequent Events | ||||
Quarterly cash dividends declared to holders of common stock | $ 0.13 | $ 0.52 | $ 0.52 | $ 0.52 |