Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 28, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-23877 | |
Entity Registrant Name | HERITAGE COMMERCE CORP | |
Entity Incorporation, State or Country Code | CA | |
Entity Tax Identification Number | 77-0469558 | |
Entity Address, Address Line One | 224 Airport Parkway | |
Entity Address, City or Town | San Jose | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 95110 | |
City Area Code | 408 | |
Local Phone Number | 947-6900 | |
Title of 12(b) Security | Common Stock, No Par Value | |
Trading Symbol | HTBK | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 60,970,338 | |
Document Fiscal Year Focus | 2023 | |
Entity Central Index Key | 0001053352 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Assets | ||
Cash and due from banks | $ 41,318,000 | $ 27,595,000 |
Other investments and interest-bearing deposits in other financial institutions | 698,690,000 | 279,008,000 |
Total cash and cash equivalents | 740,008,000 | 306,603,000 |
Securities available-for-sale, at fair value | 491,751,000 | 489,596,000 |
Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $14 at both March 31, 2023 and December 31, 2022 (fair value of $607,986 at March 31, 2023 and $614,452 at December 31, 2022) | 698,231,000 | 714,990,000 |
Loans held-for-sale - SBA, at lower of cost or fair value, including deferred costs | 2,792,000 | 2,456,000 |
Loans, net of deferred fees | 3,261,915,000 | 3,298,550,000 |
Allowance for credit losses on loans | (47,273,000) | (47,512,000) |
Loans, net | 3,214,642,000 | 3,251,038,000 |
Federal Home Loan Bank ("FHLB"), Federal Reserve Bank ("FRB") stock and other investments, at cost | 32,526,000 | 32,522,000 |
Company-owned life insurance | 79,438,000 | 78,945,000 |
Premises and equipment, net | 9,142,000 | 9,301,000 |
Goodwill | 167,631,000 | 167,631,000 |
Other intangible assets | 10,431,000 | 11,033,000 |
Accrued interest receivable and other assets | 89,948,000 | 93,465,000 |
Total assets | 5,536,540,000 | 5,157,580,000 |
Deposits: | ||
Demand, noninterest-bearing | 1,469,081,000 | 1,736,722,000 |
Demand, interest-bearing | 1,196,789,000 | 1,196,427,000 |
Savings and money market | 1,264,567,000 | 1,285,444,000 |
Time deposits - under $250 | 37,884,000 | 32,445,000 |
Time deposits - $250 and over | 172,070,000 | 108,192,000 |
ICS/CDARS - interest-bearing demand, money market and time deposits | 304,147,000 | 30,374,000 |
Total deposits | 4,444,538,000 | 4,389,604,000 |
Other short-term borrowings | 300,000,000 | |
Subordinated debt, net of issuance costs | 39,387,000 | 39,350,000 |
Accrued interest payable and other liabilities | 105,407,000 | 96,170,000 |
Total liabilities | 4,889,332,000 | 4,525,124,000 |
Shareholders' equity: | ||
Preferred stock, no par value; 10,000,000 shares authorized; none issued and outstanding at March 31, 2023 and December 31, 2022 | ||
Common stock, no par value; 100,000,000 shares authorized; 60,948,607 shares issued and outstanding at March 31, 2023 and 60,852,723 shares issued and outstanding at December 31, 2022 | 504,135,000 | 502,923,000 |
Retained earnings | 157,390,000 | 146,389,000 |
Accumulated other comprehensive loss | (14,317,000) | (16,856,000) |
Total shareholders' equity | 647,208,000 | 632,456,000 |
Total liabilities and shareholders' equity | $ 5,536,540,000 | $ 5,157,580,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Securities held-to-maturity | ||
Allowance for credit losses | $ 14 | $ 14 |
Securities held-to-maturity | $ 607,986 | $ 614,452 |
Preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock | ||
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 60,948,607 | 60,852,723 |
Common stock, shares outstanding | 60,948,607 | 60,852,723 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Interest income: | ||
Loans, including fees | $ 44,112 | $ 35,101 |
Securities, taxable | 7,056 | 3,444 |
Securities, exempt from Federal tax | 247 | 297 |
Other investments, interest-bearing deposits in other financial institutions and Federal funds sold | 4,859 | 1,064 |
Total interest income | 56,274 | 39,906 |
Interest expense: | ||
Deposits | 5,901 | 1,114 |
Short-term borrowings | 578 | |
Subordinated debt | 537 | 571 |
Total interest expense | 7,016 | 1,685 |
Net interest income before provision for credit losses on loans | 49,258 | 38,221 |
Provision for (recapture of) credit losses on loans | 32 | (567) |
Net interest income after provision for credit losses on loans | 49,226 | 38,788 |
Noninterest income: | ||
Service charges and fees on deposit accounts | $ 1,743 | $ 612 |
Revenue, Product and Service [Extensible List] | Service charges and fees on deposit accounts | Service charges and fees on deposit accounts |
Increase in cash surrender value of life insurance | $ 493 | $ 480 |
Servicing income | 131 | 106 |
Gain on sales of SBA loans | 76 | 156 |
Termination fees | 11 | |
Gain on warrants | 637 | |
Other | 312 | 469 |
Total noninterest income | 2,766 | 2,460 |
Noninterest expense: | ||
Salaries and employee benefits | 14,809 | 13,821 |
Occupancy and equipment | 2,400 | 2,437 |
Professional fees | 1,399 | 1,080 |
Other | 6,793 | 5,914 |
Total noninterest expense | 25,401 | 23,252 |
Income before income taxes | 26,591 | 17,996 |
Income tax expense | 7,674 | 5,130 |
Net income | $ 18,917 | $ 12,866 |
Earnings per common share: | ||
Basic (in dollars per share) | $ 0.31 | $ 0.21 |
Diluted (in dollars per share) | $ 0.31 | $ 0.21 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 18,917 | $ 12,866 |
Other comprehensive income (loss): | ||
Change in net unrealized holding gains (losses) on available-for-sale securities and I/O strips | 3,631 | (4,405) |
Deferred income taxes | (1,054) | 1,277 |
Change in unrealized gains (losses) on securities and I/O strips, net of deferred income taxes | 2,577 | (3,128) |
Change in net pension and other benefit plan liability adjustment | (34) | 104 |
Deferred income taxes | (4) | (34) |
Change in pension and other benefit plan liability, net of deferred income taxes | (38) | 70 |
Other comprehensive income (loss) | 2,539 | (3,058) |
Total comprehensive income | $ 21,456 | $ 9,808 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total |
Balance at Dec. 31, 2021 | $ 497,695 | $ 111,329 | $ (10,996) | $ 598,028 |
Balance (in shares) at Dec. 31, 2021 | 60,339,837 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Net income | 12,866 | 12,866 | ||
Other comprehensive income (loss) | (3,058) | (3,058) | ||
Amortization of restricted stock awards, net of forfeitures and taxes | $ 518 | 518 | ||
Cash dividend declared | (7,848) | (7,848) | ||
Stock option expense, net of forfeitures and taxes | 149 | 149 | ||
Stock options exercised | $ 401 | 401 | ||
Stock options exercised (in shares) | 68,009 | |||
Balance at Mar. 31, 2022 | $ 498,763 | 116,347 | (14,054) | 601,056 |
Balance (in shares) at Mar. 31, 2022 | 60,407,846 | |||
Balance at Dec. 31, 2022 | $ 502,923 | 146,389 | (16,856) | 632,456 |
Balance (in shares) at Dec. 31, 2022 | 60,852,723 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Net income | 18,917 | 18,917 | ||
Other comprehensive income (loss) | 2,539 | 2,539 | ||
Amortization of restricted stock awards, net of forfeitures and taxes | $ 382 | 382 | ||
Cash dividend declared | (7,916) | (7,916) | ||
Stock option expense, net of forfeitures and taxes | 147 | 147 | ||
Stock options exercised | $ 683 | 683 | ||
Stock options exercised (in shares) | 95,884 | |||
Balance at Mar. 31, 2023 | $ 504,135 | $ 157,390 | $ (14,317) | $ 647,208 |
Balance (in shares) at Mar. 31, 2023 | 60,948,607 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | ||
Cash dividend declared per share (in dollars per share) | $ 0.13 | $ 0.13 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 18,917 | $ 12,866 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of discounts and premiums on securities | (1,258) | 675 |
Gain on sale of SBA loans | (76) | (156) |
Proceeds from sale of SBA loans originated for sale | 1,045 | 2,146 |
SBA loans originated for sale | (1,305) | (934) |
Provision for (recapture of) credit losses on loans | 32 | (567) |
Increase in cash surrender value of life insurance | (493) | (480) |
Depreciation and amortization | 272 | 283 |
Amortization of other intangible assets | 602 | 659 |
Stock option expense, net | 147 | 149 |
Amortization of restricted stock awards, net | 382 | 518 |
Amortization of subordinated debt issuance costs | 37 | 46 |
Effect of changes in: | ||
Accrued interest receivable and other assets | (519) | 7,053 |
Accrued interest payable and other liabilities | 12,175 | (5,475) |
Net cash provided by operating activities | 29,958 | 16,783 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of securities available-for-sale | (21,656) | |
Purchase of securities held-to-maturity | (109,610) | |
Maturities/paydowns/calls of securities available-for-sale | 3,014 | 8,099 |
Maturities/paydowns/calls of securities held-to-maturity | 16,485 | 30,709 |
Net change in loans | 36,364 | 63,807 |
Changes in FHLB stock and other investments | (4) | (5) |
Purchase of premises and equipment | (113) | (224) |
Net cash provided by (used in) investing activities | 55,746 | (28,880) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net change in deposits | 54,934 | (69,507) |
Net change in short-term borrowings | 300,000 | |
Exercise of stock options | 683 | 401 |
Payment of cash dividends | (7,916) | (7,848) |
Net cash provided by (used in) financing activities | 347,701 | (76,954) |
Net increase in cash and cash equivalents | 433,405 | (89,051) |
Cash and cash equivalents, beginning of period | 306,603 | 1,306,216 |
Cash and cash equivalents, end of period | 740,008 | 1,217,165 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 5,657 | 1,112 |
Income taxes paid (refunds), net | (654) | |
Supplemental schedule of non-cash activity: | ||
Recording of right to use assets in exchange for lease obligations | $ 384 | |
Transfer of loans held-for-sale to loan portfolio | $ 480 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2023 | |
Basis of Presentation | |
Basis of Presentation | 1) Basis of Presentation The unaudited consolidated financial statements of Heritage Commerce Corp (the “Company” or “HCC”) and its wholly owned subsidiary, Heritage Bank of Commerce (the “Bank” or “HBC”), have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements are not included herein. The interim statements should be read in conjunction with the consolidated financial statements and notes that were included in the Company’s Form 10-K for the year ended December 31, 2022. HBC is a commercial bank serving customers primarily located in Alameda, Contra Costa, Marin, San Benito, San Francisco, San Mateo, and Santa Clara counties of California. CSNK Working Capital Finance Corp. a California corporation, dba Bay View Funding (“Bay View Funding”) is a wholly owned subsidiary of HBC, and provides business-essential working capital factoring financing to various industries throughout the United States. No customer accounts for more than 10% of revenue for HBC or the Company. The Company reports its results for two segments: banking and factoring. The Company’s management uses segment results in its operating and strategic planning. In management’s opinion, all adjustments necessary for a fair presentation of these consolidated financial statements have been included and are of a normal and recurring nature. All intercompany transactions and balances have been eliminated. The preparation of financial statements in accordance with the accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make a number of judgments, estimates and assumptions that affect the reported amount of assets, liabilities, income and expense in the financial statements. Various elements of our accounting policies, by their nature, involve the application of highly sensitive and judgmental estimates and assumptions. Some of these policies and estimates relate to matters that are highly complex and contain inherent uncertainties. Material estimates that are particularly susceptible to significant change include the determination of the allowance for credit losses and any impairment of goodwill or intangible assets. It is possible that, in some instances, different estimates and assumptions could reasonably have been made and used by management, instead of those we applied, which might have produced different results that could have had a material effect on the financial statements. The results for the three months ended March 31, 2023 are not necessarily indicative of the results expected for any subsequent period or for the entire year ending December 31, 2023. Reclassifications Certain reclassifications of prior year balances have been made to conform to the current year presentation. These reclassifications had no impact on the Company’s consolidated financial position, results of operations or net change in cash and cash equivalents. Adoption of New Accounting Standards In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-02 Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings 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. The Company adopted the guidance of ASU 2022-02 on January 1, 2023 and the amendments were applied prospectively. The adoption of this new guidance did not impact the financial position or results of operations. 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 - - . - , , |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share | |
Earnings Per Share | 2) Earnings Per Share Basic earnings per common share is computed by dividing net income by the weighted average common shares outstanding. Diluted earnings per share reflect potential dilution from outstanding stock options using the treasury stock method. There were 1,303,068 and 1,048,267 weighted average stock options outstanding for the three months ended March 31, 2023 and 2022, respectively, considered to be antidilutive and excluded from the computation of diluted earnings per share. A reconciliation of these factors used in computing basic and diluted earnings per common share is as follows: Three Months Ended March 31, 2023 2022 (Dollars in thousands, except per share amounts) Net income $ 18,917 $ 12,866 Weighted average common shares outstanding for basic earnings per common share 60,908,221 60,393,883 Dilutive potential common shares 359,851 527,952 Shares used in computing diluted earnings per common share 61,268,072 60,921,835 Basic earnings per share $ 0.31 $ 0.21 Diluted earnings per share $ 0.31 $ 0.21 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) (AOCI) | 3 Months Ended |
Mar. 31, 2023 | |
Accumulated Other Comprehensive Income (Loss) ("AOCI") | |
Accumulated Other Comprehensive Income (Loss) ("AOCI") | 3) Accumulated Other Comprehensive Income (Loss) (“AOCI”) The following table reflects the changes in AOCI by component for the periods indicated: Three Months Ended March 31, 2023 and 2022 Unrealized Gains (Losses) on Available- Defined for-Sale Benefit Securities Pension and I/O Plan Strips Items(1) Total (Dollars in thousands) Beginning balance January 1, 2023, net of taxes $ (11,394) $ (5,462) $ (16,856) Other comprehensive income (loss) before reclassification, net of taxes 2,577 (14) 2,563 Amounts reclassified from other comprehensive income (loss), net of taxes — (24) (24) Net current period other comprehensive income (loss), net of taxes 2,577 (38) 2,539 Ending balance March 31, 2023, net of taxes $ (8,817) $ (5,500) $ (14,317) Beginning balance January 1, 2022, net of taxes $ 2,153 $ (13,149) $ (10,996) Other comprehensive income (loss) before reclassification, net of taxes (3,128) (3) (3,131) Amounts reclassified from other comprehensive income (loss), net of taxes — 73 73 Net current period other comprehensive income (loss), net of taxes (3,128) 70 (3,058) Ending balance March 31, 2022, net of taxes $ (975) $ (13,079) $ (14,054) (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 8—Benefit Plans) and includes split-dollar life insurance benefit plan. Amounts Reclassified from AOCI Three Months Ended March 31, Affected Line Item Where Details About AOCI Components 2023 2022 Net Income is Presented (Dollars in thousands) Amortization of defined benefit pension plan items (1) Prior transition obligation and actuarial losses (2) $ 47 $ 11 Prior service cost and actuarial losses (3) (13) (114) 34 (103) Other noninterest expense (10) 30 Income tax benefit 24 (73) Net of tax Total reclassification from AOCI for the period $ 24 $ (73) (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 8—Benefit Plans). (2) This is related to the split dollar life insurance benefit plan. (3) This is related to the supplemental executive retirement plan. |
Securities
Securities | 3 Months Ended |
Mar. 31, 2023 | |
Securities | |
Securities | 4) Securities The amortized cost and estimated fair value of securities were as follows for the periods indicated: Gross Gross Allowance Estimated Amortized Unrealized Unrealized for Credit Fair March 31, 2023 Cost Gains (Losses) Losses Value (Dollars in thousands) Securities available-for-sale: U.S. Treasury $ 430,413 — (7,510) — $ 422,903 Agency mortgage-backed securities 73,817 — (4,969) — 68,848 Total $ 504,230 $ — $ (12,479) $ — $ 491,751 Gross Gross Estimated Allowance Amortized Unrecognized Unrecognized Fair for Credit March 31, 2023 Cost Gains (Losses) Value Losses (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 663,481 382 (90,344) $ 573,519 $ — Municipals - exempt from Federal tax 34,764 18 (315) 34,467 (14) Total $ 698,245 $ 400 $ (90,659) $ 607,986 $ (14) 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) Securities with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position are as follows for the periods indicated: Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized March 31, 2023 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: U.S. Treasury $ 387,065 $ (6,596) $ 30,886 $ (914) $ 417,951 $ (7,510) Agency mortgage-backed securities 3,586 (122) 65,262 (4,847) 68,848 (4,969) Total $ 390,651 $ (6,718) $ 96,148 $ (5,761) $ 486,799 $ (12,479) Securities held-to-maturity: Agency mortgage-backed securities $ 17,765 $ (319) $ 543,522 $ (90,025) $ 561,287 $ (90,344) Municipals — exempt from Federal tax 14,130 (160) 5,532 (155) 19,662 (315) Total $ 31,895 $ (479) $ 549,054 $ (90,180) $ 580,949 $ (90,659) 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) 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) There were no holdings of securities of any one issuer, other than the U.S. Government and its sponsored entities, in an amount greater than 10% of shareholders’ equity. At March 31, 2023, the Company held The amortized cost and estimated fair values of securities as of March 31, 2023 are shown by contractual maturity below. The expected maturities will differ from contractual maturities if borrowers have the right to call or pre-pay obligations with or without call or pre-payment penalties. Securities not due at a single maturity date are shown separately. Available-for-sale Amortized Estimated Cost Fair Value (Dollars in thousands) Due after three months through one year $ 66,001 $ 65,614 Due after one through five years 364,412 357,289 Agency mortgage-backed securities 73,817 68,848 Total $ 504,230 $ 491,751 Held-to-maturity Amortized Estimated Cost Fair Value (Dollars in thousands) Due three months or less $ 9,808 $ 9,813 Due after three months through one year 5,020 5,022 Due after one through five years 4,029 3,981 Due after five through ten years 15,907 15,651 Agency mortgage-backed securities 663,481 573,519 Total $ 698,245 $ 607,986 Securities with amortized cost of $1,075,800,000 and $66,272,000 as of March 31, 2023 and December 31, 2022 were pledged to secure public deposits and for other purposes as required or permitted by law or contract. The table below presents a roll-forward by major security type for the three months ended March 31, 2023 of the allowance for credit losses on debt securities held-to-maturity held at period end: Municipals (Dollars in thousands) Beginning balance January 1, 2023 $ 14 Provision for credit losses — Ending balance March 31, 2023 $ 14 For the three months ended March 31, 2023, the allowance for credit losses on the Company’s held-to-maturity municipal investment securities portfolio remained at $14,000 . The bond ratings for the Company’s municipal investment securities at March 31, 2023 were consistent with the ratings at December 31, 2022. |
Loans and Allowance for Credit
Loans and Allowance for Credit Losses on Loans | 3 Months Ended |
Mar. 31, 2023 | |
Loans and Allowance for Credit Losses on Loans | |
Loans and Allowance for Credit Losses on Loans | 5) Loans and Allowance for Credit Losses on Loans On January 1, 2020, the Company adopted the current expected credit loss (“CECL”) model under ASU 2016-13 (Topic 326) using the modified retrospective approach. The allowance for credit losses on loans is an estimate of the current expected credit losses in the loan portfolio. Loans are charged-off against the allowance when management determines that a loan balance has become uncollectible. Subsequent recoveries, if any, are credited to the allowance for credit losses on loans. Management’s methodology for estimating the allowance balance consists of several key elements, which include pooling loans with similar characteristics into segments and using a discounted cash flow calculation to estimate losses. The discounted cash flow model inputs include loan level cash flow estimates for each loan segment based on peer and bank historic loss correlations with certain economic factors. Management uses a four quarter forecast of each economic factor that is used for each loan segment and the economic factors are assumed to revert to the historic mean over an eight quarter period after the forecast period. The economic factors management has selected include the California unemployment rate, California gross domestic product, California home price index, and a national CRE value index. These factors are evaluated and updated as economic conditions change. Additionally, management uses qualitative adjustments to the discounted cash flow quantitative loss estimates in certain cases when management has assessed an adjustment is necessary. These qualitative adjustments are applied by pooled loan segment and have been made for increased risk due to loan quality trends, collateral risk, or other risks management determines are not adequately captured in the discounted cash flow loss estimation. Specific allowances on individually evaluated loans are combined to the allowance on pools of loans with similar risk characteristics to derive to total allowance for credit losses on loans. Management has also considered other qualitative risks such as collateral values, concentrations of credit risk (geographic, large borrower, and industry), economic conditions, changes in underwriting standards, experience and depth of lending staff, trends in delinquencies, and the level of criticized loans to address asset-specific risks and current conditions that were not fully considered by the macroeconomic variables driving the quantitative estimate. The allowance for credit losses on loans was calculated by pooling loans of similar credit risk characteristics and credit monitoring procedures. The loan portfolio is classified into eight segments of loans - commercial, commercial real estate – owner occupied, commercial real estate – non-owner occupied, land and construction, home equity, multifamily, residential mortgages and consumer and other. The risk characteristics of each loan portfolio segment are as follows: Commercial Commercial loans primarily rely on the identified cash flows of the borrower for repayment and secondarily on the underlying collateral provided by the borrower. However, the cash flows of the borrowers may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable, inventory or equipment and may incorporate a personal guarantee; however, some loans may be unsecured. Included in commercial loans are $565,000 of Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans and $69,424,000 of Bay View Funding factored receivables at March 31, 2023, compared to $1,166,000 and $79,263,000, respectively, at December 31, 2022. Commercial Real Estate (“CRE”) CRE loans rely primarily on the cash flows of the properties securing the loan and secondarily on the value of the property that is securing the loan. CRE loans comprise two segments differentiated by owner occupied CRE and non-owner CRE. Owner occupied CRE loans are secured by commercial properties that are at least 50% occupied by the borrower or borrower affiliate. Non-owner occupied CRE loans are secured by commercial properties that are less than 50% occupied by the borrower or borrower affiliate. CRE loans may be adversely affected by conditions in the real estate markets or in the general economy. Land and Construction Land and construction loans are generally based on estimates of costs and value associated with the complete project. Construction loans usually involve the disbursement of funds with repayment substantially dependent on the success of the completion of the project. Sources of repayment for these loans may be permanent loans from HBC or other lenders, or proceeds from the sales of the completed project. These loans are monitored by on-site inspections and are considered to have higher risk than other real estate loans due to the final repayment dependent on numerous factors including general economic conditions. Home Equity Home equity loans are secured by 1-4 family residences that are generally owner occupied. Repayment of these loans depends primarily on the personal income of the borrower and secondarily on the value of the property securing the loan which can be impacted by changes in economic conditions such as the unemployment rate and property values. These loans are generally revolving lines of credit. Multifamily Multifamily loans are loans on residential properties with five or more units. These loans rely primarily on the cash flows of the properties securing the loan for repayment and secondarily on the value of the properties securing the loan. The cash flows of these borrowers can fluctuate along with the values of the underlying property depending on general economic conditions. Residential Mortgages Residential mortgage loans are secured by 1-4 family residences which are generally owner-occupied. Repayment of these loans depends primarily on the personal income of the borrower and secondarily on the value of the property securing the loan which can be impacted by changes in economic conditions such as the unemployment rate and property values . These are generally term loans 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 values can vary depending on economic conditions. Loan Distribution Loans by portfolio segment and the allowance for credit losses on loans were as follows for the periods indicated: March 31, December 31, 2023 2022 (Dollars in thousands) Loans held-for-investment: Commercial $ 506,602 $ 533,915 Real estate: CRE - owner occupied 603,298 614,663 CRE - non-owner occupied 1,083,852 1,066,368 Land and construction 166,408 163,577 Home equity 124,481 120,724 Multifamily 231,242 244,882 Residential mortgages 528,639 537,905 Consumer and other 17,905 17,033 Loans 3,262,427 3,299,067 Deferred loan fees, net (512) (517) Loans, net of deferred fees 3,261,915 3,298,550 Allowance for credit losses on loans (47,273) (47,512) Loans, net $ 3,214,642 $ 3,251,038 Changes in the allowance for credit losses on loans were as follows for the periods indicated: Three Months Ended March 31, 2023 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 $ 6,617 $ 5,751 $ 22,135 $ 2,941 $ 666 $ 3,366 $ 5,907 $ 129 $ 47,512 Charge-offs (134) — — — (246) — — — (380) Recoveries 80 4 — — 25 — — — 109 Net (charge-offs) recoveries (54) 4 — — (221) — — — (271) Provision for (recapture of) credit losses on loans (29) (302) 542 235 243 1,026 (1,711) 28 32 End of period balance $ 6,534 $ 5,453 $ 22,677 $ 3,176 $ 688 $ 4,392 $ 4,196 $ 157 $ 47,273 Three Months Ended March 31, 2022 CRE CRE Owner Non-owner Land & Home Multi- Residential Consumer Commercial Occupied Occupied Construction Equity Family Mortgage and Other Total (Dollars in thousands) Beginning of period balance $ 8,414 $ 7,954 $ 17,125 $ 1,831 $ 864 $ 2,796 $ 4,132 $ 174 $ 43,290 Charge-offs (16) — — — — — — — (16) Recoveries 54 3 — — 24 — — — 81 Net recoveries 38 3 — — 24 — — — 65 Provision for (recapture of) credit losses on loans (1,651) (1,560) 2,288 175 (166) (252) 625 (26) (567) End of period balance $ 6,801 $ 6,397 $ 19,413 $ 2,006 $ 722 $ 2,544 $ 4,757 $ 148 $ 42,788 The following tables present the amortized cost basis of nonperforming loans and loans past due over 90 days and still accruing at the periods indicated: March 31, 2023 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 $ 291 $ 394 $ 123 $ 808 Real estate: CRE - Owner Occupied — — 1,336 1,336 Home equity 96 — — 96 Total $ 387 $ 394 $ 1,459 $ 2,240 December 31, 2022 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 $ 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 The following tables present the aging of past due loans by class for the periods indicated: March 31, 2023 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 $ 7,756 $ 2,239 $ 436 $ 10,431 $ 496,171 $ 506,602 Real estate: CRE - Owner Occupied 1,121 — — 1,121 602,177 603,298 CRE - Non-Owner Occupied — — 1,336 1,336 1,082,516 1,083,852 Land and construction — — — — 166,408 166,408 Home equity 96 — — 96 124,385 124,481 Multifamily — — — — 231,242 231,242 Residential mortgages 6,431 1,649 — 8,080 520,559 528,639 Consumer and other — — — — 17,905 17,905 Total $ 15,404 $ 3,888 $ 1,772 $ 21,064 $ 3,241,363 $ 3,262,427 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 Past due loans 30 days or greater totaled $21,064,000 and $17,066,000 at March 31, 2023 and December 31, 2022, respectively, of which $410,000 and $479,000 were on nonaccrual, at March 31, 2023 and December 31, 2022, respectively. At March 31, 2023, there were also $371,000 of loans less than 30 days past due included in nonaccrual loans held-for-investment. At December 31, 2022, there were also $261,000 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 Special Mention. A Special Mention asset has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in a deterioration of the repayment prospects for the asset or in the credit position at some future date. Special Mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that will jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Substandard-Nonaccrual. Loans classified as substandard-nonaccrual are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any, and it is probable that the Company will not receive payment of the full contractual principal and interest. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. In addition, the Company no longer accrues interest on the loan because of the underlying weaknesses. Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loss. Loans classified as loss are considered uncollectable or of so little value that their continuance as assets is not warranted. This classification does not necessarily mean that a loan has no recovery or salvage value; but rather, there is much doubt about whether, how much, or when the recovery would occur. Loans classified as loss are immediately charged off against the allowance for credit losses on loans. Therefore, there is Loans may be reviewed at any time throughout a loan’s duration. If new information is provided, a new risk assessment may be performed if warranted. The following tables present term loans amortized cost by vintage and loan grade classification, and revolving loans amortized cost by loan grade classification at March 31, 2023 and December 31, 2022. The loan grade classifications are based on the Bank’s internal loan grading methodology. Loan grade categories for doubtful and loss rated loans are not included on the tables below as there are no loans with those grades at March 31, 2023 and December 31, 2022. The vintage year represents the period the loan was originated or in the case of renewed loans, the period last renewed. The amortized balance is the loan balance less any purchase discounts, plus any loan purchase premiums. The loan categories are based on the loan segmentation in the Company's CECL reserve methodology based on loan purpose and type. Revolving Loans Term Loans Amortized Cost Basis by Originated Period as of March 31, 2023 Amortized 2018 and Cost 03/31/2023 12/31/2022 12/31/2021 12/31/2020 12/31/2019 Prior Basis Total (Dollars in thousands) Commercial: Pass $ 87,216 $ 36,758 $ 32,068 $ 21,972 $ 16,738 $ 29,376 $ 260,606 $ 484,734 Special Mention 2,020 1,418 524 - 917 1,260 4,494 10,633 Substandard 4 321 620 - 274 4,370 4,961 10,550 Substandard-Nonaccrual - - 236 - - 300 149 685 Total 89,240 38,497 33,448 21,972 17,929 35,306 270,210 506,602 CRE - Owner Occupied: Pass 2,381 87,418 118,376 74,459 59,368 241,040 12,216 595,258 Special Mention - 1,588 1,230 853 - 2,250 - 5,921 Substandard 990 - - - 1,121 8 - 2,119 Substandard-Nonaccrual - - - - - - - Total 3,371 89,006 119,606 75,312 60,489 243,298 12,216 603,298 CRE - Non-Owner Occupied: Pass 30,477 239,675 270,999 29,747 99,910 398,297 3,416 1,072,521 Special Mention - - - - - 3,354 - 3,354 Substandard - - - - - 7,841 136 7,977 Substandard-Nonaccrual - - - - - - - - Total 30,477 239,675 270,999 29,747 99,910 409,492 3,552 1,083,852 Land and construction: Pass 16,276 64,546 56,324 23,113 6,149 - - 166,408 Special Mention - - - - - - - - Substandard - - - - - - - - Substandard-Nonaccrual - - - - - - - - Total 16,276 64,546 56,324 23,113 6,149 - - 166,408 Home equity: Pass - - - - - 116 119,343 119,459 Special Mention - - - - - - 4,640 4,640 Substandard - - - - - 144 142 286 Substandard-Nonaccrual - - 96 - - - - 96 Total - - 96 - - 260 124,125 124,481 Multifamily: Pass 2,977 41,892 57,255 5,493 42,919 78,199 215 228,950 Special Mention - - - - - - - - Substandard - - - - - 2,292 - 2,292 Substandard-Nonaccrual - - - - - - - - Total 2,977 41,892 57,255 5,493 42,919 80,491 215 231,242 Residential mortgage: Pass 1,200 197,922 281,025 1,060 6,736 34,132 - 522,075 Special Mention - - 723 - 1,052 1,994 - 3,769 Substandard - - 1,873 - - 922 - 2,795 Substandard-Nonaccrual - - - - - - - - Total 1,200 197,922 283,621 1,060 7,788 37,048 - 528,639 Consumer and other: Pass - 386 10 - - 2,202 15,230 17,828 Special Mention - - 77 - - - - 77 Substandard - - - - - - - - Substandard-Nonaccrual - - - - - - - - Total - 386 87 - - 2,202 15,230 17,905 Total loans $ 143,541 $ 671,924 $ 821,436 $ 156,697 $ 235,184 $ 808,097 $ 425,548 $ 3,262,427 Risk Grades: Pass $ 140,527 $ 668,597 $ 816,057 $ 155,844 $ 231,820 $ 783,362 $ 411,026 $ 3,207,233 Special Mention 2,020 3,006 2,554 853 1,969 8,858 9,134 28,394 Substandard 994 321 2,493 - 1,395 15,577 5,239 26,019 Substandard-Nonaccrual - - 332 - - 300 149 781 Grand Total $ 143,541 $ 671,924 $ 821,436 $ 156,697 $ 235,184 $ 808,097 $ 425,548 $ 3,262,427 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 The following table presents the gross charge-offs by class of loans and year of origination for the three months ended March 31, 2023: Gross Charge-offs by Originated Period as of March 31, 2023 2018 and Revolving 03/31/2023 12/31/2022 12/31/2021 12/31/2020 12/31/2019 Prior Loans Total (Dollars in thousands) Commercial $ - $ - $ - $ - $ 49 $ 85 $ - $ 134 Real estate: CRE - Owner Occupied - - - - - - - - CRE - Non-Owner Occupied - - - - - - - - Land and construction - - - - - - - - Home equity - - - - - - 246 246 Multifamily - - - - - - - - Residential mortgages - - - - - - - - Consumer and other - - - - - - - - Total $ - $ - $ - $ - $ 49 $ 85 $ 246 $ 380 The amortized cost basis of collateral-dependent loans by business assets was $394,000 and $324,000 at March 31, 2023 and December 31, 2022, respectfully. When management determines that foreclosures are probable, expected credit losses for collateral-dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. For loans for which foreclosure is not probable, but for which repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty, management has elected the practical expedient under ASC 326 to estimate expected credit losses based on the fair value of collateral, adjusted for selling costs as appropriate. The class of loan represents the primary collateral type associated with the loan. Significant quarter over quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value. Loan Modifications Occasionally, the Company modifies loans to borrowers experiencing financial difficulty by providing principal forgiveness, term extension, payment delay, or interest reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses. In some cases, the Company provides multiple types of concessions on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. For the loans included in the “combination” columns below, multiple types of modifications have been made on the same loan within the current reporting period. The combination is at least two of the following: a term extension, principal forgiveness, payment delay, and/or interest rate reduction. The following table presents the amortized cost basis of loans at March 31, 2023 that were both experiencing financial difficulty and modified during the quarter ended March 31, 2023, by segment and type of modification. The percentage of the amortized cost basis of the loans that were modified to borrowers experiencing financial difficulty as compared to the amortized cost basis of each class of financing receivable is also presented below. March 31, 2023 Combination Combination Term |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | 6) Goodwill and Other Intangible Assets Goodwill At March 31, 2023, 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 that a goodwill impairment exists, for either the Company’s banking or factoring reporting units. The following table summarizes the carrying amount of goodwill by segment for the periods indicated: March 31, December 31, 2023 2022 (Dollars in thousands) Banking $ 154,587 $ 154,587 Factoring 13,044 13,044 Total Goodwill $ 167,631 $ 167,631 Other Intangible Assets The Company’s intangible assets are summarized as follows for the periods indicated: March 31, 2023 Gross Carrying Accumulated Amount Amortization Total (Dollars in thousands) Core deposit intangibles $ 25,023 $ (14,984) $ 10,039 Customer relationship and brokered relationship intangibles 1,900 (1,598) 302 Below market leases 110 (20) 90 Total $ 27,033 $ (16,602) $ 10,431 December 31, 2022 Gross Carrying Accumulated Amount Amortization Total (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 As of March 31, 2023, the estimated amortization expense for future periods is as follows: Customer & Below/ Core Brokered (Above) Total Deposit Relationship Market Amortization Year Intangible Intangible Lease Expense (Dollars in thousands) 2023 remaining $ 1,662 143 $ (2) $ 1,803 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 2028 999 — 18 1,017 2029 610 — 15 625 $ 10,039 $ 302 $ 90 $ 10,431 Impairment testing of the intangible assets is performed at the individual asset level. Impairment exists if the carrying amount of the asset is not recoverable and exceeds its fair value at the date of the impairment test. For intangible assets, estimates of expected future cash flows (cash inflows less cash outflows) that are directly associated with an intangible asset are used to determine the fair value of that asset. Management makes certain estimates and assumptions in determining the expected future cash flows from core deposit and customer relationship intangibles including account attrition, expected lives, discount rates, interest rates, servicing costs and other factors. Significant changes in these estimates and assumptions could adversely impact the valuation of these intangible assets. If an impairment loss exists, the carrying amount of the intangible asset is adjusted to a new cost basis. The new cost basis is then amortized over the remaining useful life of the asset. Based on its assessment, management concluded that there was no impairment of intangible assets at March 31, 2023 and December 31, 2022. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Taxes | |
Income Taxes | 7) Income Taxes Some items of income and expense are recognized in one year for tax purposes, and another when applying generally accepted accounting principles, which leads to timing differences between the Company’s actual current tax liability and the amount accrued for this liability based on book income. These temporary differences comprise the “deferred” portion of the Company’s tax expense or benefit, which is accumulated on the Company’s books as a deferred tax asset or deferred tax liability until such time as they reverse. Under generally accepted accounting principles, a valuation allowance is required if it is “more likely than not” that a deferred tax asset will not be realized. The determination of the realizability of the deferred tax assets is highly subjective and dependent upon judgment concerning management’s evaluation of both positive and negative evidence, including forecasts of future income, cumulative losses, applicable tax planning strategies, and assessments of current and future economic and business conditions. The Company had net deferred tax assets of $29,841,000 and $32,176,000, at March 31, 2023 and December 31, 2022, respectively. After consideration of the matters in the preceding paragraph, the Company determined that it is more likely than not that the net deferred tax assets at March 31, 2023 and December 31, 2022 will be fully realized in future years. The following table reflects the carrying amounts of the low income housing investments included in accrued interest receivable and other assets, and the future commitments included in accrued interest payable and other liabilities for the periods indicated: March 31, December 31, 2023 2022 (Dollars in thousands) Low income housing investments $ 3,290 $ 3,537 Future commitments $ 521 $ 523 The Company expects $27,000 of the future commitments to be paid in 2023, and $494,000 in 2024 through 2026. For tax purposes, the Company had low income housing tax credits of $180,000 for the three months ended March 31, 2023, and $210,000 for the three months ended March 31, 2022, and low income housing investment expense of $186,000 and $211,000 , respectively. The Company recognized low income housing investment expense as a component of income tax expense. |
Benefit Plans
Benefit Plans | 3 Months Ended |
Mar. 31, 2023 | |
Benefit Plans | |
Benefit Plans | 8) Benefit Plans Supplemental Retirement Plan The Company has a supplemental retirement plan (the “Plan”) covering some current and some former key employees and directors. The Plan is a nonqualified defined benefit plan. Benefits are unsecured as there are no Plan assets. The following table presents the amount of periodic cost recognized for the periods indicated: Three Months Ended March 31, 2023 2022 (Dollars in thousands) Components of net periodic benefit cost: Service cost $ 48 $ 87 Interest cost 324 216 Amortization of net actuarial loss 13 114 Net periodic benefit cost $ 385 $ 417 The components of net periodic benefit cost other than the service cost component are included in the line item “other noninterest expense” in the Consolidated Statements of Income. Split-Dollar Life Insurance Benefit Plan The Company maintains life insurance policies for some current and former directors and officers that are subject to split-dollar life insurance agreements. The following table sets forth the funded status of the split-dollar life insurance benefits for the periods indicated: March 31, December 31, 2023 2022 (Dollars in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 7,060 $ 9,244 Interest cost 91 246 Actuarial loss — (2,430) Projected benefit obligation at end of period $ 7,151 $ 7,060 March 31, December 31, 2023 2022 (Dollars in thousands) Net actuarial loss $ 2,371 $ 2,301 Prior transition obligation 768 790 Accumulated other comprehensive loss $ 3,139 $ 3,091 Three Months Ended March 31, 2023 2022 (Dollars in thousands) Amortization of prior transition obligation and actuarial losses $ (47) $ (11) Interest cost 91 62 Net periodic benefit cost $ 44 $ 51 |
Fair Value
Fair Value | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value | |
Fair Value | 9) Fair Value Accounting guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data (for example, interest rates and yield curves observable at commonly quoted intervals, prepayment speeds, credit risks, and default rates). Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. Financial Assets and Liabilities Measured on a Recurring Basis The fair values of securities available-for sale-are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The fair value of interest-only (“I/O”) strip receivable assets is based on a valuation model used by a third party. The Company is able to compare the valuation model inputs and results to widely available published industry data for reasonableness (Level 2 inputs). Fair Value Measurements Using Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Balance (Level 1) (Level 2) (Level 3) (Dollars in thousands) Assets at March 31, 2023 Available-for-sale securities: U.S. Treasury $ 422,903 $ 422,903 $ — $ — Agency mortgage-backed securities 68,848 — 68,848 — I/O strip receivables 145 — 145 — 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 — There were no transfers between Level 1 and Level 2 during the period for assets measured at fair value on a recurring basis. Assets and Liabilities Measured on a Non-Recurring Basis The fair value of collateral dependent loans individually evaluated with specific allocations of the allowance for credit losses on loans is generally based on recent real estate appraisals. The appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. There were no material collateral dependent loans carried at fair value on a non-recurring basis at March 31, 2023 or December 31, 2022. Foreclosed assets are valued at the time the loan is foreclosed upon and the asset is transferred to foreclosed assets. The fair value is based primarily on third party appraisals, less costs to sell. The appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales and income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. At March 31, 2023 and December 31, 2022, there were The carrying amounts and estimated fair values of financial instruments at March 31, 2023 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 $ 740,008 $ 740,008 $ — $ — $ 740,008 Securities available-for-sale 491,751 422,903 68,848 — 491,751 Securities held-to-maturity 698,231 — 607,986 — 607,986 Loans (including loans held-for-sale) 3,264,707 (1) — 2,792 3,058,697 3,061,489 FHLB stock, FRB stock, and other investments 32,526 — — — N/A Accrued interest receivable 16,117 1,745 2,502 11,870 16,117 I/O strips receivables 145 — 145 — 145 Liabilities: Time deposits $ 214,443 $ — $ 216,579 $ — $ 216,579 Other deposits 4,230,095 — 4,230,095 — 4,230,095 Borrowings on FHLB and FRB lines of credit 300,000 — 300,000 — 300,000 Subordinated debt 39,387 — 32,787 — 32,787 Accrued interest payable 1,921 — 1,921 — 1,921 (1) Before allowance for credit losses on loans of $47,273,000. The carrying amounts and estimated fair values of the Company’s financial instruments at December 31, 2022: 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 714,990 — 614,452 — 614,452 Loans (including loans held-for-sale) 3,301,006 (1) — 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 (1) Before allowance for credit losses on loans of $47,512,000. |
Equity Plan
Equity Plan | 3 Months Ended |
Mar. 31, 2023 | |
Equity Plan | |
Equity Plan | 10) Equity Plan The Company maintained an Amended and Restated 2004 Equity Plan (the “2004 Plan”) for directors, officers, and key employees. The 2004 Plan was terminated on May 23, 2013. On May 23, 2013, the Company’s shareholders approved the 2013 Equity Incentive Plan (the “2013 Plan”). On May 21, 2020, the shareholders approved an amendment to the Heritage Commerce Corp 2013 Equity Incentive Plan to increase the number of shares available from 3,000,000 to 5,000,000 shares. The equity plans provide for the grant of incentive and nonqualified stock options, restricted stock, and restricted stock units. 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. For the three months ended March 31, 2023, the Company granted 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, 2023 2,527,173 $ 10.44 Exercised 95,884 $ 7.12 Forfeited or expired (23,728) $ 13.62 Outstanding at March 31, 2023 2,407,561 $ 10.54 5.38 $ 1,356,635 Vested or expected to vest 2,263,107 5.38 $ 1,275,237 Exercisable at March 31, 2023 1,858,557 4.46 $ 1,356,635 Information related to the equity plans for the periods indicated: Three Months Ended March 31, 2023 2022 Intrinsic value of options exercised $ 466,308 $ 415,117 Cash received from option exercise $ 682,825 $ 401,136 Tax benefit (expense) realized from option exercises $ 3,969 $ 31,971 As of March 31, 2023, there was $1,141,000 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 2.50 years. Restricted stock activity under the equity plans is as follows: Weighted Average Grant Number Date Fair Total Restricted Stock Award of Shares Value Nonvested shares at January 1, 2023 253,491 $ 11.05 Vested — $ — Nonvested shares at March 31, 2023 253,491 $ 11.05 As of March 31, 2023, there was $1,500,000 of total unrecognized compensation cost related to nonvested restricted stock awards granted under the equity plans. The cost is expected to be recognized over a weighted-average period of approximately 1.84 years. |
Borrowing Arrangements
Borrowing Arrangements | 3 Months Ended |
Mar. 31, 2023 | |
Borrowing Arrangements | |
Borrowing Arrangements | 11) 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. HBC had $653,005,000 of loans and $377,513,000 of securities pledged to the FHLB as collateral on an available line of credit of $789,909,000 at March 31, 2023, of which $150,000,000 was outstanding. The Bank repaid in full the outstanding on April 20, 2023. HBC had HBC can also borrow from the FRB discount window. HBC had was outstanding. The Bank repaid in full the outstanding on April 20, 2023. There were At March 31, 2023, HBC had Federal funds purchased arrangements available of $80,000,000. There were no Federal funds purchased outstanding at March 31, 2023 and December 31, 2022. The Company has a $20,000,000 million line of credit with a correspondent bank, of which none was outstanding at March 31, 2023 and December 31, 2022. HBC may also utilize securities sold under repurchase agreements to manage its liquidity position. There were no securities sold under agreements to repurchase at March 31, 2023, March 31, 2022, and December 31, 2022. Subordinated Debt fixed-to-floating rate subordinated notes due May 15, 2032 (“Sub Debt due 2032”). The Company 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 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 |
Capital Requirements
Capital Requirements | 3 Months Ended |
Mar. 31, 2023 | |
Capital Requirements | |
Capital Requirements | 12) Capital Requirements The Company and its subsidiary bank are subject to various regulatory capital requirements administered by the banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary—actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements and operations. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and HBC must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off balance sheet items as calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. The Company’s consolidated capital ratios and the HBC’s capital ratios exceeded the regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements at March 31, 2023. There are no conditions or events since March 31, 2023, that management believes have changed the categorization of the Company or HBC as “well-capitalized.” As permitted by the interim final rule issued on March 27, 2020 by our federal regulatory agency, we elected the option to delay the estimated impact of the adoption of the CECL Standard in our regulatory capital for two years. This two-year delay is in addition to the three-year transition period the agency had already made available. The adoption delayed the effects of CECL on our regulatory capital through the end of 2021. The effects are being phased-in over a three-year period from January 1, 2022 through December 31, 2024, with 75% recognized in 2022, 50% recognized in 2023, and 25% recognized in 2024. Under the interim final rule, the amount of adjustments to regulatory capital deferred until the phase-in period includes both the initial impact of adoption of the CECL Standard at January 1, 2020 and 25% of subsequent changes in our allowance for credit losses during each quarter of the two-year period ending December 31, 2021. Quantitative measures established by regulation to help ensure capital adequacy require the Company and HBC to maintain minimum amounts and ratios (set forth in the tables below) of total, Tier 1 capital, and common equity Tier 1 capital (as defined in the regulations) to risk weighted assets (as defined), and of Tier 1 capital to average assets (as defined). Management believes that, as of March 31, 2023 and December 31, 2022, the Company and HBC met all capital adequacy guidelines to which they were subject. The Company’s consolidated capital amounts and ratios are presented in the following table, together with capital adequacy requirements, under the Basel III regulatory requirements for the periods indicated: Required For Capital Adequacy Purposes Actual Under Basel III Amount Ratio Amount Ratio (1) (Dollars in thousands) As of March 31, 2023 Total Capital $ 567,562 15.3 % $ 389,554 10.5 % (to risk-weighted assets) Tier 1 Capital $ 485,738 13.1 % $ 315,353 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 485,738 13.1 % $ 259,703 7.0 % (to risk-weighted assets) Tier 1 Capital $ 485,738 9.6 % $ 202,798 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, 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) (2) Includes 2.5% capital conservation buffer, except the Tier 1 Capital to average assets ratio. HBC’s actual capital amounts and ratios are presented in the following table, together with capital adequacy requirements, under the Basel III regulatory requirements for the periods indicated: Required For Capital To Be Well-Capitalized Adequacy Under Basel III PCA Regulatory Purposes Actual Requirements Under Basel III Amount Ratio Amount Ratio Amount Ratio (1) (Dollars in thousands) As of March 31, 2023 Total Capital $ 545,172 14.7 % $ 371,242 10.0 % $ 389,804 10.5 % (to risk-weighted assets) Tier 1 Capital $ 502,735 13.5 % $ 296,993 8.0 % $ 315,555 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 502,735 13.5 % $ 241,307 6.5 % $ 259,869 7.0 % (to risk-weighted assets) Tier 1 Capital $ 502,735 9.9 % $ 253,402 5.0 % $ 202,722 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, 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. The Subordinated Debt, net of unamortized issuance costs, totaled $39,387,000 at March 31, 2023, and qualifies as Tier 2 capital for the Company under the guidelines established by the Federal Reserve Bank. Under California General Corporation Law, the holders of common stock are entitled to receive dividends when and as declared by the Board of Directors, out of funds legally available. The California Financial Code provides that a state licensed bank may not make a cash distribution to its shareholders in excess of the lesser of the following: (i) the bank’s retained earnings; or (ii) the bank’s net income for its last three fiscal years, less the amount of any distributions made by the bank to its shareholders during such period. However, a bank, with the prior approval of the Commissioner of the California Department of Financial Protection and Innovation (“DFPI”) may make a distribution to its shareholders of an amount not to exceed the greater of (i) a bank’s retained earnings; (ii) its net income for its last fiscal year; or (iii) its net income for the current fiscal year. Also with the prior approval of the Commissioner of the DFPI and the shareholders of the bank, the bank may make a distribution to its shareholders, as a reduction in capital of the bank. In the event that the Commissioner determines that the shareholders’ equity of a bank is inadequate or that the making of a distribution by a bank would be unsafe or unsound, the Commissioner may order a bank to refrain from making such a proposed distribution. As March 31, 2023, HBC would not be required to obtain regulatory approval, and the amount available for cash dividends is $58,084,000 . HBC distributed to HCC dividends of |
Commitments and Loss Contingenc
Commitments and Loss Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Loss Contingencies | |
Commitments and Loss Contingencies | 13) Commitments and Loss Contingencies Loss Contingencies Within the ordinary course of our business, we are subject to private lawsuits, government audits, administrative proceedings and other claims. A number of these claims may exist at any given time, and some of the claims may be pled as class actions. We could be affected by adverse publicity and litigation costs resulting from such allegations, regardless of whether they are valid or whether we are legally determined to be liable. A summary of proceedings outstanding at March 31, 2023 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 Superior Court of State of California for the County of Solano. 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 26 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 District Court of Appeal, which denied the petition. On December 12, 2022, the court granted the Bank’s motion for judgment on the pleadings on one of the two remaining counts. Subsequently, the Bank filed a motion for summary judgment against one of the 26 plaintiffs on the one remaining count. The plaintiffs did not object to the motion for summary judgment and instead, all plaintiffs filed a request to dismiss the one remaining count against the Bank with prejudice. The Bank asked the court to rule on the motion for summary judgment, but the court issued a tentative ruling holding that the motion for summary judgment was moot because plaintiffs had dismissed the count. At the hearing on the motion, the Bank asked the court to grant the motion for summary judgment, and the court has taken that request under submission. Whether or not the court grants the summary judgment motion, plaintiffs have no further claims against the Bank in the trial court. 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 $1,088,698,000 at March 31, 2023, and $1,134,619,000 at December 31, 2022. Unused commitments represented 33% outstanding gross loans at March 31, 2023, and 34% at December 31, 2022. The effect on the Company’s revenues, expenses, cash flows and liquidity from the unused portion of the commitments to provide credit cannot be reasonably predicted because there is no certainty that lines of credit and letters of credit will ever be fully utilized. The following table presents the Company’s commitments to extend credit for the periods indicated: March 31, 2023 December 31, 2022 Fixed Variable Fixed Variable Rate Rate Total Rate Rate Total (Dollars in thousands) Unused lines of credit and commitments to make loans $ 78,955 $ 996,210 $ 1,075,165 $ 87,348 $ 1,036,847 $ 1,124,195 Standby letters of credit 4,850 8,683 13,533 1,565 8,859 10,424 $ 83,805 $ 1,004,893 $ 1,088,698 $ 88,913 $ 1,045,706 $ 1,134,619 For the three months ended March 31, 2023, there was an decrease of $2,000 to the allowance for credit losses on the Company’s off-balance sheet credit exposures. The decrease in the allowance for credit losses for off-balance sheet credit exposures in the first three months of 2023 was driven by lower loan commitments. The allowance for credit losses on the Company’s off-balance sheet credit exposures was $818,000 at March 31, 2023 and $820,000 at December 31, 2022. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2023 | |
Revenue Recognition | |
Revenue Recognition | 14) Revenue Recognition On January 1, 2018, the Company adopted ASU No. 2014-09 (Topic 606) Service charges and fees on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. We sometimes charge customers fees that are not specifically related to the customer accessing its funds, such as account maintenance or dormancy fees. The amount of deposit fees assessed varies based on a number of factors, such as the type of customer and account, the quantity of transactions, and the size of the deposit balance. We charge, and in some circumstances do not charge, fees to earn additional revenue and influence certain customer behavior. An example would be where we do not charge a monthly service fee, or do not charge for certain transactions, for customers that have a high deposit balance. Deposit fees are considered either transactional in nature (such as wire transfers, nonsufficient fund fees, and stop payment orders) or non-transactional (such as account maintenance and dormancy fees). These fees are recognized as earned or as transactions occur and services are provided. Check orders and other deposit account related fees are largely transactional based and, therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts. The Company currently accounts for sales of foreclosed assets in accordance with Topic 360-20. In most cases the Company will seek to engage a real estate agent for the sale of foreclosed assets immediately upon foreclosure. However, in some cases, where there is clear demand for the property in question, the Company may elect to allow for a marketing period of no more than six months to attempt a direct sale of the property. We generally recognize the sale, and any associated gain or loss, of a real estate property when control of the property transfers. Any gains or losses from the sale are recorded to noninterest income/expense. The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the periods indicated: Three Months Ended March 31, 2023 2022 (Dollars in thousands) Noninterest Income In-scope of Topic 606: Service charges and fees on deposit accounts $ 1,743 $ 612 Total noninterest income in-scope of Topic 606 1,743 612 Noninterest Income Out-of-scope of Topic 606 1,023 1,848 Total noninterest income $ 2,766 $ 2,460 |
Noninterest Expense
Noninterest Expense | 3 Months Ended |
Mar. 31, 2023 | |
Noninterest Expense | |
Noninterest Expense | 15) Noninterest Expense The following table sets forth the various components of the Company’s noninterest expense for the periods indicated: Three Months Ended March 31, 2023 2022 (Dollars in thousands) Salaries and employee benefits $ 14,809 $ 13,821 Occupancy and equipment 2,400 2,437 Insurance expense 1,520 1,043 Professional fees 1,399 1,080 Amortization of intangible assets 602 659 Data processing 774 651 Other 3,897 3,561 Total noninterest expense $ 25,401 $ 23,252 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
Leases | 16) Leases The Company recognizes the following for all leases, at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use, of a specified asset for the lease term. The Company is impacted as a lessee of the offices and real estate used for operations. The Company's lease agreements include The following table presents the quantitative information for the Company’s leases for the periods indicated: Three Months Ended March 31, 2023 2022 (Dollars in thousands) Operating Lease Cost (Cost resulting from lease payments) $ 1,701 $ 1,620 Operating Lease - Operating Cash Flows (Fixed Payments) $ 1,645 $ 1,210 Operating Lease - ROU assets $ 32,123 $ 33,669 Operating Lease - Liabilities $ 32,123 $ 33,669 Weighted Average Lease Term - Operating Leases 6.44 years 7.19 years Weighted Average Discount Rate - Operating Leases 4.54% 4.49% The following maturity analysis shows the undiscounted cash flows due on the Company’s operating lease liabilities as of March 31, 2023: (Dollars in thousands) 2023 remaining $ 4,750 2024 6,063 2025 5,523 2026 4,974 2027 4,804 Thereafter 11,189 Total undiscounted cash flows 37,303 Discount on cash flows (5,180) Total lease liability $ 32,123 |
Business Segment Information
Business Segment Information | 3 Months Ended |
Mar. 31, 2023 | |
Business Segment Information | |
Business Segment Information | 17) Business Segment Information The following presents the Company’s operating segments. The Company operates through two business segments: Banking segment and Factoring segment. Transactions between segments consist primarily of borrowed funds. Intersegment interest expense is allocated to the Factoring segment based on the Company’s prime rate and funding costs. The provision for credit losses on loans is allocated based on the segment’s allowance for loan loss determination which considers the effects of charge-offs. Noninterest income and expense directly attributable to a segment are assigned to it. Taxes are paid on a consolidated basis and allocated for segment purposes. The Factoring segment includes only factoring originated by Bay View Funding. Three Months Ended March 31, 2023 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 52,273 $ 4,001 $ 56,274 Intersegment interest allocations 705 (705) — Total interest expense 7,016 — 7,016 Net interest income 45,962 3,296 49,258 Provision for (recapture of) credit losses on loans 144 (112) 32 Net interest income after provision 45,818 3,408 49,226 Noninterest income 2,682 84 2,766 Noninterest expense 23,728 1,673 25,401 Intersegment expense allocations 174 (174) — Income before income taxes 24,946 1,645 26,591 Income tax expense 7,188 486 7,674 Net income $ 17,758 $ 1,159 $ 18,917 Total assets $ 5,453,352 $ 83,188 $ 5,536,540 Loans, net of deferred fees $ 3,192,491 $ 69,424 $ 3,261,915 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations Three Months Ended March 31, 2022 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 37,113 $ 2,793 $ 39,906 Intersegment interest allocations 237 (237) — Total interest expense 1,685 — 1,685 Net interest income 35,665 2,556 38,221 Provision (recapture) for credit losses on loans (539) (28) (567) Net interest income after provision 36,204 2,584 38,788 Noninterest income 2,398 62 2,460 Noninterest expense 21,767 1,485 23,252 Intersegment expense allocations 114 (114) — Income before income taxes 16,949 1,047 17,996 Income tax expense 4,821 309 5,130 Net income $ 12,128 $ 738 $ 12,866 Total assets $ 5,352,709 $ 74,689 $ 5,427,398 Loans, net of deferred fees $ 2,962,823 $ 61,241 $ 3,024,064 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events | |
Subsequent Events | 18) Subsequent Events On April 27, 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 will be payable on May 25, 2023, to shareholders of record at the close of the business day on May 11, 2023. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Basis of Presentation | |
Basis of Presentation | Basis of Presentation The unaudited consolidated financial statements of Heritage Commerce Corp (the “Company” or “HCC”) and its wholly owned subsidiary, Heritage Bank of Commerce (the “Bank” or “HBC”), have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements are not included herein. The interim statements should be read in conjunction with the consolidated financial statements and notes that were included in the Company’s Form 10-K for the year ended December 31, 2022. HBC is a commercial bank serving customers primarily located in Alameda, Contra Costa, Marin, San Benito, San Francisco, San Mateo, and Santa Clara counties of California. CSNK Working Capital Finance Corp. a California corporation, dba Bay View Funding (“Bay View Funding”) is a wholly owned subsidiary of HBC, and provides business-essential working capital factoring financing to various industries throughout the United States. No customer accounts for more than 10% of revenue for HBC or the Company. The Company reports its results for two segments: banking and factoring. The Company’s management uses segment results in its operating and strategic planning. In management’s opinion, all adjustments necessary for a fair presentation of these consolidated financial statements have been included and are of a normal and recurring nature. All intercompany transactions and balances have been eliminated. The preparation of financial statements in accordance with the accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make a number of judgments, estimates and assumptions that affect the reported amount of assets, liabilities, income and expense in the financial statements. Various elements of our accounting policies, by their nature, involve the application of highly sensitive and judgmental estimates and assumptions. Some of these policies and estimates relate to matters that are highly complex and contain inherent uncertainties. Material estimates that are particularly susceptible to significant change include the determination of the allowance for credit losses and any impairment of goodwill or intangible assets. It is possible that, in some instances, different estimates and assumptions could reasonably have been made and used by management, instead of those we applied, which might have produced different results that could have had a material effect on the financial statements. The results for the three months ended March 31, 2023 are not necessarily indicative of the results expected for any subsequent period or for the entire year ending December 31, 2023. |
Reclassifications | Reclassifications Certain reclassifications of prior year balances have been made to conform to the current year presentation. These reclassifications had no impact on the Company’s consolidated financial position, results of operations or net change in cash and cash equivalents. |
Adoption of New Accounting Standards | Adoption of New Accounting Standards In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-02 Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings 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. The Company adopted the guidance of ASU 2022-02 on January 1, 2023 and the amendments were applied prospectively. The adoption of this new guidance did not impact the financial position or results of operations. |
Accounting Guidance Issued But Not Yet Adopted | Accounting Guidance Issued But Not Yet Adopted In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from London Inter-Bank Offered Rate (“LIBOR”) toward new interest rate benchmarks. For transactions that are modified because of reference rate reform and that meet certain scope guidance (i) modifications of loan agreements should be accounted for by prospectively adjusting the effective interest rate and the modification will be considered "minor" so that any existing unamortized origination fees/costs would carry forward and continue to be amortized and (ii) modifications of lease agreements should be accounted for as a continuation of the existing agreement with - - . - , , |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share | |
Schedule of reconciliation of factors used in computing basic and diluted earnings per common share | Three Months Ended March 31, 2023 2022 (Dollars in thousands, except per share amounts) Net income $ 18,917 $ 12,866 Weighted average common shares outstanding for basic earnings per common share 60,908,221 60,393,883 Dilutive potential common shares 359,851 527,952 Shares used in computing diluted earnings per common share 61,268,072 60,921,835 Basic earnings per share $ 0.31 $ 0.21 Diluted earnings per share $ 0.31 $ 0.21 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (AOCI) (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accumulated Other Comprehensive Income (Loss) ("AOCI") | |
Schedule of changes in AOCI by component | Three Months Ended March 31, 2023 and 2022 Unrealized Gains (Losses) on Available- Defined for-Sale Benefit Securities Pension and I/O Plan Strips Items(1) Total (Dollars in thousands) Beginning balance January 1, 2023, net of taxes $ (11,394) $ (5,462) $ (16,856) Other comprehensive income (loss) before reclassification, net of taxes 2,577 (14) 2,563 Amounts reclassified from other comprehensive income (loss), net of taxes — (24) (24) Net current period other comprehensive income (loss), net of taxes 2,577 (38) 2,539 Ending balance March 31, 2023, net of taxes $ (8,817) $ (5,500) $ (14,317) Beginning balance January 1, 2022, net of taxes $ 2,153 $ (13,149) $ (10,996) Other comprehensive income (loss) before reclassification, net of taxes (3,128) (3) (3,131) Amounts reclassified from other comprehensive income (loss), net of taxes — 73 73 Net current period other comprehensive income (loss), net of taxes (3,128) 70 (3,058) Ending balance March 31, 2022, net of taxes $ (975) $ (13,079) $ (14,054) (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 8—Benefit Plans) and includes split-dollar life insurance benefit plan. |
Schedule of reclassifications out of AOCI into net income | Amounts Reclassified from AOCI Three Months Ended March 31, Affected Line Item Where Details About AOCI Components 2023 2022 Net Income is Presented (Dollars in thousands) Amortization of defined benefit pension plan items (1) Prior transition obligation and actuarial losses (2) $ 47 $ 11 Prior service cost and actuarial losses (3) (13) (114) 34 (103) Other noninterest expense (10) 30 Income tax benefit 24 (73) Net of tax Total reclassification from AOCI for the period $ 24 $ (73) (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 8—Benefit Plans). (2) This is related to the split dollar life insurance benefit plan. (3) This is related to the supplemental executive retirement plan. |
Securities (Tables)
Securities (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Securities | |
Schedule of amortized cost and estimated fair value of securities | Gross Gross Allowance Estimated Amortized Unrealized Unrealized for Credit Fair March 31, 2023 Cost Gains (Losses) Losses Value (Dollars in thousands) Securities available-for-sale: U.S. Treasury $ 430,413 — (7,510) — $ 422,903 Agency mortgage-backed securities 73,817 — (4,969) — 68,848 Total $ 504,230 $ — $ (12,479) $ — $ 491,751 Gross Gross Estimated Allowance Amortized Unrecognized Unrecognized Fair for Credit March 31, 2023 Cost Gains (Losses) Value Losses (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 663,481 382 (90,344) $ 573,519 $ — Municipals - exempt from Federal tax 34,764 18 (315) 34,467 (14) Total $ 698,245 $ 400 $ (90,659) $ 607,986 $ (14) 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) |
Schedule of securities with unrealized losses | Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized March 31, 2023 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: U.S. Treasury $ 387,065 $ (6,596) $ 30,886 $ (914) $ 417,951 $ (7,510) Agency mortgage-backed securities 3,586 (122) 65,262 (4,847) 68,848 (4,969) Total $ 390,651 $ (6,718) $ 96,148 $ (5,761) $ 486,799 $ (12,479) Securities held-to-maturity: Agency mortgage-backed securities $ 17,765 $ (319) $ 543,522 $ (90,025) $ 561,287 $ (90,344) Municipals — exempt from Federal tax 14,130 (160) 5,532 (155) 19,662 (315) Total $ 31,895 $ (479) $ 549,054 $ (90,180) $ 580,949 $ (90,659) 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) 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) |
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 three months through one year $ 66,001 $ 65,614 Due after one through five years 364,412 357,289 Agency mortgage-backed securities 73,817 68,848 Total $ 504,230 $ 491,751 Held-to-maturity Amortized Estimated Cost Fair Value (Dollars in thousands) Due three months or less $ 9,808 $ 9,813 Due after three months through one year 5,020 5,022 Due after one through five years 4,029 3,981 Due after five through ten years 15,907 15,651 Agency mortgage-backed securities 663,481 573,519 Total $ 698,245 $ 607,986 |
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, 2023 $ 14 Provision for credit losses — Ending balance March 31, 2023 $ 14 |
Loans and Allowance for Credi_2
Loans and Allowance for Credit Losses on Loans (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Loans and Allowance for Credit Losses on Loans | |
Schedule of loans | March 31, December 31, 2023 2022 (Dollars in thousands) Loans held-for-investment: Commercial $ 506,602 $ 533,915 Real estate: CRE - owner occupied 603,298 614,663 CRE - non-owner occupied 1,083,852 1,066,368 Land and construction 166,408 163,577 Home equity 124,481 120,724 Multifamily 231,242 244,882 Residential mortgages 528,639 537,905 Consumer and other 17,905 17,033 Loans 3,262,427 3,299,067 Deferred loan fees, net (512) (517) Loans, net of deferred fees 3,261,915 3,298,550 Allowance for credit losses on loans (47,273) (47,512) Loans, net $ 3,214,642 $ 3,251,038 |
Schedule of changes in allowance for loan (credit) losses | Three Months Ended March 31, 2023 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 $ 6,617 $ 5,751 $ 22,135 $ 2,941 $ 666 $ 3,366 $ 5,907 $ 129 $ 47,512 Charge-offs (134) — — — (246) — — — (380) Recoveries 80 4 — — 25 — — — 109 Net (charge-offs) recoveries (54) 4 — — (221) — — — (271) Provision for (recapture of) credit losses on loans (29) (302) 542 235 243 1,026 (1,711) 28 32 End of period balance $ 6,534 $ 5,453 $ 22,677 $ 3,176 $ 688 $ 4,392 $ 4,196 $ 157 $ 47,273 Three Months Ended March 31, 2022 CRE CRE Owner Non-owner Land & Home Multi- Residential Consumer Commercial Occupied Occupied Construction Equity Family Mortgage and Other Total (Dollars in thousands) Beginning of period balance $ 8,414 $ 7,954 $ 17,125 $ 1,831 $ 864 $ 2,796 $ 4,132 $ 174 $ 43,290 Charge-offs (16) — — — — — — — (16) Recoveries 54 3 — — 24 — — — 81 Net recoveries 38 3 — — 24 — — — 65 Provision for (recapture of) credit losses on loans (1,651) (1,560) 2,288 175 (166) (252) 625 (26) (567) End of period balance $ 6,801 $ 6,397 $ 19,413 $ 2,006 $ 722 $ 2,544 $ 4,757 $ 148 $ 42,788 |
Schedule of nonperforming loans | March 31, 2023 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 $ 291 $ 394 $ 123 $ 808 Real estate: CRE - Owner Occupied — — 1,336 1,336 Home equity 96 — — 96 Total $ 387 $ 394 $ 1,459 $ 2,240 December 31, 2022 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 $ 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 |
Schedule of aging of past due loans by class of loans | March 31, 2023 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 $ 7,756 $ 2,239 $ 436 $ 10,431 $ 496,171 $ 506,602 Real estate: CRE - Owner Occupied 1,121 — — 1,121 602,177 603,298 CRE - Non-Owner Occupied — — 1,336 1,336 1,082,516 1,083,852 Land and construction — — — — 166,408 166,408 Home equity 96 — — 96 124,385 124,481 Multifamily — — — — 231,242 231,242 Residential mortgages 6,431 1,649 — 8,080 520,559 528,639 Consumer and other — — — — 17,905 17,905 Total $ 15,404 $ 3,888 $ 1,772 $ 21,064 $ 3,241,363 $ 3,262,427 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 |
Summary of loan portfolio by loan type and credit quality classification | Revolving Loans Term Loans Amortized Cost Basis by Originated Period as of March 31, 2023 Amortized 2018 and Cost 03/31/2023 12/31/2022 12/31/2021 12/31/2020 12/31/2019 Prior Basis Total (Dollars in thousands) Commercial: Pass $ 87,216 $ 36,758 $ 32,068 $ 21,972 $ 16,738 $ 29,376 $ 260,606 $ 484,734 Special Mention 2,020 1,418 524 - 917 1,260 4,494 10,633 Substandard 4 321 620 - 274 4,370 4,961 10,550 Substandard-Nonaccrual - - 236 - - 300 149 685 Total 89,240 38,497 33,448 21,972 17,929 35,306 270,210 506,602 CRE - Owner Occupied: Pass 2,381 87,418 118,376 74,459 59,368 241,040 12,216 595,258 Special Mention - 1,588 1,230 853 - 2,250 - 5,921 Substandard 990 - - - 1,121 8 - 2,119 Substandard-Nonaccrual - - - - - - - Total 3,371 89,006 119,606 75,312 60,489 243,298 12,216 603,298 CRE - Non-Owner Occupied: Pass 30,477 239,675 270,999 29,747 99,910 398,297 3,416 1,072,521 Special Mention - - - - - 3,354 - 3,354 Substandard - - - - - 7,841 136 7,977 Substandard-Nonaccrual - - - - - - - - Total 30,477 239,675 270,999 29,747 99,910 409,492 3,552 1,083,852 Land and construction: Pass 16,276 64,546 56,324 23,113 6,149 - - 166,408 Special Mention - - - - - - - - Substandard - - - - - - - - Substandard-Nonaccrual - - - - - - - - Total 16,276 64,546 56,324 23,113 6,149 - - 166,408 Home equity: Pass - - - - - 116 119,343 119,459 Special Mention - - - - - - 4,640 4,640 Substandard - - - - - 144 142 286 Substandard-Nonaccrual - - 96 - - - - 96 Total - - 96 - - 260 124,125 124,481 Multifamily: Pass 2,977 41,892 57,255 5,493 42,919 78,199 215 228,950 Special Mention - - - - - - - - Substandard - - - - - 2,292 - 2,292 Substandard-Nonaccrual - - - - - - - - Total 2,977 41,892 57,255 5,493 42,919 80,491 215 231,242 Residential mortgage: Pass 1,200 197,922 281,025 1,060 6,736 34,132 - 522,075 Special Mention - - 723 - 1,052 1,994 - 3,769 Substandard - - 1,873 - - 922 - 2,795 Substandard-Nonaccrual - - - - - - - - Total 1,200 197,922 283,621 1,060 7,788 37,048 - 528,639 Consumer and other: Pass - 386 10 - - 2,202 15,230 17,828 Special Mention - - 77 - - - - 77 Substandard - - - - - - - - Substandard-Nonaccrual - - - - - - - - Total - 386 87 - - 2,202 15,230 17,905 Total loans $ 143,541 $ 671,924 $ 821,436 $ 156,697 $ 235,184 $ 808,097 $ 425,548 $ 3,262,427 Risk Grades: Pass $ 140,527 $ 668,597 $ 816,057 $ 155,844 $ 231,820 $ 783,362 $ 411,026 $ 3,207,233 Special Mention 2,020 3,006 2,554 853 1,969 8,858 9,134 28,394 Substandard 994 321 2,493 - 1,395 15,577 5,239 26,019 Substandard-Nonaccrual - - 332 - - 300 149 781 Grand Total $ 143,541 $ 671,924 $ 821,436 $ 156,697 $ 235,184 $ 808,097 $ 425,548 $ 3,262,427 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 Gross Charge-offs by Originated Period as of March 31, 2023 2018 and Revolving 03/31/2023 12/31/2022 12/31/2021 12/31/2020 12/31/2019 Prior Loans Total (Dollars in thousands) Commercial $ - $ - $ - $ - $ 49 $ 85 $ - $ 134 Real estate: CRE - Owner Occupied - - - - - - - - CRE - Non-Owner Occupied - - - - - - - - Land and construction - - - - - - - - Home equity - - - - - - 246 246 Multifamily - - - - - - - - Residential mortgages - - - - - - - - Consumer and other - - - - - - - - Total $ - $ - $ - $ - $ 49 $ 85 $ 246 $ 380 |
Schedule of the amortized cost basis of the loans that were experiencing financial distress and modified | March 31, 2023 Combination Combination Term Term Extension Extension Total Interest and and Class of Principal Payment Term Rate Principal Interest Rate Financing Forgiveness Delay Extension Reduction Forgiveness Reduction Receivables (Dollars in thousands) Commercial $ 6 $ 88 $ 36 $ — $ — $ — 0.03 % Total $ 6 $ 88 $ 36 $ — $ — $ — 0.03 % |
Schedule of performance of loans that have been modified | March 31, 2023 30 - 59 60 - 89 90 Days or Days Days Greater Total Past Due Past Due Past Due Past Due (Dollars in thousands) Commercial $ — $ 36 $ 6 $ 42 Total $ — $ 36 $ 6 $ 42 |
Schedule of financial effect of the loan modification presented of borrowers experiencing financial difficulty | March 31, 2023 Weighted Weighted Average Average Interest Term Principal Rate Extension Forgiveness Reduction (Months) (Dollars in thousands) Commercial $ 3 N/A 9 Total $ 3 N/A 9 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Other Intangible Assets | |
Schedule of carrying amount of goodwill by segment | March 31, December 31, 2023 2022 (Dollars in thousands) Banking $ 154,587 $ 154,587 Factoring 13,044 13,044 Total Goodwill $ 167,631 $ 167,631 |
Summary of Company's intangible assets | March 31, 2023 Gross Carrying Accumulated Amount Amortization Total (Dollars in thousands) Core deposit intangibles $ 25,023 $ (14,984) $ 10,039 Customer relationship and brokered relationship intangibles 1,900 (1,598) 302 Below market leases 110 (20) 90 Total $ 27,033 $ (16,602) $ 10,431 December 31, 2022 Gross Carrying Accumulated Amount Amortization Total (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 |
Schedule of estimated amortization expense | Customer & Below/ Core Brokered (Above) Total Deposit Relationship Market Amortization Year Intangible Intangible Lease Expense (Dollars in thousands) 2023 remaining $ 1,662 143 $ (2) $ 1,803 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 2028 999 — 18 1,017 2029 610 — 15 625 $ 10,039 $ 302 $ 90 $ 10,431 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Income Taxes | |
Summary of carrying amount of low income tax housing investment | March 31, December 31, 2023 2022 (Dollars in thousands) Low income housing investments $ 3,290 $ 3,537 Future commitments $ 521 $ 523 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Supplemental Retirement Plan | |
Benefit plans | |
Schedule of components of net periodic benefit cost | Three Months Ended March 31, 2023 2022 (Dollars in thousands) Components of net periodic benefit cost: Service cost $ 48 $ 87 Interest cost 324 216 Amortization of net actuarial loss 13 114 Net periodic benefit cost $ 385 $ 417 |
Split-Dollar Life Insurance Benefit Plan | |
Benefit plans | |
Schedule of change in projected benefit obligation | March 31, December 31, 2023 2022 (Dollars in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 7,060 $ 9,244 Interest cost 91 246 Actuarial loss — (2,430) Projected benefit obligation at end of period $ 7,151 $ 7,060 |
Schedule of amounts recognized in accumulated other comprehensive loss | March 31, December 31, 2023 2022 (Dollars in thousands) Net actuarial loss $ 2,371 $ 2,301 Prior transition obligation 768 790 Accumulated other comprehensive loss $ 3,139 $ 3,091 |
Schedule of components of net periodic benefit cost | Three Months Ended March 31, 2023 2022 (Dollars in thousands) Amortization of prior transition obligation and actuarial losses $ (47) $ (11) Interest cost 91 62 Net periodic benefit cost $ 44 $ 51 |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value | |
Schedule of financial assets and liabilities measured on a recurring basis | Fair Value Measurements Using Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Balance (Level 1) (Level 2) (Level 3) (Dollars in thousands) Assets at March 31, 2023 Available-for-sale securities: U.S. Treasury $ 422,903 $ 422,903 $ — $ — Agency mortgage-backed securities 68,848 — 68,848 — I/O strip receivables 145 — 145 — 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 — |
Schedule of carrying amounts and estimated fair values of financial instruments | The carrying amounts and estimated fair values of financial instruments at March 31, 2023 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 $ 740,008 $ 740,008 $ — $ — $ 740,008 Securities available-for-sale 491,751 422,903 68,848 — 491,751 Securities held-to-maturity 698,231 — 607,986 — 607,986 Loans (including loans held-for-sale) 3,264,707 (1) — 2,792 3,058,697 3,061,489 FHLB stock, FRB stock, and other investments 32,526 — — — N/A Accrued interest receivable 16,117 1,745 2,502 11,870 16,117 I/O strips receivables 145 — 145 — 145 Liabilities: Time deposits $ 214,443 $ — $ 216,579 $ — $ 216,579 Other deposits 4,230,095 — 4,230,095 — 4,230,095 Borrowings on FHLB and FRB lines of credit 300,000 — 300,000 — 300,000 Subordinated debt 39,387 — 32,787 — 32,787 Accrued interest payable 1,921 — 1,921 — 1,921 (1) Before allowance for credit losses on loans of $47,273,000. The carrying amounts and estimated fair values of the Company’s financial instruments at December 31, 2022: 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 714,990 — 614,452 — 614,452 Loans (including loans held-for-sale) 3,301,006 (1) — 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 (1) Before allowance for credit losses on loans of $47,512,000. |
Equity Plan (Tables)
Equity Plan (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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, 2023 2,527,173 $ 10.44 Exercised 95,884 $ 7.12 Forfeited or expired (23,728) $ 13.62 Outstanding at March 31, 2023 2,407,561 $ 10.54 5.38 $ 1,356,635 Vested or expected to vest 2,263,107 5.38 $ 1,275,237 Exercisable at March 31, 2023 1,858,557 4.46 $ 1,356,635 |
Schedule of information related to the equity Plan | Three Months Ended March 31, 2023 2022 Intrinsic value of options exercised $ 466,308 $ 415,117 Cash received from option exercise $ 682,825 $ 401,136 Tax benefit (expense) realized from option exercises $ 3,969 $ 31,971 |
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, 2023 253,491 $ 11.05 Vested — $ — Nonvested shares at March 31, 2023 253,491 $ 11.05 |
Capital Requirements (Tables)
Capital Requirements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Capital Requirements | |
Schedule of actual capital and required amounts and ratios | Required For Capital Adequacy Purposes Actual Under Basel III Amount Ratio Amount Ratio (1) (Dollars in thousands) As of March 31, 2023 Total Capital $ 567,562 15.3 % $ 389,554 10.5 % (to risk-weighted assets) Tier 1 Capital $ 485,738 13.1 % $ 315,353 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 485,738 13.1 % $ 259,703 7.0 % (to risk-weighted assets) Tier 1 Capital $ 485,738 9.6 % $ 202,798 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, 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) (2) Includes 2.5% capital conservation buffer, except the Tier 1 Capital to average assets ratio. |
HBC | |
Capital Requirements | |
Schedule of actual capital and required amounts and ratios | Required For Capital To Be Well-Capitalized Adequacy Under Basel III PCA Regulatory Purposes Actual Requirements Under Basel III Amount Ratio Amount Ratio Amount Ratio (1) (Dollars in thousands) As of March 31, 2023 Total Capital $ 545,172 14.7 % $ 371,242 10.0 % $ 389,804 10.5 % (to risk-weighted assets) Tier 1 Capital $ 502,735 13.5 % $ 296,993 8.0 % $ 315,555 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 502,735 13.5 % $ 241,307 6.5 % $ 259,869 7.0 % (to risk-weighted assets) Tier 1 Capital $ 502,735 9.9 % $ 253,402 5.0 % $ 202,722 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, 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. |
Commitments and Loss Continge_2
Commitments and Loss Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Loss Contingencies | |
Schedule of commitments to extend credit | March 31, 2023 December 31, 2022 Fixed Variable Fixed Variable Rate Rate Total Rate Rate Total (Dollars in thousands) Unused lines of credit and commitments to make loans $ 78,955 $ 996,210 $ 1,075,165 $ 87,348 $ 1,036,847 $ 1,124,195 Standby letters of credit 4,850 8,683 13,533 1,565 8,859 10,424 $ 83,805 $ 1,004,893 $ 1,088,698 $ 88,913 $ 1,045,706 $ 1,134,619 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue Recognition | |
Schedule of noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606 | Three Months Ended March 31, 2023 2022 (Dollars in thousands) Noninterest Income In-scope of Topic 606: Service charges and fees on deposit accounts $ 1,743 $ 612 Total noninterest income in-scope of Topic 606 1,743 612 Noninterest Income Out-of-scope of Topic 606 1,023 1,848 Total noninterest income $ 2,766 $ 2,460 |
Noninterest Expense (Tables)
Noninterest Expense (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Noninterest Expense | |
Schedule of noninterest expense | Three Months Ended March 31, 2023 2022 (Dollars in thousands) Salaries and employee benefits $ 14,809 $ 13,821 Occupancy and equipment 2,400 2,437 Insurance expense 1,520 1,043 Professional fees 1,399 1,080 Amortization of intangible assets 602 659 Data processing 774 651 Other 3,897 3,561 Total noninterest expense $ 25,401 $ 23,252 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
Schedule of leases | Three Months Ended March 31, 2023 2022 (Dollars in thousands) Operating Lease Cost (Cost resulting from lease payments) $ 1,701 $ 1,620 Operating Lease - Operating Cash Flows (Fixed Payments) $ 1,645 $ 1,210 Operating Lease - ROU assets $ 32,123 $ 33,669 Operating Lease - Liabilities $ 32,123 $ 33,669 Weighted Average Lease Term - Operating Leases 6.44 years 7.19 years Weighted Average Discount Rate - Operating Leases 4.54% 4.49% |
Schedule of maturity analysis shows the undiscounted cash flows due on the Company's operating lease liabilities | (Dollars in thousands) 2023 remaining $ 4,750 2024 6,063 2025 5,523 2026 4,974 2027 4,804 Thereafter 11,189 Total undiscounted cash flows 37,303 Discount on cash flows (5,180) Total lease liability $ 32,123 |
Business Segment Information (T
Business Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Business Segment Information | |
Schedule of information by operating segment | Three Months Ended March 31, 2023 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 52,273 $ 4,001 $ 56,274 Intersegment interest allocations 705 (705) — Total interest expense 7,016 — 7,016 Net interest income 45,962 3,296 49,258 Provision for (recapture of) credit losses on loans 144 (112) 32 Net interest income after provision 45,818 3,408 49,226 Noninterest income 2,682 84 2,766 Noninterest expense 23,728 1,673 25,401 Intersegment expense allocations 174 (174) — Income before income taxes 24,946 1,645 26,591 Income tax expense 7,188 486 7,674 Net income $ 17,758 $ 1,159 $ 18,917 Total assets $ 5,453,352 $ 83,188 $ 5,536,540 Loans, net of deferred fees $ 3,192,491 $ 69,424 $ 3,261,915 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations Three Months Ended March 31, 2022 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 37,113 $ 2,793 $ 39,906 Intersegment interest allocations 237 (237) — Total interest expense 1,685 — 1,685 Net interest income 35,665 2,556 38,221 Provision (recapture) for credit losses on loans (539) (28) (567) Net interest income after provision 36,204 2,584 38,788 Noninterest income 2,398 62 2,460 Noninterest expense 21,767 1,485 23,252 Intersegment expense allocations 114 (114) — Income before income taxes 16,949 1,047 17,996 Income tax expense 4,821 309 5,130 Net income $ 12,128 $ 738 $ 12,866 Total assets $ 5,352,709 $ 74,689 $ 5,427,398 Loans, net of deferred fees $ 2,962,823 $ 61,241 $ 3,024,064 Goodwill $ 154,587 $ 13,044 $ 167,631 (1) Includes the holding company’s results of operations |
Basis of Presentation (Details)
Basis of Presentation (Details) | 3 Months Ended |
Mar. 31, 2023 customer segment | |
Segment Reporting | |
Number of customers accounting for more than 10 percent of revenue for HBC or the Company | customer | 0 |
Number of Operating Segments | segment | 2 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Reconciliation of factors used in computing basic and diluted earnings per common share | ||
Net income | $ 18,917 | $ 12,866 |
Weighted average common shares outstanding for basic earnings per common share (in shares) | 60,908,221 | 60,393,883 |
Dilutive potential common shares | 359,851 | 527,952 |
Shares used in computing diluted earnings per common share (in shares) | 61,268,072 | 60,921,835 |
Basic earnings per share (in dollars per share) | $ 0.31 | $ 0.21 |
Diluted earnings per share (in dollars per share) | $ 0.31 | $ 0.21 |
Number of shares in computing diluted earnings per common share | 1,303,068 | 1,048,267 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (AOCI) - Changes in AOCI by Component (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Changes in AOCI by Component | ||
Balance at the beginning of the period, net of taxes | $ (16,856) | |
Net current period other comprehensive income (loss), net of taxes | 2,539 | $ (3,058) |
Balance at the end of the period, net of taxes | (14,317) | |
Accumulated Other Comprehensive Loss | ||
Changes in AOCI by Component | ||
Balance at the beginning of the period, net of taxes | (16,856) | (10,996) |
Other comprehensive (loss) before reclassification, net of taxes | 2,563 | (3,131) |
Amounts reclassified from other comprehensive income (loss), net of taxes | (24) | 73 |
Net current period other comprehensive income (loss), net of taxes | 2,539 | (3,058) |
Balance at the end of the period, net of taxes | (14,317) | (14,054) |
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 | (11,394) | 2,153 |
Other comprehensive (loss) before reclassification, net of taxes | 2,577 | (3,128) |
Net current period other comprehensive income (loss), net of taxes | 2,577 | (3,128) |
Balance at the end of the period, net of taxes | (8,817) | (975) |
Defined Benefit Pension Plan Items | ||
Changes in AOCI by Component | ||
Balance at the beginning of the period, net of taxes | (5,462) | (13,149) |
Other comprehensive (loss) before reclassification, net of taxes | (14) | (3) |
Amounts reclassified from other comprehensive income (loss), net of taxes | (24) | 73 |
Net current period other comprehensive income (loss), net of taxes | (38) | 70 |
Balance at the end of the period, net of taxes | $ (5,500) | $ (13,079) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Loss) (AOCI) - Amount Reclassified from AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Amount Reclassified from AOCI | ||
Interest income on taxable securities | $ 7,056 | $ 3,444 |
Income tax expense | (7,674) | (5,130) |
Net income | 18,917 | 12,866 |
Defined Benefit Pension Plan Items | ||
Amount Reclassified from AOCI | ||
Net of tax | 24 | (73) |
Defined Benefit Pension Plan Items | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Other noninterest expense | 34 | (103) |
Income tax benefit | (10) | 30 |
Net of tax | 24 | (73) |
Prior transition obligation | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Other noninterest expense | 47 | 11 |
Prior service cost | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Other noninterest expense | (13) | (114) |
Accumulated Other Comprehensive Loss | ||
Amount Reclassified from AOCI | ||
Net of tax | 24 | (73) |
Accumulated Other Comprehensive Loss | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Net of tax | $ 24 | $ (73) |
Securities - Amortized Cost and
Securities - Amortized Cost and Estimated Fair Value of Securities - Securities Available-for-sale (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Securities available-for-sale: | ||
Amortized Cost | $ 504,230 | $ 505,713 |
Gross Unrealized (Losses) | (12,479) | (16,117) |
Estimated Fair Value | 491,751 | 489,596 |
U.S. Treasury | ||
Securities available-for-sale: | ||
Amortized Cost | 430,413 | 428,797 |
Gross Unrealized (Losses) | (7,510) | (10,323) |
Estimated Fair Value | 422,903 | 418,474 |
Agency mortgage-backed securities | ||
Securities available-for-sale: | ||
Amortized Cost | 73,817 | 76,916 |
Gross Unrealized (Losses) | (4,969) | (5,794) |
Estimated Fair Value | $ 68,848 | $ 71,122 |
Securities - Amortized Cost a_2
Securities - Amortized Cost and Estimated Fair Value of Securities - Securities Held-to-maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Securities held-to-maturity: | ||
Total | $ 698,245 | $ 715,004 |
Gross Unrecognized Gains | 400 | 244 |
Gross Unrecognized (Losses) | (90,659) | (100,796) |
Estimated Fair Value | 607,986 | 614,452 |
Allowance for credit losses | (14) | (14) |
Agency mortgage-backed securities | ||
Securities held-to-maturity: | ||
Total | 663,481 | 677,381 |
Gross Unrecognized Gains | 382 | 235 |
Gross Unrecognized (Losses) | (90,344) | (99,977) |
Estimated Fair Value | 573,519 | 577,639 |
Municipals - exempt from Federal tax | ||
Securities held-to-maturity: | ||
Total | 34,764 | 37,623 |
Gross Unrecognized Gains | 18 | 9 |
Gross Unrecognized (Losses) | (315) | (819) |
Estimated Fair Value | 34,467 | 36,813 |
Allowance for credit losses | $ (14) | $ (14) |
Securities - Securities with Un
Securities - Securities with Unrealized Losses - Securities Held-to-maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Securities, Fair Value | ||
Less Than 12 Months | $ 390,651 | $ 489,596 |
12 Months or More | 96,148 | |
Total | 486,799 | 489,596 |
Less Than 12 Months | 31,895 | 167,271 |
12 Months or More | 549,054 | 429,257 |
Total | 580,949 | 596,528 |
Securities, Unrealized (Losses) | ||
Less Than 12 Months | (6,718) | (16,117) |
12 Months or More | (5,761) | |
Total | (12,479) | (16,117) |
Less Than 12 Months | (479) | (13,685) |
12 Months or More | (90,180) | (87,111) |
Total | (90,659) | (100,796) |
Agency mortgage-backed securities | ||
Securities, Fair Value | ||
Less Than 12 Months | 3,586 | 71,122 |
12 Months or More | 65,262 | |
Total | 68,848 | 71,122 |
Less Than 12 Months | 17,765 | 136,264 |
12 Months or More | 543,522 | 429,257 |
Total | 561,287 | 565,521 |
Securities, Unrealized (Losses) | ||
Less Than 12 Months | (122) | (5,794) |
12 Months or More | (4,847) | |
Total | (4,969) | (5,794) |
Less Than 12 Months | (319) | (12,866) |
12 Months or More | (90,025) | (87,111) |
Total | (90,344) | (99,977) |
U.S. Treasury | ||
Securities, Fair Value | ||
Less Than 12 Months | 387,065 | 418,474 |
12 Months or More | 30,886 | |
Total | 417,951 | 418,474 |
Securities, Unrealized (Losses) | ||
Less Than 12 Months | (6,596) | (10,323) |
12 Months or More | (914) | |
Total | (7,510) | (10,323) |
Municipals - exempt from Federal tax | ||
Securities, Fair Value | ||
Less Than 12 Months | 14,130 | 31,007 |
12 Months or More | 5,532 | |
Total | 19,662 | 31,007 |
Securities, Unrealized (Losses) | ||
Less Than 12 Months | (160) | (819) |
12 Months or More | (155) | |
Total | $ (315) | $ (819) |
Securities - Additional Informa
Securities - Additional Information (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) item security | Dec. 31, 2022 USD ($) | |
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 | 455 | |
Number of available for sale securities held | item | 173 | |
Number of held to maturity securities held | item | 282 | |
Number of securities with fair values below amortized cost | item | 404 | |
Available-for-sale securities carried with an unrealized loss less than 12 months | $ 390,651 | $ 489,596 |
Available-for-sale securities carried with an unrealized loss for over 12 months | 96,148 | |
Held-to-maturity securities carried with an unrealized loss less than 12 months | 31,895 | 167,271 |
Held-to-maturity securities carried with an unrealized loss for over 12 months | 549,054 | 429,257 |
Agency mortgage-backed securities | ||
Additional Information | ||
Available-for-sale securities carried with an unrealized loss less than 12 months | 3,586 | 71,122 |
Available-for-sale securities carried with an unrealized loss for over 12 months | 65,262 | |
Held-to-maturity securities carried with an unrealized loss less than 12 months | 17,765 | 136,264 |
Held-to-maturity securities carried with an unrealized loss for over 12 months | 543,522 | 429,257 |
U.S. Treasury | ||
Additional Information | ||
Available-for-sale securities carried with an unrealized loss less than 12 months | 387,065 | 418,474 |
Available-for-sale securities carried with an unrealized loss for over 12 months | 30,886 | |
Municipals - exempt from Federal tax | ||
Additional Information | ||
Held-to-maturity securities carried with an unrealized loss less than 12 months | 14,130 | $ 31,007 |
Held-to-maturity securities carried with an unrealized loss for over 12 months | $ 5,532 |
Securities - Amortized Cost a_3
Securities - Amortized Cost and Fair Value of Debt Securities by Contractual Maturity - Securities Available-for-sale (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Available-for-sale, Amortized Cost | ||
Due after three months through one year | $ 66,001 | |
Due after one through five years | 364,412 | |
Agency mortgage-backed securities | 73,817 | |
Total | 504,230 | $ 505,713 |
Available-for-sale, Estimated Fair Value | ||
Due after three months through one year | 65,614 | |
Due after one year through five years | 357,289 | |
Agency mortgage-backed securities | 68,848 | |
Total | $ 491,751 | $ 489,596 |
Securities - Amortized Cost a_4
Securities - Amortized Cost and Fair Value of Debt Securities by Contractual Maturity - Securities Held-to-maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Held-to-maturity, Amortized Cost | ||
Due three months or less | $ 9,808 | |
Due after three months through one year | 5,020 | |
Due after one year through five years | 4,029 | |
Due after five years through ten years | 15,907 | |
Agency mortgage-backed securities | 663,481 | |
Total | 698,245 | |
Held-to-maturity, Estimated Fair Value | ||
Due three months or less | 9,813 | |
Due after three months through one year | 5,022 | |
Due after one year through five years | 3,981 | |
Due after five years through ten years | 15,651 | |
Agency mortgage-backed securities | 573,519 | |
Total | $ 607,986 | $ 614,452 |
Securities - Securities Pledged
Securities - Securities Pledged to Secure Public Deposits and for Other Purposes (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
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 | $ 1,075,800,000 | $ 66,272,000 |
Securities - Roll-forward by ma
Securities - Roll-forward by major security type (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Securities | |
Debt Securities, Held-to-maturity, Allowance for Credit Loss, Beginning Balance | $ 14,000 |
Provision for credit losses | 14,000 |
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 ($) | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Loans held-for-investment: | ||||
Total loan balance | $ 3,262,427,000 | $ 3,299,067,000 | ||
Deferred loan fees, net | (512,000) | (517,000) | ||
Loans, net of deferred fees | 3,261,915,000 | 3,298,550,000 | $ 3,024,064,000 | |
Allowance for credit losses on loans | (47,273,000) | (47,512,000) | (42,788,000) | $ (43,290,000) |
Loans, net | 3,214,642,000 | 3,251,038,000 | ||
Commercial | ||||
Loans held-for-investment: | ||||
Total loan balance | 506,602,000 | 533,915,000 | ||
Allowance for credit losses on loans | (6,534,000) | (6,617,000) | (6,801,000) | (8,414,000) |
Commercial | Commercial. | ||||
Loans held-for-investment: | ||||
Total loan balance | 506,602,000 | 533,915,000 | ||
SBA Paycheck Protection Program ("PPP") loans | ||||
Loans held-for-investment: | ||||
Total loan balance | 565,000 | |||
Loans, net | 1,166,000 | |||
Bay View Funding | ||||
Loans held-for-investment: | ||||
Loans, net | 69,424,000 | 79,263,000 | ||
CRE - Owner Occupied | ||||
Loans held-for-investment: | ||||
Total loan balance | 603,298,000 | 614,663,000 | ||
Allowance for credit losses on loans | (5,453,000) | (5,751,000) | (6,397,000) | (7,954,000) |
CRE - Owner Occupied | Real estate | ||||
Loans held-for-investment: | ||||
Total loan balance | 603,298,000 | 614,663,000 | ||
CRE - Non-Owner Occupied | ||||
Loans held-for-investment: | ||||
Total loan balance | 1,083,852,000 | 1,066,368,000 | ||
Allowance for credit losses on loans | (22,677,000) | (22,135,000) | (19,413,000) | (17,125,000) |
CRE - Non-Owner Occupied | Real estate | ||||
Loans held-for-investment: | ||||
Total loan balance | 1,083,852,000 | 1,066,368,000 | ||
Land & Construction | ||||
Loans held-for-investment: | ||||
Total loan balance | 166,408,000 | 163,577,000 | ||
Allowance for credit losses on loans | (3,176,000) | (2,941,000) | (2,006,000) | (1,831,000) |
Land & Construction | Real estate | ||||
Loans held-for-investment: | ||||
Total loan balance | 166,408,000 | 163,577,000 | ||
Home Equity | ||||
Loans held-for-investment: | ||||
Total loan balance | 124,481,000 | 120,724,000 | ||
Allowance for credit losses on loans | (688,000) | (666,000) | (722,000) | (864,000) |
Home Equity | Real estate | ||||
Loans held-for-investment: | ||||
Total loan balance | 124,481,000 | 120,724,000 | ||
Multi-Family | ||||
Loans held-for-investment: | ||||
Total loan balance | 231,242,000 | 244,882,000 | ||
Allowance for credit losses on loans | (4,392,000) | (3,366,000) | (2,544,000) | (2,796,000) |
Multi-Family | Real estate | ||||
Loans held-for-investment: | ||||
Total loan balance | 231,242,000 | 244,882,000 | ||
Residential Mortgage | ||||
Loans held-for-investment: | ||||
Total loan balance | 528,639,000 | 537,905,000 | ||
Allowance for credit losses on loans | (4,196,000) | (5,907,000) | (4,757,000) | (4,132,000) |
Residential Mortgage | Real estate | ||||
Loans held-for-investment: | ||||
Total loan balance | 528,639,000 | 537,905,000 | ||
Consumer and Other | ||||
Loans held-for-investment: | ||||
Total loan balance | 17,905,000 | 17,033,000 | ||
Allowance for credit losses on loans | (157,000) | (129,000) | $ (148,000) | $ (174,000) |
Consumer and Other | Consumer | ||||
Loans held-for-investment: | ||||
Total loan balance | $ 17,905,000 | $ 17,033,000 |
Loans and Allowance for Credi_4
Loans and Allowance for Credit Losses on Loans - Changes in the Allowance for Loan Losses (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | $ 47,512,000 | $ 43,290,000 |
Charge-offs | (380,000) | (16,000) |
Recoveries | 109,000 | 81,000 |
Net (charge-offs) recoveries | (271,000) | 65,000 |
Provision for (recapture of) credit losses on loans | 32,000 | (567,000) |
End of period balance | 47,273,000 | 42,788,000 |
Commercial | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | 6,617,000 | 8,414,000 |
Charge-offs | (134,000) | (16,000) |
Recoveries | 80,000 | 54,000 |
Net (charge-offs) recoveries | (54,000) | 38,000 |
Provision for (recapture of) credit losses on loans | (29,000) | (1,651,000) |
End of period balance | 6,534,000 | 6,801,000 |
CRE - Owner Occupied | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | 5,751,000 | 7,954,000 |
Recoveries | 4,000 | 3,000 |
Net (charge-offs) recoveries | 4,000 | 3,000 |
Provision for (recapture of) credit losses on loans | (302,000) | (1,560,000) |
End of period balance | 5,453,000 | 6,397,000 |
CRE - Non-Owner Occupied | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | 22,135,000 | 17,125,000 |
Provision for (recapture of) credit losses on loans | 542,000 | 2,288,000 |
End of period balance | 22,677,000 | 19,413,000 |
Land & Construction | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | 2,941,000 | 1,831,000 |
Provision for (recapture of) credit losses on loans | 235,000 | 175,000 |
End of period balance | 3,176,000 | 2,006,000 |
Home Equity | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | 666,000 | 864,000 |
Charge-offs | (246,000) | |
Recoveries | 25,000 | 24,000 |
Net (charge-offs) recoveries | (221,000) | 24,000 |
Provision for (recapture of) credit losses on loans | 243,000 | (166,000) |
End of period balance | 688,000 | 722,000 |
Multi-Family | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | 3,366,000 | 2,796,000 |
Provision for (recapture of) credit losses on loans | 1,026,000 | (252,000) |
End of period balance | 4,392,000 | 2,544,000 |
Residential Mortgage | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | 5,907,000 | 4,132,000 |
Provision for (recapture of) credit losses on loans | (1,711,000) | 625,000 |
End of period balance | 4,196,000 | 4,757,000 |
Consumer and Other | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | 129,000 | 174,000 |
Provision for (recapture of) credit losses on loans | 28,000 | (26,000) |
End of period balance | $ 157,000 | $ 148,000 |
Loans and Allowance for Credi_5
Loans and Allowance for Credit Losses on Loans - Nonaccrual Status and Loans Past Due Over 90 Days (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 |
Nonperforming Loans by Class | |||
Nonaccrual Financing Receivable, no Specific Allowance for Credit Losses | $ 387 | $ 416 | |
Nonaccrual Financing Receivable, with Special Allowance for Credit Losses | 394 | 324 | |
Restructured and loans over 90 days past due and still accruing | 1,459 | 1,685 | |
Total | 2,240 | $ 2,425 | |
Commercial. | |||
Nonperforming Loans by Class | |||
Nonaccrual Financing Receivable, no Specific Allowance for Credit Losses | 291 | $ 318 | |
Nonaccrual Financing Receivable, with Special Allowance for Credit Losses | 394 | 324 | |
Restructured and loans over 90 days past due and still accruing | 123 | 349 | |
Total | 808 | 991 | |
CRE - Owner Occupied | Real estate | |||
Nonperforming Loans by Class | |||
Restructured and loans over 90 days past due and still accruing | 1,336 | ||
Total | 1,336 | ||
CRE - Non-Owner Occupied | Real estate | |||
Nonperforming Loans by Class | |||
Restructured and loans over 90 days past due and still accruing | 1,336 | ||
Total | 1,336 | ||
Home Equity | Real estate | |||
Nonperforming Loans by Class | |||
Nonaccrual Financing Receivable, no Specific Allowance for Credit Losses | 96 | 98 | |
Total | $ 96 | $ 98 |
Loans and Allowance for Credi_6
Loans and Allowance for Credit Losses on Loans - Aging of Past Due Loans by Class of Loans (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 |
Aging of Past Due Loans by Class of Loans | |||
Loan balance | $ 3,261,915,000 | $ 3,298,550,000 | $ 3,024,064,000 |
Total | 3,262,427,000 | 3,299,067,000 | |
30-59 Days Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 15,404,000 | 11,690,000 | |
60-89 Days Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 3,888,000 | 3,337,000 | |
90 Days or Greater Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 1,772,000 | 2,039,000 | |
Past due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 21,064,000 | 17,066,000 | |
Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 3,241,363,000 | 3,282,001,000 | |
Commercial | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 506,602,000 | 533,915,000 | |
Commercial | Commercial. | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 506,602,000 | 533,915,000 | |
Commercial | Commercial. | 30-59 Days Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 7,756,000 | 7,236,000 | |
Commercial | Commercial. | 60-89 Days Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 2,239,000 | 2,519,000 | |
Commercial | Commercial. | 90 Days or Greater Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 436,000 | 703,000 | |
Commercial | Commercial. | Past due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 10,431,000 | 10,458,000 | |
Commercial | Commercial. | Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 496,171,000 | 523,457,000 | |
CRE - Owner Occupied | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 603,298,000 | 614,663,000 | |
CRE - Owner Occupied | Real estate | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 603,298,000 | 614,663,000 | |
CRE - Owner Occupied | Real estate | 30-59 Days Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 1,121,000 | 252,000 | |
CRE - Owner Occupied | Real estate | Past due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 1,121,000 | 252,000 | |
CRE - Owner Occupied | Real estate | Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 602,177,000 | 614,411,000 | |
CRE - Non-Owner Occupied | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 1,083,852,000 | 1,066,368,000 | |
CRE - Non-Owner Occupied | Real estate | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 1,083,852,000 | 1,066,368,000 | |
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 | 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 | 1,336,000 | |
CRE - Non-Owner Occupied | Real estate | Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 1,082,516,000 | 1,065,032,000 | |
Land & Construction | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 166,408,000 | 163,577,000 | |
Land & Construction | Real estate | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 166,408,000 | 163,577,000 | |
Land & Construction | Real estate | Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 166,408,000 | 163,577,000 | |
Home Equity | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 124,481,000 | 120,724,000 | |
Home Equity | Real estate | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 124,481,000 | 120,724,000 | |
Home Equity | Real estate | 30-59 Days Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 96,000 | ||
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 | 96,000 | 98,000 | |
Home Equity | Real estate | Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 124,385,000 | 120,626,000 | |
Multi-Family | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 231,242,000 | 244,882,000 | |
Multi-Family | Real estate | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 231,242,000 | 244,882,000 | |
Multi-Family | Real estate | Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 231,242,000 | 244,882,000 | |
Residential Mortgage | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 528,639,000 | 537,905,000 | |
Residential Mortgage | Real estate | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 528,639,000 | 537,905,000 | |
Residential Mortgage | Real estate | 30-59 Days Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 6,431,000 | 4,202,000 | |
Residential Mortgage | Real estate | 60-89 Days Past Due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 1,649,000 | 720,000 | |
Residential Mortgage | Real estate | Past due | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 8,080,000 | 4,922,000 | |
Residential Mortgage | Real estate | Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | 520,559,000 | 532,983,000 | |
Consumer and Other | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 17,905,000 | 17,033,000 | |
Consumer and Other | Consumer | |||
Aging of Past Due Loans by Class of Loans | |||
Total | 17,905,000 | 17,033,000 | |
Consumer and Other | Consumer | Current | |||
Aging of Past Due Loans by Class of Loans | |||
Loan balance | $ 17,905,000 | $ 17,033,000 |
Loans and Allowance for Credi_7
Loans and Allowance for Credit Losses on Loans - Aging of Past Due Loans by Class of Loans - Additional Information (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 |
Aging of Past Due Loans by Class of Loans | |||
Loans, net of deferred fees | $ 3,261,915,000 | $ 3,298,550,000 | $ 3,024,064,000 |
30 days or greater past due | |||
Aging of Past Due Loans by Class of Loans | |||
Nonaccrual loans | 410,000 | 479,000 | |
Less than 30 days past due | |||
Aging of Past Due Loans by Class of Loans | |||
Nonaccrual loans | 371,000 | 261,000 | |
Past due | |||
Aging of Past Due Loans by Class of Loans | |||
Loans, net of deferred fees | $ 21,064,000 | $ 17,066,000 |
Loans and Allowance for Credi_8
Loans and Allowance for Credit Losses on Loans - Credit Quality Indicators (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Loans | ||
2023/ 2022 | $ 143,541 | $ 735,274 |
2022/ 2021 | 671,924 | 874,235 |
2021/ 2020 | 821,436 | 161,375 |
2020/ 2019 | 156,697 | 240,466 |
2019/ 2018 | 235,184 | 155,623 |
Prior Periods | 808,097 | 680,984 |
Revolving | 425,548 | 451,110 |
Total loan balance | 3,262,427 | 3,299,067 |
Balance to report | 3,214,642 | 3,251,038 |
Loan classified as loss | ||
Loans | ||
Balance to report | 0 | 0 |
Commercial | ||
Loans | ||
2023/ 2022 | 89,240 | 106,381 |
2022/ 2021 | 38,497 | 38,091 |
2021/ 2020 | 33,448 | 24,598 |
2020/ 2019 | 21,972 | 20,540 |
2019/ 2018 | 17,929 | 12,419 |
Prior Periods | 35,306 | 27,293 |
Revolving | 270,210 | 304,593 |
Total loan balance | 506,602 | 533,915 |
Commercial | Pass [Member] | ||
Loans | ||
2023/ 2022 | 87,216 | 102,969 |
2022/ 2021 | 36,758 | 36,752 |
2021/ 2020 | 32,068 | 24,406 |
2020/ 2019 | 21,972 | 19,272 |
2019/ 2018 | 16,738 | 12,089 |
Prior Periods | 29,376 | 21,127 |
Revolving | 260,606 | 293,546 |
Total loan balance | 484,734 | 510,161 |
Commercial | Special Mention [Member] | ||
Loans | ||
2023/ 2022 | 2,020 | 3,408 |
2022/ 2021 | 1,418 | 1,060 |
2021/ 2020 | 524 | 192 |
2020/ 2019 | 1,123 | |
2019/ 2018 | 917 | |
Prior Periods | 1,260 | 6,031 |
Revolving | 4,494 | 5,551 |
Total loan balance | 10,633 | 17,365 |
Commercial | Substandard [Member] | ||
Loans | ||
2023/ 2022 | 4 | 4 |
2022/ 2021 | 321 | |
2021/ 2020 | 620 | |
2020/ 2019 | 145 | |
2019/ 2018 | 274 | |
Prior Periods | 4,370 | 102 |
Revolving | 4,961 | 5,496 |
Total loan balance | 10,550 | 5,747 |
Commercial | Substandard-Nonaccrual [Member] | ||
Loans | ||
2022/ 2021 | 279 | |
2021/ 2020 | 236 | |
2019/ 2018 | 330 | |
Prior Periods | 300 | 33 |
Revolving | 149 | |
Total loan balance | 685 | 642 |
CRE - Owner Occupied | ||
Loans | ||
2023/ 2022 | 3,371 | 92,689 |
2022/ 2021 | 89,006 | 118,959 |
2021/ 2020 | 119,606 | 75,874 |
2020/ 2019 | 75,312 | 61,007 |
2019/ 2018 | 60,489 | 58,373 |
Prior Periods | 243,298 | 199,003 |
Revolving | 12,216 | 8,758 |
Total loan balance | 603,298 | 614,663 |
CRE - Owner Occupied | Pass [Member] | ||
Loans | ||
2023/ 2022 | 2,381 | 92,689 |
2022/ 2021 | 87,418 | 116,266 |
2021/ 2020 | 118,376 | 75,007 |
2020/ 2019 | 74,459 | 59,887 |
2019/ 2018 | 59,368 | 58,180 |
Prior Periods | 241,040 | 194,584 |
Revolving | 12,216 | 8,758 |
Total loan balance | 595,258 | 605,371 |
CRE - Owner Occupied | Special Mention [Member] | ||
Loans | ||
2022/ 2021 | 1,588 | 2,033 |
2021/ 2020 | 1,230 | 867 |
2020/ 2019 | 853 | 1,120 |
Prior Periods | 2,250 | 4,410 |
Total loan balance | 5,921 | 8,430 |
CRE - Owner Occupied | Substandard [Member] | ||
Loans | ||
2023/ 2022 | 990 | |
2022/ 2021 | 660 | |
2019/ 2018 | 1,121 | 193 |
Prior Periods | 8 | 9 |
Total loan balance | 2,119 | 862 |
CRE - Non-Owner Occupied | ||
Loans | ||
2023/ 2022 | 30,477 | 239,556 |
2022/ 2021 | 239,675 | 278,051 |
2021/ 2020 | 270,999 | 31,848 |
2020/ 2019 | 29,747 | 101,854 |
2019/ 2018 | 99,910 | 63,905 |
Prior Periods | 409,492 | 347,909 |
Revolving | 3,552 | 3,245 |
Total loan balance | 1,083,852 | 1,066,368 |
CRE - Non-Owner Occupied | Pass [Member] | ||
Loans | ||
2023/ 2022 | 30,477 | 239,556 |
2022/ 2021 | 239,675 | 278,051 |
2021/ 2020 | 270,999 | 31,848 |
2020/ 2019 | 29,747 | 101,854 |
2019/ 2018 | 99,910 | 63,905 |
Prior Periods | 398,297 | 337,048 |
Revolving | 3,416 | 3,245 |
Total loan balance | 1,072,521 | 1,055,507 |
CRE - Non-Owner Occupied | Special Mention [Member] | ||
Loans | ||
Prior Periods | 3,354 | 4,883 |
Total loan balance | 3,354 | 4,883 |
CRE - Non-Owner Occupied | Substandard [Member] | ||
Loans | ||
Prior Periods | 7,841 | 5,978 |
Revolving | 136 | |
Total loan balance | 7,977 | 5,978 |
Land & Construction | ||
Loans | ||
2023/ 2022 | 16,276 | 62,241 |
2022/ 2021 | 64,546 | 72,847 |
2021/ 2020 | 56,324 | 22,459 |
2020/ 2019 | 23,113 | 6,030 |
2019/ 2018 | 6,149 | |
Total loan balance | 166,408 | 163,577 |
Land & Construction | Pass [Member] | ||
Loans | ||
2023/ 2022 | 16,276 | 62,241 |
2022/ 2021 | 64,546 | 72,847 |
2021/ 2020 | 56,324 | 22,459 |
2020/ 2019 | 23,113 | 6,030 |
2019/ 2018 | 6,149 | |
Total loan balance | 166,408 | 163,577 |
Home Equity | ||
Loans | ||
2022/ 2021 | 98 | |
2021/ 2020 | 96 | |
Prior Periods | 260 | 188 |
Revolving | 124,125 | 120,438 |
Total loan balance | 124,481 | 120,724 |
Home Equity | Pass [Member] | ||
Loans | ||
Prior Periods | 116 | 44 |
Revolving | 119,343 | 117,950 |
Total loan balance | 119,459 | 117,994 |
Home Equity | Special Mention [Member] | ||
Loans | ||
Revolving | 4,640 | 2,346 |
Total loan balance | 4,640 | 2,346 |
Home Equity | Substandard [Member] | ||
Loans | ||
Prior Periods | 144 | 144 |
Revolving | 142 | 142 |
Total loan balance | 286 | 286 |
Home Equity | Substandard-Nonaccrual [Member] | ||
Loans | ||
2022/ 2021 | 98 | |
2021/ 2020 | 96 | |
Total loan balance | 96 | 98 |
Multi-Family | ||
Loans | ||
2023/ 2022 | 2,977 | 42,111 |
2022/ 2021 | 41,892 | 69,824 |
2021/ 2020 | 57,255 | 5,528 |
2020/ 2019 | 5,493 | 43,183 |
2019/ 2018 | 42,919 | 15,356 |
Prior Periods | 80,491 | 68,700 |
Revolving | 215 | 180 |
Total loan balance | 231,242 | 244,882 |
Multi-Family | Pass [Member] | ||
Loans | ||
2023/ 2022 | 2,977 | 42,111 |
2022/ 2021 | 41,892 | 69,824 |
2021/ 2020 | 57,255 | 4,871 |
2020/ 2019 | 5,493 | 42,412 |
2019/ 2018 | 42,919 | 15,356 |
Prior Periods | 78,199 | 66,380 |
Revolving | 215 | 180 |
Total loan balance | 228,950 | 241,134 |
Multi-Family | Special Mention [Member] | ||
Loans | ||
2021/ 2020 | 657 | |
2020/ 2019 | 771 | |
Prior Periods | 2,320 | |
Total loan balance | 3,748 | |
Multi-Family | Substandard [Member] | ||
Loans | ||
Prior Periods | 2,292 | |
Total loan balance | 2,292 | |
Residential Mortgage | ||
Loans | ||
2023/ 2022 | 1,200 | 191,907 |
2022/ 2021 | 197,922 | 296,270 |
2021/ 2020 | 283,621 | 1,068 |
2020/ 2019 | 1,060 | 7,846 |
2019/ 2018 | 7,788 | 4,206 |
Prior Periods | 37,048 | 36,608 |
Total loan balance | 528,639 | 537,905 |
Residential Mortgage | Pass [Member] | ||
Loans | ||
2023/ 2022 | 1,200 | 191,907 |
2022/ 2021 | 197,922 | 296,270 |
2021/ 2020 | 281,025 | 1,068 |
2020/ 2019 | 1,060 | 6,788 |
2019/ 2018 | 6,736 | 2,724 |
Prior Periods | 34,132 | 33,290 |
Total loan balance | 522,075 | 532,047 |
Residential Mortgage | Special Mention [Member] | ||
Loans | ||
2021/ 2020 | 723 | |
2020/ 2019 | 1,058 | |
2019/ 2018 | 1,052 | 1,482 |
Prior Periods | 1,994 | 2,387 |
Total loan balance | 3,769 | 4,927 |
Residential Mortgage | Substandard [Member] | ||
Loans | ||
2021/ 2020 | 1,873 | |
Prior Periods | 922 | 931 |
Total loan balance | 2,795 | 931 |
Consumer and Other | ||
Loans | ||
2023/ 2022 | 389 | |
2022/ 2021 | 386 | 95 |
2021/ 2020 | 87 | |
2020/ 2019 | 6 | |
2019/ 2018 | 1,364 | |
Prior Periods | 2,202 | 1,283 |
Revolving | 15,230 | 13,896 |
Total loan balance | 17,905 | 17,033 |
Consumer and Other | Pass [Member] | ||
Loans | ||
2023/ 2022 | 389 | |
2022/ 2021 | 386 | 13 |
2021/ 2020 | 10 | |
2019/ 2018 | 1,364 | |
Prior Periods | 2,202 | 1,283 |
Revolving | 15,230 | 13,647 |
Total loan balance | 17,828 | 16,696 |
Consumer and Other | Special Mention [Member] | ||
Loans | ||
2022/ 2021 | 82 | |
2021/ 2020 | 77 | |
2020/ 2019 | 6 | |
Revolving | 249 | |
Total loan balance | 77 | 337 |
Risk Grades [Member] | ||
Loans | ||
2023/ 2022 | 143,541 | 735,274 |
2022/ 2021 | 671,924 | 874,235 |
2021/ 2020 | 821,436 | 161,375 |
2020/ 2019 | 156,697 | 240,466 |
2019/ 2018 | 235,184 | 155,623 |
Prior Periods | 808,097 | 680,984 |
Revolving | 425,548 | 451,110 |
Total loan balance | 3,262,427 | 3,299,067 |
Risk Grades [Member] | Pass [Member] | ||
Loans | ||
2023/ 2022 | 140,527 | 731,862 |
2022/ 2021 | 668,597 | 870,023 |
2021/ 2020 | 816,057 | 159,659 |
2020/ 2019 | 155,844 | 236,243 |
2019/ 2018 | 231,820 | 153,618 |
Prior Periods | 783,362 | 653,756 |
Revolving | 411,026 | 437,326 |
Total loan balance | 3,207,233 | 3,242,487 |
Risk Grades [Member] | Special Mention [Member] | ||
Loans | ||
2023/ 2022 | 2,020 | 3,408 |
2022/ 2021 | 3,006 | 3,175 |
2021/ 2020 | 2,554 | 1,716 |
2020/ 2019 | 853 | 4,078 |
2019/ 2018 | 1,969 | 1,482 |
Prior Periods | 8,858 | 20,031 |
Revolving | 9,134 | 8,146 |
Total loan balance | 28,394 | 42,036 |
Risk Grades [Member] | Substandard [Member] | ||
Loans | ||
2023/ 2022 | 994 | 4 |
2022/ 2021 | 321 | 660 |
2021/ 2020 | 2,493 | |
2020/ 2019 | 145 | |
2019/ 2018 | 1,395 | 193 |
Prior Periods | 15,577 | 7,164 |
Revolving | 5,239 | 5,638 |
Total loan balance | 26,019 | 13,804 |
Risk Grades [Member] | Substandard-Nonaccrual [Member] | ||
Loans | ||
2022/ 2021 | 377 | |
2021/ 2020 | 332 | |
2019/ 2018 | 330 | |
Prior Periods | 300 | 33 |
Revolving | 149 | |
Total loan balance | $ 781 | $ 740 |
Loans and Allowance for Credi_9
Loans and Allowance for Credit Losses on Loans - Gross charge-offs by year of origination and revolving loans (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Current period gross charge-offs | ||
12/31/2019 | $ 49 | |
2018 and Prior | 85 | |
Revolving Loans | 246 | |
Total | 380 | $ 16 |
Commercial. | ||
Current period gross charge-offs | ||
12/31/2019 | 49 | |
2018 and Prior | 85 | |
Total | 134 | |
Commercial | ||
Current period gross charge-offs | ||
Total | 134 | $ 16 |
Home Equity | ||
Current period gross charge-offs | ||
Total | 246 | |
Home Equity | Real estate | ||
Current period gross charge-offs | ||
Revolving Loans | 246 | |
Total | $ 246 |
Loans and Allowance for Cred_10
Loans and Allowance for Credit Losses on Loans - Amortized Cost Basis of Collateral-dependent Loans (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Business Assets | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Collateral dependent loans | $ 394,000 | $ 324,000 |
Loans and Allowance for Cred_11
Loans and Allowance for Credit Losses on Loans - Amortized cost basis of loans that were experiencing financial distress and modified (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) loan | |
Financing Receivable, Modifications [Line Items] | |
Number of loans for which multiple concessions are provided | loan | 1 |
Total Class of Financing Receivables | 0.03% |
Amount committed to borrowers | $ 0 |
Principal Forgiveness | |
Financing Receivable, Modifications [Line Items] | |
Total | 6,000 |
Payment Delay | |
Financing Receivable, Modifications [Line Items] | |
Total | 88,000 |
Term Extension | |
Financing Receivable, Modifications [Line Items] | |
Total | $ 36,000 |
Commercial. | |
Financing Receivable, Modifications [Line Items] | |
Total Class of Financing Receivables | 0.03% |
Commercial. | Principal Forgiveness | |
Financing Receivable, Modifications [Line Items] | |
Total | $ 6,000 |
Commercial. | Payment Delay | |
Financing Receivable, Modifications [Line Items] | |
Total | 88,000 |
Commercial. | Term Extension | |
Financing Receivable, Modifications [Line Items] | |
Total | $ 36,000 |
Loans and Allowance for Cred_12
Loans and Allowance for Credit Losses on Loans - Performance of loans that have been modified (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Financing Receivable, Recorded Investment, Past Due [Line Items] | |
Total financing receivable modified | $ 42,000 |
Payment default for loans modified | 0 |
Commercial. | |
Financing Receivable, Recorded Investment, Past Due [Line Items] | |
Total financing receivable modified | 42,000 |
60-89 Days Past Due | |
Financing Receivable, Recorded Investment, Past Due [Line Items] | |
Total financing receivable modified | 36,000 |
60-89 Days Past Due | Commercial. | |
Financing Receivable, Recorded Investment, Past Due [Line Items] | |
Total financing receivable modified | 36,000 |
90 Days or Greater Past Due | |
Financing Receivable, Recorded Investment, Past Due [Line Items] | |
Total financing receivable modified | 6,000 |
90 Days or Greater Past Due | Commercial. | |
Financing Receivable, Recorded Investment, Past Due [Line Items] | |
Total financing receivable modified | $ 6,000 |
Loans and Allowance for Cred_13
Loans and Allowance for Credit Losses on Loans - Financial effect of the loan modification (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Financing Receivable, Modifications [Line Items] | |
Principal Forgiveness | $ 3,000 |
Weighted Average Term Extension (Months) | 9 years |
Payment default for loans modified | $ 0 |
Commercial. | |
Financing Receivable, Modifications [Line Items] | |
Principal Forgiveness | $ 3,000 |
Weighted Average Term Extension (Months) | 9 years |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | |
Goodwill | |||
Goodwill | $ 167,631 | $ 167,631 | $ 167,631 |
BVF/CSNK | |||
Goodwill | |||
Goodwill acquired | 13,044 | ||
Focus | |||
Goodwill | |||
Goodwill acquired | 32,619 | ||
Tri Valley Bank | |||
Goodwill | |||
Goodwill acquired | 13,819 | ||
United American Bank | |||
Goodwill | |||
Goodwill acquired | 24,271 | ||
Presidio bank | |||
Goodwill | |||
Goodwill acquired | 83,878 | ||
Banking | |||
Goodwill | |||
Goodwill | 154,587 | 154,587 | 154,587 |
Factoring | |||
Goodwill | |||
Goodwill | $ 13,044 | $ 13,044 | $ 13,044 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Other Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Other Intangible Assets | ||
Gross Carrying amount | $ 27,033 | $ 27,033 |
Accumulated Amortization | (16,602) | (16,000) |
Total | 10,431 | 11,033 |
Core deposit intangibles | ||
Other Intangible Assets | ||
Gross Carrying amount | 25,023 | 25,023 |
Accumulated Amortization | (14,984) | (14,429) |
Total | 10,039 | 10,594 |
Customer relationship and brokered relationship | ||
Other Intangible Assets | ||
Gross Carrying amount | 1,900 | 1,900 |
Accumulated Amortization | (1,598) | (1,551) |
Total | 302 | 349 |
Below market leases | ||
Other Intangible Assets | ||
Gross Carrying amount | 110 | 110 |
Accumulated Amortization | (20) | (20) |
Total | $ 90 | $ 90 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Estimated Amortization Expense (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Estimated Amortization Expense | ||
2023 remaining | $ 1,803 | |
2024 | 2,187 | |
2025 | 1,813 | |
2026 | 1,530 | |
2027 | 1,456 | |
2028 | 1,017 | |
2029 | 625 | |
Total | 10,431 | $ 11,033 |
Core deposit | ||
Estimated Amortization Expense | ||
2023 remaining | 1,662 | |
2024 | 2,023 | |
2025 | 1,795 | |
2026 | 1,512 | |
2027 | 1,438 | |
2028 | 999 | |
2029 | 610 | |
Total | 10,039 | 10,594 |
Customer relationship and brokered relationship | ||
Estimated Amortization Expense | ||
2023 remaining | 143 | |
2024 | 159 | |
Total | 302 | 349 |
Below/ (Above) market-value lease | ||
Estimated Amortization Expense | ||
2023 remaining | (2) | |
2024 | 5 | |
2025 | 18 | |
2026 | 18 | |
2027 | 18 | |
2028 | 18 | |
2029 | 15 | |
Total | $ 90 | $ 90 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Impairment of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Impairment of Intangible Assets | ||
Impairment of intangible assets | $ 0 | $ 0 |
Income Taxes - Net Deferred Tax
Income Taxes - Net Deferred Tax Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Net deferred tax assets | ||
Net deferred tax assets | $ 29,841 | $ 32,176 |
Deferred Tax Assets, Valuation Allowance | $ 0 | $ 0 |
Income Taxes - Carry Amounts of
Income Taxes - Carry Amounts of the Low Income Housing Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Income Taxes | ||
Low income housing investments | $ 3,290 | $ 3,537 |
Future commitments | $ 521 | $ 523 |
Income Taxes - Future Commitmen
Income Taxes - Future Commitments of the Low Income Housing Investments (Details) - Low income housing investments | Mar. 31, 2023 USD ($) |
Future Commitments | |
2023 | $ 27,000 |
2024 through 2026 | $ 494,000 |
Income Taxes - Components of Lo
Income Taxes - Components of Low Income Housing Investment (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Taxes | ||
Low income housing tax credits | $ 180,000 | $ 210,000 |
Low income housing investment expense | $ 186,000 | $ 211,000 |
Benefit Plans - Defined Benefit
Benefit Plans - Defined Benefit Plans - Nonqualified Defined Benefit Pension Plan (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Supplemental Retirement Plan | |
Supplemental Retirement Plan | |
Plan assets associated with the plan | $ 0 |
Benefit Plans - Defined Benef_2
Benefit Plans - Defined Benefit Plans - Components of Pension Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Supplemental Retirement Plan | |||
Components of net periodic benefit cost: | |||
Service cost | $ 48 | $ 87 | |
Interest cost | 324 | 216 | |
Amortization of net actuarial loss | 13 | 114 | |
Net periodic benefit cost | 385 | 417 | |
Split-Dollar Life Insurance Benefit Plan | |||
Components of net periodic benefit cost: | |||
Amortization of prior transition obligation and actuarial losses | (47) | (11) | |
Interest cost | 91 | 62 | $ 246 |
Net periodic benefit cost | $ 44 | $ 51 |
Benefit Plans - Defined Benef_3
Benefit Plans - Defined Benefit Plans - Change in Projected Benefit Obligation (Details) - Split-Dollar Life Insurance Benefit Plan - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Change in projected benefit obligation: | |||
Projected benefit obligation at beginning of year | $ 7,060 | $ 9,244 | $ 9,244 |
Interest cost | 91 | $ 62 | 246 |
Actuarial loss | (2,430) | ||
Projected benefit obligation at end of period | $ 7,151 | $ 7,060 |
Benefit Plans - Defined Benef_4
Benefit Plans - Defined Benefit Plans - Amounts Recognized in Accumulated Other Comprehensive Loss (Details) - Split-Dollar Life Insurance Benefit Plan - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Amounts Recognized in Accumulated Other Comprehensive Loss | ||
Net actuarial loss | $ 2,371 | $ 2,301 |
Prior transition obligation | 768 | 790 |
Accumulated other comprehensive loss | $ 3,139 | $ 3,091 |
Fair Value - Financial Assets a
Fair Value - Financial Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | $ 491,751 | $ 489,596 |
U.S. Treasury | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 422,903 | 418,474 |
Agency mortgage-backed securities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 68,848 | 71,122 |
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 | |
Recurring basis | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
I/O strip receivables | 145 | 152 |
Transfers between Level 1 and Level 2: | ||
Transfers between Level 1 and Level 2 | 0 | 0 |
Transfers between Level 2 and Level 1 | 0 | 0 |
Recurring basis | U.S. Treasury | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 422,903 | 418,474 |
Recurring basis | Agency mortgage-backed securities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 68,848 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasury | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 422,903 | 418,474 |
Recurring basis | Significant Other Observable Inputs (Level 2) | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
I/O strip receivables | 145 | $ 152 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Agency mortgage-backed securities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | $ 68,848 |
Fair Value - Impaired Loans Hel
Fair Value - Impaired Loans Held-for-investment - Additional Disclosures (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Carrying Amounts | ||
Impaired Loans Held-for-investment | ||
Foreclosed assets | $ 0 | $ 0 |
Fair Value - Carrying Amounts a
Fair Value - Carrying Amounts and Estimated Fair Values of Financial Instruments (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Assets | ||||
Securities available-for-sale | $ 491,751,000 | $ 489,596,000 | ||
Securities held-to-maturity | 607,986,000 | 614,452,000 | ||
Federal Home Loan Bank ("FHLB"), Federal Reserve Bank ("FRB") stock and other investments, at cost | 32,526,000 | 32,522,000 | ||
Liabilities | ||||
Subordinated debt | 39,387,000 | 39,350,000 | ||
Allowance for credit losses on loans | 47,273,000 | 47,512,000 | $ 42,788,000 | $ 43,290,000 |
Carrying Amounts | ||||
Assets | ||||
Cash and cash equivalents | 740,008,000 | 306,603,000 | ||
Securities available-for-sale | 491,751,000 | 489,596,000 | ||
Securities held-to-maturity | 698,231,000 | 714,990,000 | ||
Loans (including loans held-for-sale) | 3,264,707,000 | 3,301,006,000 | ||
Federal Home Loan Bank ("FHLB"), Federal Reserve Bank ("FRB") stock and other investments, at cost | 32,526,000 | 32,522,000 | ||
Accrued interest receivable | 16,117,000 | 15,047,000 | ||
I/O strips receivables | 145,000 | 152,000 | ||
Liabilities | ||||
Time deposits | 214,443,000 | 143,958,000 | ||
Other deposits | 4,230,095,000 | 4,245,646,000 | ||
Borrowings on FHLB and FRB lines of credit | 300,000,000 | |||
Subordinated debt | 39,387,000 | 39,350,000 | ||
Accrued interest payable | 1,921,000 | 600,000 | ||
Balance | ||||
Assets | ||||
Cash and cash equivalents | 740,008,000 | 306,603,000 | ||
Securities available-for-sale | 491,751,000 | 489,596,000 | ||
Securities held-to-maturity | 607,986,000 | 614,452,000 | ||
Loans (including loans held-for-sale) | 3,061,489,000 | 3,082,941,000 | ||
Accrued interest receivable | 16,117,000 | 15,047,000 | ||
I/O strips receivables | 145,000 | 152,000 | ||
Liabilities | ||||
Time deposits | 216,579,000 | 144,702,000 | ||
Other deposits | 4,230,095,000 | 4,245,646,000 | ||
Borrowings on FHLB and FRB lines of credit | 300,000,000 | |||
Subordinated debt | 32,787,000 | 36,025,000 | ||
Accrued interest payable | 1,921,000 | 600,000 | ||
Balance | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||||
Assets | ||||
Cash and cash equivalents | 740,008,000 | 306,603,000 | ||
Securities available-for-sale | 422,903,000 | 418,474,000 | ||
Accrued interest receivable | 1,745,000 | 1,328,000 | ||
Balance | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Securities available-for-sale | 68,848,000 | 71,122,000 | ||
Securities held-to-maturity | 607,986,000 | 614,452,000 | ||
Loans (including loans held-for-sale) | 2,792,000 | 2,456,000 | ||
Accrued interest receivable | 2,502,000 | 1,836,000 | ||
I/O strips receivables | 145,000 | 152,000 | ||
Liabilities | ||||
Time deposits | 216,579,000 | 144,702,000 | ||
Other deposits | 4,230,095,000 | 4,245,646,000 | ||
Borrowings on FHLB and FRB lines of credit | 300,000,000 | |||
Subordinated debt | 32,787,000 | 36,025,000 | ||
Accrued interest payable | 1,921,000 | 600,000 | ||
Balance | Significant Unobservable Inputs (Level 3) | ||||
Assets | ||||
Loans (including loans held-for-sale) | 3,058,697,000 | 3,080,485,000 | ||
Accrued interest receivable | $ 11,870,000 | $ 11,883,000 |
Equity Plan - General Disclosur
Equity Plan - General Disclosures (Details) - shares | 3 Months Ended | ||
Mar. 31, 2023 | May 21, 2020 | May 20, 2020 | |
2013 Plan | |||
Equity Plan | |||
Number of shares authorized for equity plan | 5,000,000 | 3,000,000 | |
Number of shares available for future grants | 1,498,474 | ||
Options | |||
Equity Plan | |||
Vesting period | 4 years | ||
Expiration term | 10 years | ||
Nonqualified stock options | |||
Equity Plan | |||
Number of equity awards issued (in shares) | 0 |
Equity Plan - Stock Option Acti
Equity Plan - Stock Option Activity (Details) - Options | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Number of Shares | |
Outstanding at the beginning of the period (in shares) | 2,527,173 |
Exercised (in shares) | 95,884 |
Forfeited or expired (in shares) | (23,728) |
Outstanding at the end of the period (in shares) | 2,407,561 |
Vested or expected to vest (in shares) | 2,263,107 |
Exercisable at the end of the period (in shares) | 1,858,557 |
Weighted Average Exercise Price | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 10.44 |
Exercised (in dollars per share) | $ / shares | 7.12 |
Forfeited or expired (in dollars per share) | $ / shares | 13.62 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 10.54 |
Additional Information | |
Weighted Average Remaining Contractual Life - Outstanding at the end of the period (in years) | 5 years 4 months 17 days |
Weighted Average Remaining Contractual Life - Vested or expected to vest (in years) | 5 years 4 months 17 days |
Weighted Average Remaining Contractual Life - Exercisable at the end of the period (in years) | 4 years 5 months 15 days |
Aggregate Intrinsic Value - Outstanding at the end of the period (in dollars) | $ | $ 1,356,635 |
Aggregate Intrinsic Value - Vested or expected to vest (in dollars) | $ | 1,275,237 |
Aggregate Intrinsic Value - Exercisable at the end of the period (in dollars) | $ | $ 1,356,635 |
Equity Plan - Information Relat
Equity Plan - Information Related to the Equity Plans for each of the Last Three Years (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Information Related to the Equity Plans | ||
Cash received from option exercise | $ 683 | $ 401 |
Options | ||
Information Related to the Equity Plans | ||
Intrinsic value of options exercised | 466,308 | 415,117 |
Cash received from option exercise | 682,825 | 401,136 |
Tax benefit (expense) realized from option exercises | $ 3,969 | $ 31,971 |
Equity Plan - Unrecognized Comp
Equity Plan - Unrecognized Compensation Cost -Nonvested Stock Options (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Options | |
Unrecognized Compensation Cost | |
Total unrecognized compensation cost related to nonvested stock options granted | $ 1,141,000 |
Expected weighted-average period for recognition of compensation costs related to nonvested stock options | 2 years 6 months |
Restricted stock | |
Unrecognized Compensation Cost | |
Total unrecognized compensation cost related to nonvested stock options granted | $ 1,500,000 |
Expected weighted-average period for recognition of compensation costs related to nonvested stock options | 1 year 10 months 2 days |
Equity Plan - Restricted Stock
Equity Plan - Restricted Stock Activity (Details) - Restricted stock | Mar. 31, 2023 $ / shares shares |
Number of Shares | |
Nonvested shares at the beginning of the period (in shares) | shares | 253,491 |
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 | $ 11.05 |
Nonvested shares at the end of the period (in dollars per share) | $ / shares | $ 11.05 |
Borrowing Arrangements - Federa
Borrowing Arrangements - Federal Home Loan Bank Borrowings, Federal Reserve Bank Borrowings, and Available Lines of Credit (Details) - USD ($) | Apr. 20, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 |
Borrowing Arrangements | ||||
Loans, net of deferred fees | $ 3,261,915,000 | $ 3,298,550,000 | $ 3,024,064,000 | |
FHLB | Line of credit | ||||
Borrowing Arrangements | ||||
Amount outstanding | 150,000,000 | 0 | ||
Line of credit | 1,231,874,000 | |||
Repayment of debt outstanding | $ 150,000,000 | |||
FHLB | Line of credit | FHLB of San Francisco | ||||
Borrowing Arrangements | ||||
FHLB overnight borrowings | $ 0 | |||
FHLB | ||||
Borrowing Arrangements | ||||
Securities pledged as collateral | 377,513,000 | |||
Amount outstanding | 150,000,000 | |||
Repayment of debt outstanding | $ 150,000,000 | |||
FHLB | Line of credit | FHLB of San Francisco | ||||
Borrowing Arrangements | ||||
Loans, net of deferred fees | 653,005,000 | |||
Line of credit | $ 789,909,000 |
Borrowing Arrangements - Fede_2
Borrowing Arrangements - Federal Reserve Bank Borrowings (Details) | Mar. 31, 2023 USD ($) |
Line of credit | FRB | |
Borrowing Arrangements | |
Loans and securities pledged to as collateral | $ 1,622,220,000 |
Borrowing Arrangements - Availa
Borrowing Arrangements - Available Lines of Credit (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
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) - Parent Company - Line of credit - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Borrowing Arrangements | ||
Line of credit | $ 20,000 | $ 20,000 |
Amount outstanding | $ 0 | $ 0 |
Borrowing Arrangements - Securi
Borrowing Arrangements - Securities Sold under Repurchase Agreements (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Borrowing Arrangements | ||
Amount of securities sold under agreements | $ 0 | $ 0 |
Borrowing Arrangements - Subord
Borrowing Arrangements - Subordinated Debt (Details) - USD ($) | May 26, 2017 | Mar. 31, 2023 | Dec. 31, 2022 | Jun. 01, 2022 | May 11, 2022 |
Debt Instrument [Line Items] | |||||
Subordinated debt, net of issuance costs | $ 39,387,000 | $ 39,350,000 | |||
Sub Debt Due 2032 | |||||
Debt Instrument [Line Items] | |||||
Principal amount | $ 40,000,000 | ||||
Fixed interest rate (as a percent) | 5% | ||||
Subordinated debt, net of issuance costs | 39,387,000 | ||||
Debt Issuance Costs | $ 613,000 | ||||
Sub Debt Due 2027 | |||||
Debt Instrument [Line Items] | |||||
Principal amount | $ 40,000,000 | $ 40,000,000 | $ 40,000,000 | ||
Fixed interest rate (as a percent) | 5.25% | 5.25% | |||
Redemption price | 100% |
Capital Requirements - General
Capital Requirements - General Information (Details) | 3 Months Ended | 12 Months Ended | ||
Mar. 27, 2020 | Mar. 31, 2023 | 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 | 25% | |||
Capital conservation buffer (as a percent) | 2.50% | 2.50% | ||
2022 | ||||
Capital Requirements | ||||
Percentage of impact on allowances for credit losses on delayed adoption of CECL standard | 75% | |||
2023 | ||||
Capital Requirements | ||||
Percentage of impact on allowances for credit losses on delayed adoption of CECL standard | 50% | |||
2024 | ||||
Capital Requirements | ||||
Percentage of impact on allowances for credit losses on delayed adoption of CECL standard | 25% | |||
HBC | ||||
Capital Requirements | ||||
Capital conservation buffer (as a percent) | 2.50% | 2.50% |
Capital Requirements - Tabular
Capital Requirements - Tabular Disclosure (Details) $ in Thousands | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) |
Total Capital (to risk-weighted assets) | ||
Actual, Amount | $ 567,562 | $ 554,810 |
Required For Capital Adequacy Purposes, Amount | $ 389,554 | $ 393,461 |
Actual, Ratio (as a percent) | 0.153 | 0.148 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.105 | 0.105 |
Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 485,738 | $ 475,609 |
Required For Capital Adequacy Purposes, Amount | $ 315,353 | $ 318,516 |
Actual, Ratio (as a percent) | 0.131 | 0.127 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.085 | 0.085 |
Common Equity Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 485,738 | $ 475,609 |
Required For Capital Adequacy Purposes, Amount | $ 259,703 | $ 262,307 |
Actual, Ratio (as a percent) | 0.131% | 0.127% |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.07% | 0.07% |
Tier 1 Capital (to average assets) | ||
Actual, Amount | $ 485,738 | $ 475,609 |
Required For Capital Adequacy Purposes, Amount | $ 202,798 | $ 207,852 |
Actual, Ratio (as a percent) | 0.096 | 0.092 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.040 | 0.040 |
HBC | ||
Total Capital (to risk-weighted assets) | ||
Actual, Amount | $ 545,172 | $ 532,576 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 371,242 | 374,572 |
Required For Capital Adequacy Purposes, Amount | $ 389,804 | $ 393,301 |
Actual, Ratio (as a percent) | 0.147 | 0.142 |
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 | $ 502,735 | $ 492,725 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 296,993 | 299,658 |
Required For Capital Adequacy Purposes, Amount | $ 315,555 | $ 318,387 |
Actual, Ratio (as a percent) | 0.135 | 0.132 |
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 | $ 502,735 | $ 492,725 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 241,307 | 243,472 |
Required For Capital Adequacy Purposes, Amount | $ 259,869 | $ 262,201 |
Actual, Ratio (as a percent) | 0.135% | 0.132% |
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 | $ 502,735 | $ 492,725 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 253,402 | 259,740 |
Required For Capital Adequacy Purposes, Amount | $ 202,722 | $ 207,792 |
Actual, Ratio (as a percent) | 0.099 | 0.095 |
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent) | 0.050 | 0.050 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.040 | 0.040 |
Capital Requirements - Dividend
Capital Requirements - Dividends to Parent (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Cash dividend | ||
Subordinated Debt. | $ 39,387,000 | $ 39,350,000 |
HBC | ||
Cash dividend | ||
Cash dividend available | 58,084,000 | |
Dividends paid to parent company | $ 8,000,000 |
Commitments and Loss Continge_3
Commitments and Loss Contingencies - Financial Instruments with Off-Balance Sheet Risk (Details) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 12, 2022 plaintiff item | Dec. 11, 2022 item | Oct. 31, 2021 item plaintiff | |
Commitments and Contingencies | |||||
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 | 26 | |||
Commitments to extend credit, fixed rate | $ 83,805,000 | $ 88,913,000 | |||
Commitments to extend credit, variable rate | 1,004,893,000 | 1,045,706,000 | |||
Commitment to extend credit, total | $ 1,088,698,000 | $ 1,134,619,000 | |||
Percentage of unused commitments to outstanding gross loans | 33% | 34% | |||
Increase (decrease) to the allowance for credit losses on loans | $ 2,000 | ||||
Off-balance sheet, credit loss liability increase due to offsetting increase in loss factors in CECL model | 818,000 | $ 820,000 | |||
Unused lines of credit and commitments to make loans | |||||
Commitments and Contingencies | |||||
Commitments to extend credit, fixed rate | 78,955,000 | 87,348,000 | |||
Commitments to extend credit, variable rate | 996,210,000 | 1,036,847,000 | |||
Commitment to extend credit, total | 1,075,165,000 | 1,124,195,000 | |||
Standby letters of credit | |||||
Commitments and Contingencies | |||||
Commitments to extend credit, fixed rate | 4,850,000 | 1,565,000 | |||
Commitments to extend credit, variable rate | 8,683,000 | 8,859,000 | |||
Commitment to extend credit, total | $ 13,533,000 | $ 10,424,000 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Non-interest Income In-scope of Topic 606 | $ 1,743 | $ 612 |
Non-interest Income Out-of-scope of Topic 606 | 1,023 | 1,848 |
Total noninterest income | $ 2,766 | $ 2,460 |
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 | ||
Disaggregation of Revenue [Line Items] | ||
Non-interest Income In-scope of Topic 606 | $ 1,743 | $ 612 |
Noninterest Expense (Details)
Noninterest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Noninterest Expense | ||
Salaries and employee benefits | $ 14,809 | $ 13,821 |
Occupancy and equipment | 2,400 | 2,437 |
Insurance expense | 1,520 | 1,043 |
Professional fees | 1,399 | 1,080 |
Amortization of intangible assets | 602 | 659 |
Data processing | 774 | 651 |
Other | 3,897 | 3,561 |
Total noninterest expense | $ 25,401 | $ 23,252 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Leases | ||
Lessee, Operating Lease, Option to renew | true | |
Operating Lease Cost (Cost resulting from lease payments) | $ 1,701 | $ 1,620 |
Operating Lease - Operating Cash Flows (Fixed Payments) | 1,645 | 1,210 |
Operating Lease - ROU assets | $ 32,123 | $ 33,669 |
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 | $ 32,123 | $ 33,669 |
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 5 months 8 days | 7 years 2 months 8 days |
Weighted Average Discount Rate - Operating Leases | 4.54% | 4.49% |
Leases - Maturity Analysis (Det
Leases - Maturity Analysis (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Mar. 31, 2022 |
Operating Lease Payments Due | ||
2023 remaining | $ 4,750 | |
2024 | 6,063 | |
2025 | 5,523 | |
2026 | 4,974 | |
2027 | 4,804 | |
Thereafter | 11,189 | |
Total undiscounted cash flows | 37,303 | |
Discount on cash flows | (5,180) | |
Total lease liability | $ 32,123 | $ 33,669 |
Business Segment Information -
Business Segment Information - Business Segments (Details) | 3 Months Ended |
Mar. 31, 2023 segment | |
Business Segment Information | |
Number of business segments | 2 |
Focus | |
Business Segment Information | |
Number of business segments | 2 |
Business Segment Information _2
Business Segment Information - Operating Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Operating Income | |||
Interest income | $ 56,274 | $ 39,906 | |
Total interest expense | 7,016 | 1,685 | |
Net interest income | 49,258 | 38,221 | |
Provision for (recapture of) credit losses on loans | 32 | (567) | |
Net interest income after provision | 49,226 | 38,788 | |
Noninterest income | 2,766 | 2,460 | |
Noninterest expense | 25,401 | 23,252 | |
Income before income taxes | 26,591 | 17,996 | |
Income tax expense | 7,674 | 5,130 | |
Net income | 18,917 | 12,866 | |
Total assets | 5,536,540 | 5,427,398 | $ 5,157,580 |
Loans, net of deferred fees | 3,261,915 | 3,024,064 | 3,298,550 |
Goodwill | 167,631 | 167,631 | 167,631 |
Banking | |||
Operating Income | |||
Interest income | 52,273 | 37,113 | |
Intersegment interest allocations | 705 | 237 | |
Total interest expense | 7,016 | 1,685 | |
Net interest income | 45,962 | 35,665 | |
Provision for (recapture of) credit losses on loans | 144 | (539) | |
Net interest income after provision | 45,818 | 36,204 | |
Noninterest income | 2,682 | 2,398 | |
Noninterest expense | 23,728 | 21,767 | |
Intersegment expense allocations | 174 | 114 | |
Income before income taxes | 24,946 | 16,949 | |
Income tax expense | 7,188 | 4,821 | |
Net income | 17,758 | 12,128 | |
Total assets | 5,453,352 | 5,352,709 | |
Loans, net of deferred fees | 3,192,491 | 2,962,823 | |
Goodwill | 154,587 | 154,587 | 154,587 |
Factoring | |||
Operating Income | |||
Interest income | 4,001 | 2,793 | |
Intersegment interest allocations | (705) | (237) | |
Net interest income | 3,296 | 2,556 | |
Provision for (recapture of) credit losses on loans | (112) | (28) | |
Net interest income after provision | 3,408 | 2,584 | |
Noninterest income | 84 | 62 | |
Noninterest expense | 1,673 | 1,485 | |
Intersegment expense allocations | (174) | (114) | |
Income before income taxes | 1,645 | 1,047 | |
Income tax expense | 486 | 309 | |
Net income | 1,159 | 738 | |
Total assets | 83,188 | 74,689 | |
Loans, net of deferred fees | 69,424 | 61,241 | |
Goodwill | $ 13,044 | $ 13,044 | $ 13,044 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | 3 Months Ended | ||
Apr. 27, 2023 | Mar. 31, 2023 | Mar. 31, 2022 | |
Subsequent Event [Line Items] | |||
Quarterly cash dividends declared to holders of common stock | $ 0.13 | $ 0.13 | |
Subsequent event | |||
Subsequent Event [Line Items] | |||
Quarterly cash dividends declared to holders of common stock | $ 0.13 |