Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2024 | Apr. 29, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
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 | 61,255,913 | |
Entity Central Index Key | 0001053352 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Assets | ||
Cash and due from banks | $ 32,543,000 | $ 41,592,000 |
Other investments and interest-bearing deposits in other financial institutions | 508,816,000 | 366,537,000 |
Total cash and cash equivalents | 541,359,000 | 408,129,000 |
Securities available-for-sale, at fair value | 404,474,000 | 442,636,000 |
Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $12 (fair value of $542,858 and $564,127, respectively) | 636,249,000 | 650,565,000 |
Loans held-for-sale - SBA, at lower of cost or fair value, including deferred costs | 1,946,000 | 2,205,000 |
Loans, net of deferred fees | 3,336,102,000 | 3,350,378,000 |
Allowance for credit losses on loans | (47,888,000) | (47,958,000) |
Loans, net | 3,288,214,000 | 3,302,420,000 |
Federal Home Loan Bank ("FHLB"), Federal Reserve Bank ("FRB") stock and other investments, at cost | 32,544,000 | 32,540,000 |
Company-owned life insurance | 80,007,000 | 79,489,000 |
Premises and equipment, net | 9,986,000 | 9,857,000 |
Goodwill | 167,631,000 | 167,631,000 |
Other intangible assets | 8,074,000 | 8,627,000 |
Accrued interest receivable and other assets | 85,590,000 | 89,996,000 |
Total assets | 5,256,074,000 | 5,194,095,000 |
Deposits: | ||
Demand, noninterest-bearing | 1,242,059,000 | 1,292,486,000 |
Demand, interest-bearing | 925,100,000 | 914,066,000 |
Savings and money market | 1,124,900,000 | 1,087,518,000 |
Time deposits - under $250 | 38,105,000 | 38,055,000 |
Time deposits - $250 and over | 200,739,000 | 192,228,000 |
Insured Cash Sweep ("ICS")/Certificates of Deposit Account Registry Service ("CDARS") - interest-bearing demand, money market and time deposits | 913,757,000 | 854,105,000 |
Total deposits | 4,444,660,000 | 4,378,458,000 |
Subordinated debt, net of issuance costs | 39,539,000 | 39,502,000 |
Accrued interest payable and other liabilities | 95,579,000 | 103,234,000 |
Total liabilities | 4,579,778,000 | 4,521,194,000 |
Shareholders' equity: | ||
Common stock, no par value; 100,000,000 shares authorized; 61,253,625 and 61,146,835 shares issued and outstanding, respectively | 507,578,000 | 506,539,000 |
Retained earnings | 181,306,000 | 179,092,000 |
Accumulated other comprehensive loss | (12,588,000) | (12,730,000) |
Total shareholders' equity | 676,296,000 | 672,901,000 |
Total liabilities and shareholders' equity | $ 5,256,074,000 | $ 5,194,095,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Securities held-to-maturity | ||
Allowance for credit loss current period | $ 12,000 | $ 12,000 |
Securities held-to-maturity | $ 542,858,000 | $ 564,127,000 |
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 | 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 | 61,253,625 | 61,146,835 |
Common stock, shares outstanding | 61,253,625 | 61,146,835 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Interest income: | ||
Loans, including fees | $ 44,600 | $ 44,112 |
Securities, taxable | 6,183 | 7,056 |
Securities, exempt from Federal tax | 226 | 247 |
Other investments, interest-bearing deposits in other financial institutions and Federal funds sold | 6,542 | 4,859 |
Total interest income | 57,551 | 56,274 |
Interest expense: | ||
Deposits | 16,920 | 5,901 |
Short-term borrowings | 578 | |
Subordinated debt | 538 | 537 |
Total interest expense | 17,458 | 7,016 |
Net interest income before provision for credit losses on loans | 40,093 | 49,258 |
Provision for credit losses on loans | 184 | 32 |
Net interest income after provision for credit losses on loans | 39,909 | 49,226 |
Noninterest income: | ||
Service charges and fees on deposit accounts | 877 | 1,743 |
Increase in cash surrender value of life insurance | 518 | 493 |
Gain on sales of SBA loans | 178 | 76 |
Servicing income | 90 | 131 |
Termination fees | 13 | 11 |
Other | 371 | 312 |
Total noninterest income | 2,047 | 2,766 |
Noninterest expense: | ||
Salaries and employee benefits | 15,509 | 14,809 |
Occupancy and equipment | 2,443 | 2,400 |
Professional fees | 1,327 | 1,399 |
Other | 8,257 | 6,793 |
Total noninterest expense | 27,536 | 25,401 |
Income before income taxes | 14,420 | 26,591 |
Income tax expense | 4,254 | 7,674 |
Net income | $ 10,166 | $ 18,917 |
Earnings per common share: | ||
Basic (in dollars per share) | $ 0.17 | $ 0.31 |
Diluted (in dollars per share) | $ 0.17 | $ 0.31 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 10,166 | $ 18,917 |
Other comprehensive income (loss): | ||
Change in net unrealized holding gains (losses) on available-for-sale securities and I/O strips | 248 | 3,631 |
Deferred income taxes | (72) | (1,054) |
Change in unrealized gains (losses) on securities and I/O strips, net of deferred income taxes | 176 | 2,577 |
Change in net pension and other benefit plan liability adjustment | (26) | (34) |
Deferred income taxes | (8) | (4) |
Change in pension and other benefit plan liability, net of deferred income taxes | (34) | (38) |
Other comprehensive income | 142 | 2,539 |
Total comprehensive income | $ 10,308 | $ 21,456 |
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, 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 | 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 | |||
Balance at Dec. 31, 2023 | $ 506,539 | 179,092 | (12,730) | 672,901 |
Balance (in shares) at Dec. 31, 2023 | 61,146,835 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Net income | 10,166 | 10,166 | ||
Other comprehensive income | 142 | 142 | ||
Issuance (forfeitures) of restricted stock awards, net (in shares) | 33,908 | |||
Amortization of restricted stock awards, net of forfeitures and taxes | $ 311 | 311 | ||
Cash dividend declared | (7,952) | (7,952) | ||
Restricted stock units ("RSUs") and performance-based restricted stock units ("PRSUs") expense, net of taxes | 198 | 198 | ||
Stock option expense, net of forfeitures and taxes | 145 | 145 | ||
Stock options exercised | $ 385 | 385 | ||
Stock options exercised (in shares) | 72,882 | |||
Balance at Mar. 31, 2024 | $ 507,578 | $ 181,306 | $ (12,588) | $ 676,296 |
Balance (in shares) at Mar. 31, 2024 | 61,253,625 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
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, 2024 | Mar. 31, 2023 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 10,166 | $ 18,917 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of premiums and accretion of discounts on securities | (936) | (1,258) |
Gain on sale of SBA loans | (178) | (76) |
Proceeds from sale of SBA loans originated for sale | 1,978 | 1,045 |
SBA loans originated for sale | (1,541) | (1,305) |
Provision for credit losses on loans | 184 | 32 |
Increase in cash surrender value of life insurance | (518) | (493) |
Depreciation and amortization | 300 | 272 |
Amortization of other intangible assets | 553 | 602 |
Stock option expense, net | 145 | 147 |
RSUs and PRSUs expense | 198 | |
Amortization of restricted stock awards, net | 311 | 382 |
Amortization of subordinated debt issuance costs | 37 | 37 |
Effect of changes in: | ||
Accrued interest receivable and other assets | 4,861 | (519) |
Accrued interest payable and other liabilities | (8,222) | 12,175 |
Net cash provided by operating activities | 7,338 | 29,958 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Maturities/paydowns/calls of securities available-for-sale | 39,596 | 3,014 |
Maturities/paydowns/calls of securities held-to-maturity | 14,072 | 16,485 |
Net change in loans | 14,022 | 36,364 |
Changes in FHLB stock and other investments | (4) | (4) |
Purchase of premises and equipment | (429) | (113) |
Net cash provided by investing activities | 67,257 | 55,746 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net change in deposits | 66,202 | 54,934 |
Net change in short-term borrowings | 300,000 | |
Exercise of stock options | 385 | 683 |
Payment of cash dividends | (7,952) | (7,916) |
Net cash provided by financing activities | 58,635 | 347,701 |
Net increase in cash and cash equivalents | 133,230 | 433,405 |
Cash and cash equivalents, beginning of period | 408,129 | 306,603 |
Cash and cash equivalents, end of period | 541,359 | 740,008 |
Supplemental disclosures of cash flow information: | ||
Interest paid | $ 16,350 | 5,657 |
Supplemental schedule of non-cash activity: | ||
Recording of right of use assets in exchange for lease obligations | $ 384 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2024 | |
Basis of Presentation | |
Basis of Presentation | HERITAGE COMMERCE CORP NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (Unaudited) 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, 2023. 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 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, 2024 are not necessarily indicative of the results expected for any subsequent period or for the entire year ending December 31, 2024. 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 Accounting Standards Update (“ASU”) No. 2023-07,“Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” ("ASU 2023-07) requires filers to disclose significant segment expenses, an amount and description for other segment items, the title and position of the entity’s chief operating decision maker ("CODM") and an explanation of how the CODM uses the reported measures of profit or loss to assess segment performance, and, on an interim basis, certain segment related disclosures that previously were required only on an annual basis. ASU 2023-07 also clarifies that entities with a single reportable segment are subject to both new and existing segment reporting requirements and that an entity is permitted to disclose multiple measures of segment profit or loss, provided that certain criteria are met. ASU 2023-07 is effective for the Company for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Effective January 1, 2024, Accounting Guidance Issued But Not Yet Adopted In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2024 | |
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. Unvested restricted stock units are not considered participating securities and as a result are not considered outstanding under the two class method of computing basic earnings per common share. There were 1,904,786 weighted average stock options outstanding for the three months ended March 31, 2024 considered to be antidilutive and excluded from the computation of diluted earnings per share. There were 1,314,428 weighted average stock options outstanding for the three months ended March 31, 2023 considered to be antidilutive and excluded from the computation of diluted earnings per share. There were 65,805 weighted average RSUs outstanding for the three months ended March 31, 2024 considered to be antidilutive and excluded from the computation of diluted earnings per shares. There were no weighted average RSUs outstanding for the three months ended March 31, 2023 considered to be antidilutive and excluded from the computation of diluted earnings per shares. A reconciliation of these factors used in computing basic and diluted earnings per common share is as follows: Three Months Ended March 31, 2024 2023 (Dollars in thousands, except per share amounts) Net income $ 10,166 $ 18,917 Weighted average common shares outstanding for basic earnings per common share 61,186,623 60,908,221 Dilutive potential common shares 283,929 359,851 Shares used in computing diluted earnings per common share $ 61,470,552 $ 61,268,072 Basic earnings per share $ 0.17 $ 0.31 Diluted earnings per share $ 0.17 $ 0.31 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) (AOCI) | 3 Months Ended |
Mar. 31, 2024 | |
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, 2024 and 2023 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, 2024, net of taxes $ (7,029) $ (5,701) $ (12,730) Other comprehensive income (loss) before reclassification, net of taxes 176 (16) 160 Amounts reclassified from other comprehensive income (loss), net of taxes — (18) (18) Net current period other comprehensive income (loss), net of taxes 176 (34) 142 Ending balance March 31, 2024, net of taxes $ (6,853) $ (5,735) $ (12,588) 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) (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 2024 2023 Net Income is Presented (Dollars in thousands) Amortization of defined benefit pension plan items (1) Prior transition obligation and actuarial losses (2) $ 52 $ 47 Prior service cost and actuarial losses (3) (26) (13) 26 34 Other noninterest expense (8) (10) Income tax benefit 18 24 Net of tax Total reclassification from AOCI for the period $ 18 $ 24 (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, 2024 | |
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, 2024 Cost Gains (Losses) Losses Value (Dollars in thousands) Securities available-for-sale: U.S. Treasury $ 352,237 $ — $ (4,784) $ — $ 347,453 Agency mortgage-backed securities 61,916 — (4,895) — 57,021 Total $ 414,153 $ — $ (9,679) $ — $ 404,474 Gross Gross Estimated Allowance Amortized Unrecognized Unrecognized Fair for Credit March 31, 2024 Cost Gains (Losses) Value Losses (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 604,458 $ 83 $ (92,415) $ 512,126 $ — Municipals - exempt from Federal tax 31,803 1 (1,072) 30,732 (12) Total $ 636,261 $ 84 $ (93,487) $ 542,858 $ (12) Gross Gross Allowance Estimated Amortized Unrealized Unrealized for Credit Fair December 31, 2023 Cost Gains (Losses) Losses Value (Dollars in thousands) Securities available-for-sale: U.S. Treasury $ 387,990 $ — $ (5,621) $ — $ 382,369 Agency mortgage-backed securities 64,580 — (4,313) — 60,267 Total $ 452,570 $ — $ (9,934) $ — $ 442,636 Gross Gross Estimated Allowance Amortized Unrecognized Unrecognized Fair for Credit December 31, 2023 Cost Gains (Losses) Value Losses (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 618,374 $ 282 $ (86,011) $ 532,645 $ — Municipals - exempt from Federal tax 32,203 3 (724) 31,482 (12) Total $ 650,577 $ 285 $ (86,735) $ 564,127 $ (12) Securities with unrealized/unrecognized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized/unrecognized 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, 2024 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: U.S. Treasury $ 4,907 $ (65) $ 342,546 $ (4,719) $ 347,453 $ (4,784) Agency mortgage-backed securities — — 57,021 (4,895) 57,021 (4,895) Total $ 4,907 $ (65) $ 399,567 $ (9,614) $ 404,474 $ (9,679) Securities held-to-maturity: Agency mortgage-backed securities $ — $ — $ 500,329 $ (92,415) $ 500,329 $ (92,415) Municipals — exempt from Federal tax 9,246 (147) 20,226 (925) 29,472 (1,072) Total $ 9,246 $ (147) $ 520,555 $ (93,340) $ 529,801 $ (93,487) Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2023 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: U.S. Treasury $ 4,926 $ (40) $ 377,443 $ (5,581) $ 382,369 $ (5,621) Agency mortgage-backed securities — — 60,267 (4,313) 60,267 (4,313) Total $ 4,926 $ (40) $ 437,710 $ (9,894) $ 442,636 $ (9,934) Securities held-to-maturity: Agency mortgage-backed securities $ — $ — $ 520,615 $ (86,011) $ 520,615 $ (86,011) Municipals — exempt from Federal tax 9,790 (176) 13,151 (548) 22,941 (724) Total $ 9,790 $ (176) $ 533,766 $ (86,559) $ 543,556 $ (86,735) The Company conducts a regular assessment of its investment securities to determine whether securities are experiencing credit losses. Factors for consideration include the nature of the securities, credit ratings or financial condition of the issuer, the extent of the unrealized loss, expected cash flows, market conditions and the Company’s ability to hold the securities through the anticipated recovery period. No credit losses are expected in the Company investment securities. 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, 2024, the Company held 429 securities (157 available-for-sale and 272 held-to-maturity), of which 419 had fair value below amortized cost. The unrealized/unrecognized losses were due to higher interest rates at period end compared to when the securities were purchased. The issuers are of high credit quality and all principal amounts are expected to be paid when securities mature. The fair value is expected to recover as the securities approach their maturity date and/or market rates decline. The Company does not believe that it is more likely than not that the Company will be required to sell a security in an unrealized loss position prior to recovery in value. The amortized cost and estimated fair values of securities as of March 31, 2024 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 three months or less $ 110,872 $ 110,511 Due after three months through one year 100,763 99,531 Due after one through five years 140,602 137,411 Agency mortgage-backed securities 61,916 57,021 Total $ 414,153 $ 404,474 Held-to-maturity Amortized Estimated Cost (1) Fair Value (Dollars in thousands) Due after three months through one year $ 665 $ 661 Due after one through five years 8,362 8,140 Due after five through ten years 22,776 21,931 Agency mortgage-backed securities 604,458 512,126 Total $ 636,261 $ 542,858 (1) Gross of the allowance for credit losses of ( $12,000 ) at March 31, 2024. Securities with amortized cost of $991,078,000 and $1,041,608,000 as of March 31, 2024 and December 31, 2023, respectively, were pledged to secure public deposits and for other purposes as required or permitted by law or contract. The decrease in pledged securities at March 31, 2024 was due to securities maturities. The table below presents a roll-forward by major security type for the three months ended March 31, 2024 of the allowance for credit losses on debt securities held-to-maturity at period end: Municipals (Dollars in thousands) Beginning balance January 1, 2024 $ 12 Provision for credit losses — Ending balance March 31, 2024 $ 12 The bond ratings for the Company’s municipal investment securities at March 31, 2024 were consistent with the ratings at December 31, 2023. |
Loans and Allowance for Credit
Loans and Allowance for Credit Losses on Loans | 3 Months Ended |
Mar. 31, 2024 | |
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 In accordance with Accounting Standards Codification (“ASC”) 326, the Company is required to measure the allowance for credit losses of financial assets with similar risk characteristics on a collective or pooled basis. In considering the segmentation of financial assets measured at amortized cost into pools, the Company considered various risk characteristics in its analysis. Generally, the segmentation utilized represents the level at which the Company develops and documents its systematic methodology to determine the allowance for credit losses for the financial assets held at amortized cost, specifically the Company's loan portfolio and debt securities classified as held-to-maturity. In accordance with ASC 326, the Company elected to not measure an allowance for credit losses on accrued interest. As such accrued interest is written off in a timely manner when deemed uncollectible. Any such write-off of accrued interest will reverse previously recognized interest income. In addition, the Company elected to not include accrued interest within presentation and disclosures of the carrying amount of financial assets held at amortized cost. This election is applicable to the various disclosures included within the Company's financial statements. Accrued interest related to financial assets held at amortized cost is included within accrued interest receivable and other assets within the Company's Consolidated Statements of Condition and totaled $16,246,000 at March 31, 2024 and $14,959,000 at December 31, 2023. 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 $55,698,000 of Bay View Funding factored receivables at March 31, 2024, compared to $ $57,458,000 at December 31, 2023. 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 occupied CRE. Owner occupied CRE loans are secured by commercial properties that are at least 50% occupied by the borrower or borrower affiliate. Although CRE loans often incorporate a personal guarantee, the commercial property collateral is typically sufficient and reliance on personal guarantees is minimal. 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 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, 2024 2023 (Dollars in thousands) Loans held-for-investment: Commercial $ 452,231 $ 463,778 Real estate: CRE - owner occupied 585,031 583,253 CRE - non-owner occupied 1,271,184 1,256,590 Land and construction 129,712 140,513 Home equity 122,794 119,125 Multifamily 269,263 269,734 Residential mortgages 490,035 496,961 Consumer and other 16,439 20,919 Loans 3,336,689 3,350,873 Deferred loan fees, net (587) (495) Loans, net of deferred fees 3,336,102 3,350,378 Allowance for credit losses on loans (47,888) (47,958) Loans, net $ 3,288,214 $ 3,302,420 The allowance for credit losses on loans was calculated by pooling loans of similar credit risk characteristics and credit monitoring procedures. Changes in the allowance for credit losses on loans were as follows for the periods indicated: Three Months Ended March 31, 2024 CRE CRE Owner Non-owner Land & Home Multi- Residential Consumer Commercial Occupied Occupied Construction Equity Family Mortgages and Other Total (Dollars in thousands) Beginning of period balance $ 5,853 $ 5,121 $ 25,323 $ 2,352 $ 644 $ 5,053 $ 3,425 $ 187 $ 47,958 Charge-offs (358) — — — — — — — (358) Recoveries 82 4 — — 18 — — — 104 Net (charge-offs) recoveries (276) 4 — — 18 — — — (254) Provision for (recapture of) credit losses on loans (548) 16 1,086 (470) 91 (744) 774 (21) 184 End of period balance $ 5,029 $ 5,141 $ 26,409 $ 1,882 $ 753 $ 4,309 $ 4,199 $ 166 $ 47,888 Three Months Ended March 31, 2023 CRE CRE Owner Non-owner Land & Home Multi- Residential Consumer Commercial Occupied Occupied Construction Equity Family Mortgages 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 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, 2024 Nonaccrual Nonaccrual 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 $ 924 $ 203 $ 1,443 $ 2,570 Real estate: CRE - Owner Occupied — — — — CRE - Non-Owner Occupied — — — — Land and construction 4,673 — — 4,673 Home equity 120 — — 120 Residential mortgages — — 508 508 Total $ 5,717 $ 203 $ 1,951 $ 7,871 December 31, 2023 Nonaccrual Nonaccrual 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 $ 946 $ 290 $ 889 $ 2,125 Real estate: CRE - Owner Occupied — — — — CRE - Non-Owner Occupied — — — — Land and construction 4,661 — — 4,661 Home equity 142 — — 142 Residential mortgages 779 — — 779 Total $ 6,528 $ 290 $ 889 $ 7,707 The following tables present the aging of past due loans by class for the periods indicated: March 31, 2024 30 - 59 60 - 89 90 Days or Days Days Greater Total Past Due Past Due Past Due Past Due Current Total (Dollars in thousands) Commercial $ 3,522 $ 1,180 $ 1,955 $ 6,657 $ 445,574 $ 452,231 Real estate: CRE - Owner Occupied — — — — 585,031 585,031 CRE - Non-Owner Occupied 5,662 — — 5,662 1,265,522 1,271,184 Land and construction 3,550 — 4,672 8,222 121,490 129,712 Home equity 441 — 441 122,353 122,794 Multifamily — — — — 269,263 269,263 Residential mortgages — — 508 508 489,527 490,035 Consumer and other — — — — 16,439 16,439 Total $ 13,175 $ 1,180 $ 7,135 $ 21,490 $ 3,315,199 $ 3,336,689 December 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 $ 6,688 $ 2,030 $ 1,264 $ 9,982 $ 453,796 $ 463,778 Real estate: CRE - Owner Occupied — — — — 583,253 583,253 CRE - Non-Owner Occupied 1,289 — — 1,289 1,255,301 1,256,590 Land and construction 955 — 3,706 4,661 135,852 140,513 Home equity — — 142 142 118,983 119,125 Multifamily — — — — 269,734 269,734 Residential mortgages 3,794 510 779 5,083 491,878 496,961 Consumer and other — — — — 20,919 20,919 Total $ 12,726 $ 2,540 $ 5,891 $ 21,157 $ 3,329,716 $ 3,350,873 The following table presents the past due loans on nonaccrual and current loans on nonaccrual for the periods indicated: March 31, December 31, 2024 2023 (Dollars in thousands) Past due nonaccrual loans $ 5,184 $ 6,100 Current nonaccrual loans 736 718 Total nonaccrual loans $ 5,920 $ 6,818 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 resumes 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 and their guarantors could be adversely impacted by a downturn in these sectors of the economy which could reduce the demand for loans and adversely impact the borrowers’ ability to repay their loans. The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, and other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. Nonclassified loans generally include those loans that are expected to be repaid in accordance with their contractual loan terms. Loans categorized as special mention have potential weaknesses that may, if not checked or corrected, weaken the credit or inadequately protect the Company’s position at some future date. These loans pose elevated risk, but their weaknesses do not yet justify a substandard classification. Classified loans are those loans that are assigned a substandard, substandard-nonaccrual, or doubtful risk rating using the following definitions: Special Mention. 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, 2024 and December 31, 2023. 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, 2024 and December 31, 2023. 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, 2024 Amortized 3/31/2024 2023 2022 2021 2020 Prior Periods Cost Basis Total (Dollars in thousands) Commercial: Pass $ 74,006 $ 36,626 $ 23,777 $ 18,808 $ 13,368 $ 30,291 $ 239,157 $ 436,033 Special Mention 2,020 82 1,062 38 — 3,272 2,471 8,945 Substandard 4 — 1,478 — 97 4,490 57 6,126 Substandard-Nonaccrual — — — 343 — 784 — 1,127 Total 76,030 36,708 26,317 19,189 13,465 38,837 241,685 452,231 CRE - Owner Occupied: Pass 12,117 32,194 84,349 109,741 64,592 262,613 10,107 575,713 Special Mention — — 249 3,219 457 1,251 — 5,176 Substandard — — — — 3,042 1,100 — 4,142 Substandard-Nonaccrual — — — — — — — — Total 12,117 32,194 84,598 112,960 68,091 264,964 10,107 585,031 CRE - Non-Owner Occupied: Pass 21,427 226,112 240,250 260,618 27,717 465,826 5,116 1,247,066 Special Mention — — — 708 — 10,958 — 11,666 Substandard — — — 4,564 — 7,562 326 12,452 Substandard-Nonaccrual — — — — — — — — Total 21,427 226,112 240,250 265,890 27,717 484,346 5,442 1,271,184 Land and construction: Pass 9,596 38,701 39,325 23,083 9,246 1,844 — 121,795 Special Mention — — — — — 2,163 — 2,163 Substandard — — — — — 1,081 — 1,081 Substandard-Nonaccrual — — — 3,706 967 — — 4,673 Total 9,596 38,701 39,325 26,789 10,213 5,088 — 129,712 Home equity: Pass — — — — — 2,055 114,967 117,022 Special Mention — — — — — — 2,256 2,256 Substandard — — — — — — 3,396 3,396 Substandard-Nonaccrual — — — — — 120 — 120 Total — — — — — 2,175 120,619 122,794 Multifamily: Pass 4,523 47,031 40,893 54,977 5,358 116,026 455 269,263 Special Mention — — — — — — — — Substandard — — — — — — — — Substandard-Nonaccrual — — — — — — — — Total 4,523 47,031 40,893 54,977 5,358 116,026 455 269,263 Residential mortgage: Pass — 1,678 178,340 271,180 1,030 34,206 — 486,434 Special Mention — — 1,326 — — — — 1,326 Substandard — — 764 — — 1,511 — 2,275 Substandard-Nonaccrual — — — — — — — — Total — 1,678 180,430 271,180 1,030 35,717 — 490,035 Consumer and other: Pass — 1,566 1,373 58 — 2,060 10,588 15,645 Special Mention — 705 — — — 89 — 794 Substandard — — — — — — — — Substandard-Nonaccrual — — — — — — — — Total — 2,271 1,373 58 — 2,149 10,588 16,439 Total loans $ 123,693 $ 384,695 $ 613,186 $ 751,043 $ 125,874 $ 949,302 $ 388,896 $ 3,336,689 Risk Grades: Pass $ 121,669 $ 383,908 $ 608,307 $ 738,465 $ 121,311 $ 914,921 $ 380,390 $ 3,268,971 Special Mention 2,020 787 2,637 3,965 457 17,733 4,727 32,326 Substandard 4 — 2,242 4,564 3,139 15,744 3,779 29,472 Substandard-Nonaccrual — — — 4,049 967 904 — 5,920 Grand Total $ 123,693 $ 384,695 $ 613,186 $ 751,043 $ 125,874 $ 949,302 $ 388,896 $ 3,336,689 Revolving Loans Term Loans Amortized Cost Basis by Originated Period as of December 31, 2023 Amortized 2023 2022 2021 2020 2019 Prior Periods Cost Basis Total (Dollars in thousands) Commercial: Pass $ 99,387 $ 25,250 $ 19,732 $ 14,929 $ 11,893 $ 22,134 $ 258,461 $ 451,786 Special Mention 2,107 1,092 41 — 133 1,134 467 4,974 Substandard 4 1,516 — 100 185 3,835 142 5,782 Substandard-Nonaccrual — — 349 — 116 771 — 1,236 Total 101,498 27,858 20,122 15,029 12,327 27,874 259,070 463,778 CRE - Owner Occupied: Pass 32,993 86,688 110,613 68,184 52,885 214,729 10,302 576,394 Special Mention — 250 3,241 462 — 1,802 — 5,755 Substandard — — — — 1,100 4 — 1,104 Substandard-Nonaccrual — — — — — — — — Total 32,993 86,938 113,854 68,646 53,985 216,535 10,302 583,253 CRE - Non-Owner Occupied: Pass 225,505 243,080 267,870 28,315 92,648 370,552 3,199 1,231,169 Special Mention — — — — 7,493 10,040 — 17,533 Substandard — — — — — 7,614 274 7,888 Substandard-Nonaccrual — — — — — — — — Total 225,505 243,080 267,870 28,315 100,141 388,206 3,473 1,256,590 Land and construction: Pass 40,142 52,862 27,419 9,273 1,864 — — 131,560 Special Mention 2,163 — — — — — — 2,163 Substandard 2,129 — — — — — — 2,129 Substandard-Nonaccrual — — 3,706 955 — — — 4,661 Total 44,434 52,862 31,125 10,228 1,864 — — 140,513 Home equity: Pass — — — — — 1,463 111,250 112,713 Special Mention — — — — — — 2,110 2,110 Substandard — — — — — — 4,160 4,160 Substandard-Nonaccrual — — — — — — 142 142 Total — — — — — 1,463 117,662 119,125 Multifamily: Pass 47,089 41,112 55,557 5,394 42,129 75,890 355 267,526 Special Mention — — — — — — — — Substandard — — — — — 2,208 — 2,208 Substandard-Nonaccrual — — — — — — — — Total 47,089 41,112 55,557 5,394 42,129 78,098 355 269,734 Residential mortgage: Pass 1,684 187,417 268,617 1,037 6,861 28,892 — 494,508 Special Mention — — — — — — — — Substandard — 973 — — — 701 — 1,674 Substandard-Nonaccrual — 779 — — — — — 779 Total 1,684 189,169 268,617 1,037 6,861 29,593 — 496,961 Consumer and other: Pass 2,332 1,376 3 — — 2,089 14,961 20,761 Special Mention — — 62 — — 96 — 158 Substandard — — — — — — — — Substandard-Nonaccrual — — — — — — — — Total 2,332 1,376 65 — — 2,185 14,961 20,919 Total loans $ 455,535 $ 642,395 $ 757,210 $ 128,649 $ 217,307 $ 743,954 $ 405,823 $ 3,350,873 Risk Grades: Pass $ 449,132 $ 637,785 $ 749,811 $ 127,132 $ 208,280 $ 715,749 $ 398,528 $ 3,286,417 Special Mention 4,270 1,342 3,344 462 7,626 13,072 2,577 32,693 Substandard 2,133 2,489 — 100 1,285 14,362 4,576 24,945 Substandard-Nonaccrual — 779 4,055 955 116 771 142 6,818 Grand Total $ 455,535 $ 642,395 $ 757,210 $ 128,649 $ 217,307 $ 743,954 $ 405,823 $ 3,350,873 The following tables present the gross charge-offs by class of loans and year of origination for the periods indicated: Gross Charge-offs by Originated Period for the Three Months Ended March 31, 2024 Prior Revolving 3/31/2024 2023 2022 2021 2020 Periods Loans Total (Dollars in thousands) Commercial $ — $ — $ — $ — $ — $ 358 $ — $ 358 Real estate: CRE - Owner Occupied — — — — — — — — CRE - Non-Owner Occupied — — — — — — — — Land and construction — — — — — — — — Home equity — — — — — — — — Multifamily — — — — — — — — Residential mortgages — — — — — — — — Consumer and other — — — — — — — — Total $ — $ — $ — $ — $ — $ 358 $ — $ 358 Gross Charge-offs by Originated Period for the Three Months Ended March 31, 2023 Prior Revolving 03/31/2023 2022 2021 2020 2019 Periods 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 at March 31, 2024 and December 31, 2023 was $203,000 and $290,000, respectively, and were secured by business assets. When management determines that foreclosures are probable, expected credit losses for collateral-dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. For loans which foreclosure is not probable, but for which repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty, management has elected the practical expedient under ASC 326 to estimate expected credit losses based on the fair value of collateral, adjusted for selling costs as appropriate. The class of loan represents the primary collateral type associated with the loan. Significant quarter over quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value. 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 tables present the amortized cost basis of loans that were both experiencing financial difficulty and modified through the periods indicated, 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. Three Months Ended March 31, 2024 Combination |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | 6) Goodwill and Other Intangible Assets Goodwill At March 31, 2024, the carrying value of goodwill was $167,631,000, which included $13,044,000 of goodwill related to the acquisition of Bay View Funding, $32,619,000 from the acquisition of Focus Business Bank, $13,819,000 from the acquisition of Tri-Valley Bank, $24,271,000 from the acquisition of United American Bank and $83,878,000 from its acquisition of Presidio Bank. ASC 350-20 outlines the methodology used to determine if goodwill has been impaired and to measure any loss resulting from an impairment. 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. 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’s 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's policy is to test goodwill for impairment annually as of November 30, or on an interim basis if an event triggering impairment assessment may have occurred. The Company completed its annual goodwill impairment analysis as of November 30, 2023 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. The qualitative assessment indicated that it was more likely than not that the fair value of the reporting units exceeded the carry value. No events or circumstances since the November 30, 2023 annual impairment test were noted that would indicate it was more likely than not a goodwill impairment exists. The following table summarizes the carrying amount of goodwill by segment for the periods indicated: March 31, December 31, 2024 2023 (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, 2024 Gross Carrying Accumulated Amount Amortization Total (Dollars in thousands) Core deposit intangibles $ 25,023 (17,152) $ 7,871 Customer relationship and brokered relationship intangibles 1,900 (1,788) 112 Below market leases 110 (19) 91 Total $ 27,033 $ (18,959) $ 8,074 December 31, 2023 Gross Carrying Accumulated Amount Amortization Total (Dollars in thousands) Core deposit intangibles $ 25,023 (16,646) $ 8,377 Customer relationship and brokered relationship intangibles 1,900 (1,741) 159 Below market leases 110 (19) 91 Total $ 27,033 $ (18,406) $ 8,627 As of March 31, 2024, 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) 2024 remaining $ 1,517 $ 112 $ 5 $ 1,634 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 — 14 624 $ 7,871 $ 112 $ 91 $ 8,074 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, 2024 and December 31, 2023. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
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 $27,513,000 and $29,765,000, at March 31, 2024 and December 31, 2023, 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, 2024 and December 31, 2023 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, 2024 2023 (Dollars in thousands) Low income housing investments $ 2,615 $ 2,794 Future commitments $ 494 $ 494 The Company expects $14,000 of the future commitments to be paid in 2024, and $480,000 in 2025 through 2027. For tax purposes, the Company had low income housing tax credits of $141,000 and $180,000 for the three months ended March 31, 2024 and 2023, respectively, and low income housing investment expense of $148,000 and $186,000, 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, 2024 | |
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, 2024 2023 (Dollars in thousands) Components of net periodic benefit cost: Service cost $ 50 $ 48 Interest cost 318 324 Amortization of net actuarial loss 27 13 Net periodic benefit cost $ 395 $ 385 Amount recognized in other comprehensive income $ 18 $ 8 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, 2024 2023 (Dollars in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 6,951 $ 7,060 Interest cost 86 365 Actuarial loss — (474) Projected benefit obligation at end of period $ 7,037 $ 6,951 March 31, December 31, 2024 2023 (Dollars in thousands) Net actuarial loss $ 2,183 $ 2,108 Prior transition obligation 678 701 Accumulated other comprehensive loss $ 2,861 $ 2,809 Three Months Ended March 31, 2024 2023 (Dollars in thousands) Amortization of prior transition obligation and actuarial losses $ (52) $ (47) Interest cost 86 91 Net periodic benefit cost $ 34 $ 44 Amount recognized in other comprehensive income $ (52) $ (48) |
Fair Value
Fair Value | 3 Months Ended |
Mar. 31, 2024 | |
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, 2024 Available-for-sale securities: U.S. Treasury $ 347,453 $ 347,453 $ — $ — Agency mortgage-backed securities 57,021 — 57,021 — I/O strip receivables 110 — 110 — Assets at December 31, 2023 Available-for-sale securities: U.S. Treasury $ 382,369 $ 382,369 $ — $ — Agency mortgage-backed securities 60,267 — 60,267 — I/O strip receivables 117 — 117 — 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, 2024 or December 31, 2023. 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, 2024 and December 31, 2023, there were no foreclosed assets on the balance sheet. The carrying amounts and estimated fair values of financial instruments at March 31, 2024 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 $ 541,359 $ 541,359 $ — $ — $ 541,359 Securities available-for-sale 404,474 347,453 57,021 — 404,474 Securities held-to-maturity 636,249 — 542,858 — 542,858 Loans (including loans held-for-sale) 3,338,048 (1) — 1,946 3,142,873 3,144,819 FHLB stock, FRB stock, and other investments 32,544 — — — N/A Accrued interest receivable 16,246 1,592 2,482 12,172 16,246 I/O strips receivables 110 — 110 — 110 Liabilities: Time deposits $ 488,112 $ — $ 491,943 $ — $ 491,943 Other deposits 3,956,548 — 3,956,548 — 3,956,548 Subordinated debt 39,539 — 32,339 — 32,339 Accrued interest payable 5,296 — 5,296 — 5,296 (1) Before allowance for credit losses on loans of $47,888,000. The carrying amounts and estimated fair values of the Company’s financial instruments at December 31, 2023: 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 $ 408,129 $ 408,129 $ — $ — $ 408,129 Securities available-for-sale 442,636 382,369 60,267 — 442,636 Securities held-to-maturity 650,565 — 564,127 — 564,127 Loans (including loans held-for-sale) 3,352,583 (1) — 2,205 3,172,512 3,174,717 FHLB stock, FRB stock, and other investments 32,540 — — — N/A Accrued interest receivable 14,959 1,255 1,764 11,940 14,959 I/O strips receivables 117 — 117 — 117 Liabilities: Time deposits $ 469,472 $ — $ 471,693 $ — $ 471,693 Other deposits 3,908,986 — 3,908,986 — 3,908,986 Subordinated debt 39,502 — 31,902 — 31,902 Accrued interest payable 4,688 — 4,698 — 4,698 (1) Before allowance for credit losses on loans of $47,958,000. |
Equity Plan
Equity Plan | 3 Months Ended |
Mar. 31, 2024 | |
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 2013 Plan to increase the number of shares available from 3,000,000 to 5,000,000 shares. The 2013 Plan was terminated on May 25, 2023. The shareholders approved the 2023 Equity Incentive Plan (the “2023 Plan”) on May 25, 2023, which reserved for issuance 600,000 shares, plus the number of shares available for issuance under the 2013 Plan that had not been made subject to outstanding awards as of the effective date of the 2023 Plan. These plans are collectively referred to as “Equity Plans.” The Equity Plans provide for the grant of incentive and nonqualified stock options, restricted stock, restricted stock units (“RSUs”) and performance-based restricted stock units (“PRSUs”). 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. There were 946,954 shares available for the issuance of equity awards under the 2023 Plan as of March 31, 2024. Each RSU will vest ratably over three years. For the three months ended March 31, 2024, the Company granted 239,531 of RSUs. The Company’s Executive Officer Cash Incentive Plan is comprised of formula-based financial measure. The executive officers that participate in the plan have 50% of their award value are PRSUs contingent on relative return on average tangible common equity (“ROATCE”) performance compared to a peer group at the end of a three year performance period. PRSUs are subject to cliff vesting after a Restricted stock is subject to time vesting. Restricted stock granted to the Board of Directors vest in one year. For the three months ended March 31, 2024, the Company granted 57,123 shares of restricted stock. 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, 2024 2,637,356 $ 10.40 Exercised (72,882) $ 5.29 Forfeited or expired (112,482) $ 9.85 Outstanding at March 31, 2024 2,451,992 $ 10.58 5.61 $ 1,086,661 Vested or expected to vest 2,304,872 5.61 $ 1,021,461 Exercisable at March 31, 2024 1,869,398 4.71 $ 748,468 Information related to the Equity Plans for the periods indicated: March 31, 2024 2023 Intrinsic value of options exercised $ 268,715 $ 466,308 Cash received from option exercise $ 385,219 $ 682,825 Tax (expense) benefit realized from option exercises $ (22,452) $ 3,968 As of March 31, 2024, there was $1,014,000 of total unrecognized compensation cost related to unvested stock options granted under the Equity Plans. That cost is expected to be recognized over a weighted-average period of approximately 2.48 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, 2024 185,413 $ 10.87 Granted 57,123 $ 8.49 Forfeited or expired (23,215) $ 11.36 Nonvested shares at March 31, 2024 219,321 $ 9.34 As of March 31, 2024, there was $1,056,000 of total unrecognized compensation cost related to unvested restricted stock awards granted under the Equity Plans. The cost is expected to be recognized over a weighted-average period of approximately 1.09 years. RSU activity under the Equity Plans is as follows: Weighted Average Grant Number Date Fair Total RSUs of Shares Value Nonvested shares at January 1, 2024 119,362 $ 7.41 Granted 239,531 $ 8.49 Forfeited or expired (18,355) $ 7.41 Nonvested shares at March 31, 2024 340,538 $ 8.17 As of March 31, 2024, there were $2,508,000 of total unrecognized compensation cost related to unvested RSUs granted under the Equity Plans. The cost is expected to be recognized over a weighted average period of PRSU activity under the Equity Plans is as follows: Weighted Average Grant Number Date Fair Total PRSUs of Shares Value Nonvested shares at January 1, 2024 119,358 $ 7.41 Granted 149,923 $ 8.49 Forfeited or expired (18,355) $ 7.41 Nonvested shares at March 31, 2024 250,926 $ 8.06 As of March 31, 2024, there were $1,764,000 of total unrecognized compensation cost related to unvested PRSUs granted under the Equity Plans. The cost is expected to be recognized over a weighted average period of 2.60 years. |
Borrowing Arrangements
Borrowing Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Borrowing Arrangements | |
Borrowing Arrangements | 11) Borrowing Arrangements Federal Home Loan Bank Borrowings, Federal Reserve Bank Borrowings, and Available Lines of Credit HBC has off-balance sheet liquidity in the form of federal funds purchase arrangements with correspondent banks, and lines of credit from the FHLB and FRB. 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 can also borrow from the FRB discount window. The following table shows the collateral value of loans and securities pledged for the lines of credit (if collateralized), total available lines of credit, the amounts outstanding, and the remaining available for the periods indicated: March 31, 2024 Collateral Total Remaining Value Available Outstanding Available (Dollars in thousands) FHLB collateralized borrowing capacity $ 1,569,070 $ 1,097,518 $ — $ 1,097,518 FRB discount window collateralized line of credit 1,639,038 1,245,362 — 1,245,362 Federal funds purchase arrangements N/A 90,000 — 90,000 Holding company line of credit N/A 20,000 — 20,000 $ 3,208,108 $ 2,452,880 $ — $ 2,452,880 December 31, 2023 Collateral Total Remaining Value Available Outstanding Available (Dollars in thousands) FHLB collateralized borrowing capacity $ 1,600,371 $ 1,100,931 $ — $ 1,100,931 FRB discount window collateralized line of credit 1,658,642 1,235,573 — 1,235,573 Federal funds purchase arrangements N/A 90,000 — 90,000 Holding company line of credit N/A 20,000 — 20,000 Total $ 3,259,013 $ 2,446,504 $ — $ 2,446,504 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, 2024 and December 31, 2023. Subordinated Debt |
Capital Requirements
Capital Requirements | 3 Months Ended |
Mar. 31, 2024 | |
Capital Requirements | |
Capital Requirements | 12) Capital Requirements The Company and HBC 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, 2024. There are no conditions or events since March 31, 2024, that management believes have changed the categorization of the Company or HBC as “well-capitalized.” 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, 2024 and December 31, 2023, 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, 2024 Total Capital $ 598,795 15.6 % $ 402,267 10.5 % (to risk-weighted assets) Tier 1 Capital $ 513,473 13.4 % $ 325,644 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 513,473 13.4 % $ 268,178 7.0 % (to risk-weighted assets) Tier 1 Capital $ 513,473 10.2 % $ 200,413 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, 2023 Total Capital $ 594,371 15.5 % $ 403,060 10.5 % (to risk-weighted assets) Tier 1 Capital $ 511,799 13.3 % $ 326,287 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 511,799 13.3 % $ 268,707 7.0 % (to risk-weighted assets) Tier 1 Capital $ 511,799 10.0 % $ 204,024 4.0 % (to average assets) (1) Includes 2.5% capital conservation buffer, except the Tier 1 Capital to average assets ratio. HBC’s actual capital amounts and ratios are presented in the following table, together with capital adequacy requirements, under the Basel III regulatory requirements for the periods indicated: Required For Capital To Be Well-Capitalized Adequacy Under PCA Regulatory Purposes Actual Guidelines Under Basel III Amount Ratio Amount Ratio Amount Ratio (1) (Dollars in thousands) As of March 31, 2024 Total Capital $ 577,519 15.1 % $ 382,910 10.0 % $ 402,055 10.5 % (to risk-weighted assets) Tier 1 Capital $ 531,736 13.9 % $ 306,328 8.0 % $ 325,473 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 531,736 13.9 % $ 248,891 6.5 % $ 268,037 7.0 % (to risk-weighted assets) Tier 1 Capital $ 531,736 10.6 % $ 250,346 5.0 % $ 200,277 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, 2023 Total Capital $ 572,907 14.9 % $ 383,542 10.0 % $ 402,719 10.5 % (to risk-weighted assets) Tier 1 Capital $ 529,836 13.8 % $ 306,834 8.0 % $ 326,011 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 529,836 13.8 % $ 249,302 6.5 % $ 268,479 7.0 % (to risk-weighted assets) Tier 1 Capital $ 529,836 10.4 % $ 254,869 5.0 % $ 203,895 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 $39,539,000 at March 31, 2024, and qualifies as Tier 2 capital for the Company under the guidelines established by the Federal Reserve Board. Under California General Corporation Law, the holders of common stock are entitled to receive dividends when and as declared by the Board of Directors, out of funds legally available. The California Financial Code provides that a state licensed bank may not make a cash distribution to its shareholders in excess of the lesser of the following: (i) the bank’s retained earnings; or (ii) the bank’s net income for its last three fiscal years, less the amount of any distributions made by the bank to its shareholders during such period. However, a bank, with the prior approval of the Commissioner of the California Department of Financial Protection and Innovation (“DFPI”) may make a distribution to its shareholders of an amount not to exceed the greater of (i) a bank’s retained earnings; (ii) its net income for its last fiscal year; or (iii) its net income for the current fiscal year. Also with the prior approval of the Commissioner of the DFPI and the shareholders of the bank, the bank may make a distribution to its shareholders, as a reduction in capital of the bank. In the event that the Commissioner determines that the shareholders’ equity of a bank is inadequate or that the making of a distribution by a bank would be unsafe or unsound, the Commissioner may order a bank to refrain from making such a proposed distribution. As of March 31, 2024, HBC would not be required to obtain regulatory approval, and the amount available for cash dividends is $87,477,000 . HBC distributed to HCC dividends of |
Commitments and Loss Contingenc
Commitments and Loss Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
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 and examinations, administrative proceedings and other claims, and from time to time we may be subjected to increased risk associated with the acts or omissions of our customers (such as customers who, unbeknownst to the Bank or the Company, engage in or are associated with fraudulent or unlawful transactions, Ponzi schemes, money laundering, and similar unlawful acts). 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. At March 31, 2024, the Company was the subject of three pending legal proceedings (excluding pending and potential litigation arising in the ordinary course of business). All three such claims are employment-related. Between November 2020 and October 2021, three employees filed employment-related lawsuits against the Bank. The claims purport to be class actions on behalf of other employees and seek unspecified damages, penalties and attorney fees under the California Labor Code, the California Business and Professions Code, and the California Private Attorneys General Act (“PAGA”). The claimants allege various instances of disability, race and gender discrimination, wage-and-hour violations, retaliation, and related claims. Those cases remain pending in Alameda County Superior Court following a series of motions and interlocutory appeals. The Company believes the underlying claims are without merit and intend to defend them vigorously. 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 cannot 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 $1,156,000,000 at March 31, 2024, and $1,149,056,000 at December 31, 2023. Unused commitments represented 35% and 34% of outstanding gross loans at March 31, 2024 and December 31, 2023, respectively. 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, 2024 December 31, 2023 Fixed Variable Fixed Variable Rate Rate Total Rate Rate Total (Dollars in thousands) Unused lines of credit and commitments to make loans $ 73,278 $ 1,068,636 $ 1,141,914 $ 96,166 $ 1,041,608 $ 1,137,774 Standby letters of credit 6,101 7,985 14,086 4,283 6,999 11,282 $ 79,379 $ 1,076,621 $ 1,156,000 $ 100,449 $ 1,048,607 $ 1,149,056 For the three months ended March 31, 2024, there was a decrease of ($44,000) 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 2024 was driven by a decline in the loss factor in the commercial and industrial and land and construction loan segments. The allowance for credit losses on the Company’s off-balance sheet credit exposures was $723,000 at March 31, 2024 and $767,000 at December 31, 2023. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2024 | |
Revenue Recognition | |
Revenue Recognition | 14) Revenue Recognition 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, 2024 2023 (Dollars in thousands) Noninterest Income In-scope of Topic 606: Service charges and fees on deposit accounts $ 877 $ 1,743 Total noninterest income in-scope of Topic 606 877 1,743 Noninterest Income Out-of-scope of Topic 606 1,170 1,023 Total noninterest income $ 2,047 $ 2,766 |
Noninterest Expense
Noninterest Expense | 3 Months Ended |
Mar. 31, 2024 | |
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, 2024 2023 (Dollars in thousands) Salaries and employee benefits $ 15,509 $ 14,809 Occupancy and equipment 2,443 2,400 Insurance expense 1,634 1,520 Professional fees 1,327 1,399 Data processing 840 774 Client services 782 445 Federal Deposit Insurance Corporation ("FDIC") assessments 670 417 Other 4,331 3,637 Total noninterest expense $ 27,536 $ 25,401 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2024 | |
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 options to renew at the Company's option. No lease extensions are reasonably certain to be exercised, therefore it was not considered in the calculation of the ROU asset and lease liability. As of March 31, 2024, operating lease ROU assets, included in other assets, and lease liabilities, included in other liabilities, totaled $30,726,000. The following table presents the quantitative information for the Company’s leases for the periods indicated: Three Months Ended March 31, 2024 2023 (Dollars in thousands) Operating Lease Cost (Cost resulting from lease payments) $ 1,676 $ 1,701 Operating Lease - Operating Cash Flows (Fixed Payments) $ 1,684 $ 1,645 Operating Lease - ROU assets $ 30,726 $ 32,123 Operating Lease - Liabilities $ 30,726 $ 32,123 Weighted Average Lease Term - Operating Leases 5.65 years 6.44 years Weighted Average Discount Rate - Operating Leases 5.03% 4.54% The following maturity analysis shows the undiscounted cash flows due on the Company’s operating lease liabilities as of March 31, 2024: (Dollars in thousands) 2024 remaining $ 5,085 2025 6,412 2026 5,835 2027 5,575 2028 4,971 Thereafter 7,532 Total undiscounted cash flows 35,410 Discount on cash flows (4,684) Total lease liability $ 30,726 |
Business Segment Information
Business Segment Information | 3 Months Ended |
Mar. 31, 2024 | |
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 credit 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, 2024 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 54,713 $ 2,838 $ 57,551 Intersegment interest allocations 423 (423) — Total interest expense 17,458 — 17,458 Net interest income 37,678 2,415 40,093 Provision for (recapture of) credit losses on loans 285 (101) 184 Net interest income after provision 37,393 2,516 39,909 Noninterest income 1,959 88 2,047 Noninterest expense 26,089 1,447 27,536 Intersegment expense allocations 128 (128) — Income before income taxes 13,391 1,029 14,420 Income tax expense 3,950 304 4,254 Net income $ 9,441 $ 725 $ 10,166 Total assets $ 5,172,553 $ 83,521 $ 5,256,074 Loans, net of deferred fees $ 3,280,404 $ 55,698 $ 3,336,102 Goodwill $ 154,587 $ 13,044 $ 167,631 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 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events | |
Subsequent Events | 18) Subsequent Events On April 25, 2024, 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 23, 2024, to shareholders of record at the close of the business day on May 9, 2024. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Basis of Presentation | |
Description of Business and 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, 2023. 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 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, 2024 are not necessarily indicative of the results expected for any subsequent period or for the entire year ending December 31, 2024. |
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 Accounting Standards Update (“ASU”) No. 2023-07,“Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” ("ASU 2023-07) requires filers to disclose significant segment expenses, an amount and description for other segment items, the title and position of the entity’s chief operating decision maker ("CODM") and an explanation of how the CODM uses the reported measures of profit or loss to assess segment performance, and, on an interim basis, certain segment related disclosures that previously were required only on an annual basis. ASU 2023-07 also clarifies that entities with a single reportable segment are subject to both new and existing segment reporting requirements and that an entity is permitted to disclose multiple measures of segment profit or loss, provided that certain criteria are met. ASU 2023-07 is effective for the Company for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Effective January 1, 2024, Accounting Guidance Issued But Not Yet Adopted In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share | |
Schedule of reconciliation of factors used in computing basic and diluted earnings per common share | Three Months Ended March 31, 2024 2023 (Dollars in thousands, except per share amounts) Net income $ 10,166 $ 18,917 Weighted average common shares outstanding for basic earnings per common share 61,186,623 60,908,221 Dilutive potential common shares 283,929 359,851 Shares used in computing diluted earnings per common share $ 61,470,552 $ 61,268,072 Basic earnings per share $ 0.17 $ 0.31 Diluted earnings per share $ 0.17 $ 0.31 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (AOCI) (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accumulated Other Comprehensive Income (Loss) ("AOCI") | |
Schedule of changes in AOCI by component | Three Months Ended March 31, 2024 and 2023 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, 2024, net of taxes $ (7,029) $ (5,701) $ (12,730) Other comprehensive income (loss) before reclassification, net of taxes 176 (16) 160 Amounts reclassified from other comprehensive income (loss), net of taxes — (18) (18) Net current period other comprehensive income (loss), net of taxes 176 (34) 142 Ending balance March 31, 2024, net of taxes $ (6,853) $ (5,735) $ (12,588) 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) (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 2024 2023 Net Income is Presented (Dollars in thousands) Amortization of defined benefit pension plan items (1) Prior transition obligation and actuarial losses (2) $ 52 $ 47 Prior service cost and actuarial losses (3) (26) (13) 26 34 Other noninterest expense (8) (10) Income tax benefit 18 24 Net of tax Total reclassification from AOCI for the period $ 18 $ 24 (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, 2024 | |
Securities | |
Schedule of amortized cost and estimated fair value of securities | Gross Gross Allowance Estimated Amortized Unrealized Unrealized for Credit Fair March 31, 2024 Cost Gains (Losses) Losses Value (Dollars in thousands) Securities available-for-sale: U.S. Treasury $ 352,237 $ — $ (4,784) $ — $ 347,453 Agency mortgage-backed securities 61,916 — (4,895) — 57,021 Total $ 414,153 $ — $ (9,679) $ — $ 404,474 Gross Gross Estimated Allowance Amortized Unrecognized Unrecognized Fair for Credit March 31, 2024 Cost Gains (Losses) Value Losses (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 604,458 $ 83 $ (92,415) $ 512,126 $ — Municipals - exempt from Federal tax 31,803 1 (1,072) 30,732 (12) Total $ 636,261 $ 84 $ (93,487) $ 542,858 $ (12) Gross Gross Allowance Estimated Amortized Unrealized Unrealized for Credit Fair December 31, 2023 Cost Gains (Losses) Losses Value (Dollars in thousands) Securities available-for-sale: U.S. Treasury $ 387,990 $ — $ (5,621) $ — $ 382,369 Agency mortgage-backed securities 64,580 — (4,313) — 60,267 Total $ 452,570 $ — $ (9,934) $ — $ 442,636 Gross Gross Estimated Allowance Amortized Unrecognized Unrecognized Fair for Credit December 31, 2023 Cost Gains (Losses) Value Losses (Dollars in thousands) Securities held-to-maturity: Agency mortgage-backed securities $ 618,374 $ 282 $ (86,011) $ 532,645 $ — Municipals - exempt from Federal tax 32,203 3 (724) 31,482 (12) Total $ 650,577 $ 285 $ (86,735) $ 564,127 $ (12) |
Schedule of securities with unrealized losses | Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized March 31, 2024 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: U.S. Treasury $ 4,907 $ (65) $ 342,546 $ (4,719) $ 347,453 $ (4,784) Agency mortgage-backed securities — — 57,021 (4,895) 57,021 (4,895) Total $ 4,907 $ (65) $ 399,567 $ (9,614) $ 404,474 $ (9,679) Securities held-to-maturity: Agency mortgage-backed securities $ — $ — $ 500,329 $ (92,415) $ 500,329 $ (92,415) Municipals — exempt from Federal tax 9,246 (147) 20,226 (925) 29,472 (1,072) Total $ 9,246 $ (147) $ 520,555 $ (93,340) $ 529,801 $ (93,487) Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2023 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: U.S. Treasury $ 4,926 $ (40) $ 377,443 $ (5,581) $ 382,369 $ (5,621) Agency mortgage-backed securities — — 60,267 (4,313) 60,267 (4,313) Total $ 4,926 $ (40) $ 437,710 $ (9,894) $ 442,636 $ (9,934) Securities held-to-maturity: Agency mortgage-backed securities $ — $ — $ 520,615 $ (86,011) $ 520,615 $ (86,011) Municipals — exempt from Federal tax 9,790 (176) 13,151 (548) 22,941 (724) Total $ 9,790 $ (176) $ 533,766 $ (86,559) $ 543,556 $ (86,735) |
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 three months or less $ 110,872 $ 110,511 Due after three months through one year 100,763 99,531 Due after one through five years 140,602 137,411 Agency mortgage-backed securities 61,916 57,021 Total $ 414,153 $ 404,474 Held-to-maturity Amortized Estimated Cost (1) Fair Value (Dollars in thousands) Due after three months through one year $ 665 $ 661 Due after one through five years 8,362 8,140 Due after five through ten years 22,776 21,931 Agency mortgage-backed securities 604,458 512,126 Total $ 636,261 $ 542,858 (1) Gross of the allowance for credit losses of ( $12,000 ) at March 31, 2024. |
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, 2024 $ 12 Provision for credit losses — Ending balance March 31, 2024 $ 12 |
Loans and Allowance for Credi_2
Loans and Allowance for Credit Losses on Loans (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Loans and Allowance for Credit Losses on Loans | |
Schedule of loans | March 31, December 31, 2024 2023 (Dollars in thousands) Loans held-for-investment: Commercial $ 452,231 $ 463,778 Real estate: CRE - owner occupied 585,031 583,253 CRE - non-owner occupied 1,271,184 1,256,590 Land and construction 129,712 140,513 Home equity 122,794 119,125 Multifamily 269,263 269,734 Residential mortgages 490,035 496,961 Consumer and other 16,439 20,919 Loans 3,336,689 3,350,873 Deferred loan fees, net (587) (495) Loans, net of deferred fees 3,336,102 3,350,378 Allowance for credit losses on loans (47,888) (47,958) Loans, net $ 3,288,214 $ 3,302,420 |
Schedule of changes in allowance for loan (credit) losses | Three Months Ended March 31, 2024 CRE CRE Owner Non-owner Land & Home Multi- Residential Consumer Commercial Occupied Occupied Construction Equity Family Mortgages and Other Total (Dollars in thousands) Beginning of period balance $ 5,853 $ 5,121 $ 25,323 $ 2,352 $ 644 $ 5,053 $ 3,425 $ 187 $ 47,958 Charge-offs (358) — — — — — — — (358) Recoveries 82 4 — — 18 — — — 104 Net (charge-offs) recoveries (276) 4 — — 18 — — — (254) Provision for (recapture of) credit losses on loans (548) 16 1,086 (470) 91 (744) 774 (21) 184 End of period balance $ 5,029 $ 5,141 $ 26,409 $ 1,882 $ 753 $ 4,309 $ 4,199 $ 166 $ 47,888 Three Months Ended March 31, 2023 CRE CRE Owner Non-owner Land & Home Multi- Residential Consumer Commercial Occupied Occupied Construction Equity Family Mortgages 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 |
Schedule of nonperforming loans | March 31, 2024 Nonaccrual Nonaccrual 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 $ 924 $ 203 $ 1,443 $ 2,570 Real estate: CRE - Owner Occupied — — — — CRE - Non-Owner Occupied — — — — Land and construction 4,673 — — 4,673 Home equity 120 — — 120 Residential mortgages — — 508 508 Total $ 5,717 $ 203 $ 1,951 $ 7,871 December 31, 2023 Nonaccrual Nonaccrual 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 $ 946 $ 290 $ 889 $ 2,125 Real estate: CRE - Owner Occupied — — — — CRE - Non-Owner Occupied — — — — Land and construction 4,661 — — 4,661 Home equity 142 — — 142 Residential mortgages 779 — — 779 Total $ 6,528 $ 290 $ 889 $ 7,707 |
Schedule of aging of past due loans by class of loans | March 31, 2024 30 - 59 60 - 89 90 Days or Days Days Greater Total Past Due Past Due Past Due Past Due Current Total (Dollars in thousands) Commercial $ 3,522 $ 1,180 $ 1,955 $ 6,657 $ 445,574 $ 452,231 Real estate: CRE - Owner Occupied — — — — 585,031 585,031 CRE - Non-Owner Occupied 5,662 — — 5,662 1,265,522 1,271,184 Land and construction 3,550 — 4,672 8,222 121,490 129,712 Home equity 441 — 441 122,353 122,794 Multifamily — — — — 269,263 269,263 Residential mortgages — — 508 508 489,527 490,035 Consumer and other — — — — 16,439 16,439 Total $ 13,175 $ 1,180 $ 7,135 $ 21,490 $ 3,315,199 $ 3,336,689 December 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 $ 6,688 $ 2,030 $ 1,264 $ 9,982 $ 453,796 $ 463,778 Real estate: CRE - Owner Occupied — — — — 583,253 583,253 CRE - Non-Owner Occupied 1,289 — — 1,289 1,255,301 1,256,590 Land and construction 955 — 3,706 4,661 135,852 140,513 Home equity — — 142 142 118,983 119,125 Multifamily — — — — 269,734 269,734 Residential mortgages 3,794 510 779 5,083 491,878 496,961 Consumer and other — — — — 20,919 20,919 Total $ 12,726 $ 2,540 $ 5,891 $ 21,157 $ 3,329,716 $ 3,350,873 March 31, December 31, 2024 2023 (Dollars in thousands) Past due nonaccrual loans $ 5,184 $ 6,100 Current nonaccrual loans 736 718 Total nonaccrual loans $ 5,920 $ 6,818 |
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, 2024 Amortized 3/31/2024 2023 2022 2021 2020 Prior Periods Cost Basis Total (Dollars in thousands) Commercial: Pass $ 74,006 $ 36,626 $ 23,777 $ 18,808 $ 13,368 $ 30,291 $ 239,157 $ 436,033 Special Mention 2,020 82 1,062 38 — 3,272 2,471 8,945 Substandard 4 — 1,478 — 97 4,490 57 6,126 Substandard-Nonaccrual — — — 343 — 784 — 1,127 Total 76,030 36,708 26,317 19,189 13,465 38,837 241,685 452,231 CRE - Owner Occupied: Pass 12,117 32,194 84,349 109,741 64,592 262,613 10,107 575,713 Special Mention — — 249 3,219 457 1,251 — 5,176 Substandard — — — — 3,042 1,100 — 4,142 Substandard-Nonaccrual — — — — — — — — Total 12,117 32,194 84,598 112,960 68,091 264,964 10,107 585,031 CRE - Non-Owner Occupied: Pass 21,427 226,112 240,250 260,618 27,717 465,826 5,116 1,247,066 Special Mention — — — 708 — 10,958 — 11,666 Substandard — — — 4,564 — 7,562 326 12,452 Substandard-Nonaccrual — — — — — — — — Total 21,427 226,112 240,250 265,890 27,717 484,346 5,442 1,271,184 Land and construction: Pass 9,596 38,701 39,325 23,083 9,246 1,844 — 121,795 Special Mention — — — — — 2,163 — 2,163 Substandard — — — — — 1,081 — 1,081 Substandard-Nonaccrual — — — 3,706 967 — — 4,673 Total 9,596 38,701 39,325 26,789 10,213 5,088 — 129,712 Home equity: Pass — — — — — 2,055 114,967 117,022 Special Mention — — — — — — 2,256 2,256 Substandard — — — — — — 3,396 3,396 Substandard-Nonaccrual — — — — — 120 — 120 Total — — — — — 2,175 120,619 122,794 Multifamily: Pass 4,523 47,031 40,893 54,977 5,358 116,026 455 269,263 Special Mention — — — — — — — — Substandard — — — — — — — — Substandard-Nonaccrual — — — — — — — — Total 4,523 47,031 40,893 54,977 5,358 116,026 455 269,263 Residential mortgage: Pass — 1,678 178,340 271,180 1,030 34,206 — 486,434 Special Mention — — 1,326 — — — — 1,326 Substandard — — 764 — — 1,511 — 2,275 Substandard-Nonaccrual — — — — — — — — Total — 1,678 180,430 271,180 1,030 35,717 — 490,035 Consumer and other: Pass — 1,566 1,373 58 — 2,060 10,588 15,645 Special Mention — 705 — — — 89 — 794 Substandard — — — — — — — — Substandard-Nonaccrual — — — — — — — — Total — 2,271 1,373 58 — 2,149 10,588 16,439 Total loans $ 123,693 $ 384,695 $ 613,186 $ 751,043 $ 125,874 $ 949,302 $ 388,896 $ 3,336,689 Risk Grades: Pass $ 121,669 $ 383,908 $ 608,307 $ 738,465 $ 121,311 $ 914,921 $ 380,390 $ 3,268,971 Special Mention 2,020 787 2,637 3,965 457 17,733 4,727 32,326 Substandard 4 — 2,242 4,564 3,139 15,744 3,779 29,472 Substandard-Nonaccrual — — — 4,049 967 904 — 5,920 Grand Total $ 123,693 $ 384,695 $ 613,186 $ 751,043 $ 125,874 $ 949,302 $ 388,896 $ 3,336,689 Revolving Loans Term Loans Amortized Cost Basis by Originated Period as of December 31, 2023 Amortized 2023 2022 2021 2020 2019 Prior Periods Cost Basis Total (Dollars in thousands) Commercial: Pass $ 99,387 $ 25,250 $ 19,732 $ 14,929 $ 11,893 $ 22,134 $ 258,461 $ 451,786 Special Mention 2,107 1,092 41 — 133 1,134 467 4,974 Substandard 4 1,516 — 100 185 3,835 142 5,782 Substandard-Nonaccrual — — 349 — 116 771 — 1,236 Total 101,498 27,858 20,122 15,029 12,327 27,874 259,070 463,778 CRE - Owner Occupied: Pass 32,993 86,688 110,613 68,184 52,885 214,729 10,302 576,394 Special Mention — 250 3,241 462 — 1,802 — 5,755 Substandard — — — — 1,100 4 — 1,104 Substandard-Nonaccrual — — — — — — — — Total 32,993 86,938 113,854 68,646 53,985 216,535 10,302 583,253 CRE - Non-Owner Occupied: Pass 225,505 243,080 267,870 28,315 92,648 370,552 3,199 1,231,169 Special Mention — — — — 7,493 10,040 — 17,533 Substandard — — — — — 7,614 274 7,888 Substandard-Nonaccrual — — — — — — — — Total 225,505 243,080 267,870 28,315 100,141 388,206 3,473 1,256,590 Land and construction: Pass 40,142 52,862 27,419 9,273 1,864 — — 131,560 Special Mention 2,163 — — — — — — 2,163 Substandard 2,129 — — — — — — 2,129 Substandard-Nonaccrual — — 3,706 955 — — — 4,661 Total 44,434 52,862 31,125 10,228 1,864 — — 140,513 Home equity: Pass — — — — — 1,463 111,250 112,713 Special Mention — — — — — — 2,110 2,110 Substandard — — — — — — 4,160 4,160 Substandard-Nonaccrual — — — — — — 142 142 Total — — — — — 1,463 117,662 119,125 Multifamily: Pass 47,089 41,112 55,557 5,394 42,129 75,890 355 267,526 Special Mention — — — — — — — — Substandard — — — — — 2,208 — 2,208 Substandard-Nonaccrual — — — — — — — — Total 47,089 41,112 55,557 5,394 42,129 78,098 355 269,734 Residential mortgage: Pass 1,684 187,417 268,617 1,037 6,861 28,892 — 494,508 Special Mention — — — — — — — — Substandard — 973 — — — 701 — 1,674 Substandard-Nonaccrual — 779 — — — — — 779 Total 1,684 189,169 268,617 1,037 6,861 29,593 — 496,961 Consumer and other: Pass 2,332 1,376 3 — — 2,089 14,961 20,761 Special Mention — — 62 — — 96 — 158 Substandard — — — — — — — — Substandard-Nonaccrual — — — — — — — — Total 2,332 1,376 65 — — 2,185 14,961 20,919 Total loans $ 455,535 $ 642,395 $ 757,210 $ 128,649 $ 217,307 $ 743,954 $ 405,823 $ 3,350,873 Risk Grades: Pass $ 449,132 $ 637,785 $ 749,811 $ 127,132 $ 208,280 $ 715,749 $ 398,528 $ 3,286,417 Special Mention 4,270 1,342 3,344 462 7,626 13,072 2,577 32,693 Substandard 2,133 2,489 — 100 1,285 14,362 4,576 24,945 Substandard-Nonaccrual — 779 4,055 955 116 771 142 6,818 Grand Total $ 455,535 $ 642,395 $ 757,210 $ 128,649 $ 217,307 $ 743,954 $ 405,823 $ 3,350,873 Gross Charge-offs by Originated Period for the Three Months Ended March 31, 2024 Prior Revolving 3/31/2024 2023 2022 2021 2020 Periods Loans Total (Dollars in thousands) Commercial $ — $ — $ — $ — $ — $ 358 $ — $ 358 Real estate: CRE - Owner Occupied — — — — — — — — CRE - Non-Owner Occupied — — — — — — — — Land and construction — — — — — — — — Home equity — — — — — — — — Multifamily — — — — — — — — Residential mortgages — — — — — — — — Consumer and other — — — — — — — — Total $ — $ — $ — $ — $ — $ 358 $ — $ 358 Gross Charge-offs by Originated Period for the Three Months Ended March 31, 2023 Prior Revolving 03/31/2023 2022 2021 2020 2019 Periods 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 | Three Months Ended March 31, 2024 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 $ — $ — $ 33 $ — $ — $ — 0.01 % Total $ — $ — $ 33 $ — $ — $ — 0.01 % Three Months Ended 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 | Three Months Ended March 31, 2024 30 - 59 60 - 89 90 Days or Days Days Greater Total Past Due Past Due Past Due Past Due (Dollars in thousands) Commercial $ — $ — $ — $ — Total $ — $ — $ — $ — Three Months Ended 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 | Three Months Ended March 31, 2024 Weighted Weighted Average Average Interest Term Principal Rate Extension Forgiveness Reduction (Months) (Dollars in thousands) Commercial $ — — % 10 Total $ — — % 10 Three Months Ended March 31, 2023 Weighted Weighted Average Average Interest Term Principal Rate Extension Forgiveness Reduction (Months) (Dollars in thousands) Commercial $ 3 — % 9 Total $ 3 — % 9 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Other Intangible Assets | |
Schedule of carrying amount of goodwill by segment | March 31, December 31, 2024 2023 (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, 2024 Gross Carrying Accumulated Amount Amortization Total (Dollars in thousands) Core deposit intangibles $ 25,023 (17,152) $ 7,871 Customer relationship and brokered relationship intangibles 1,900 (1,788) 112 Below market leases 110 (19) 91 Total $ 27,033 $ (18,959) $ 8,074 December 31, 2023 Gross Carrying Accumulated Amount Amortization Total (Dollars in thousands) Core deposit intangibles $ 25,023 (16,646) $ 8,377 Customer relationship and brokered relationship intangibles 1,900 (1,741) 159 Below market leases 110 (19) 91 Total $ 27,033 $ (18,406) $ 8,627 |
Schedule of estimated amortization expense | Customer & Below/ Core Brokered (Above) Total Deposit Relationship Market Amortization Year Intangible Intangible Lease Expense (Dollars in thousands) 2024 remaining $ 1,517 $ 112 $ 5 $ 1,634 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 — 14 624 $ 7,871 $ 112 $ 91 $ 8,074 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Income Taxes | |
Summary of carrying amount of low income tax housing investment | March 31, December 31, 2024 2023 (Dollars in thousands) Low income housing investments $ 2,615 $ 2,794 Future commitments $ 494 $ 494 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Supplemental Retirement Plan | |
Benefit plans | |
Schedule of components of net periodic benefit cost | Three Months Ended March 31, 2024 2023 (Dollars in thousands) Components of net periodic benefit cost: Service cost $ 50 $ 48 Interest cost 318 324 Amortization of net actuarial loss 27 13 Net periodic benefit cost $ 395 $ 385 Amount recognized in other comprehensive income $ 18 $ 8 |
Split-Dollar Life Insurance Benefit Plan | |
Benefit plans | |
Schedule of change in projected benefit obligation | March 31, December 31, 2024 2023 (Dollars in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 6,951 $ 7,060 Interest cost 86 365 Actuarial loss — (474) Projected benefit obligation at end of period $ 7,037 $ 6,951 |
Schedule of amounts recognized in accumulated other comprehensive loss | March 31, December 31, 2024 2023 (Dollars in thousands) Net actuarial loss $ 2,183 $ 2,108 Prior transition obligation 678 701 Accumulated other comprehensive loss $ 2,861 $ 2,809 |
Schedule of components of net periodic benefit cost | Three Months Ended March 31, 2024 2023 (Dollars in thousands) Amortization of prior transition obligation and actuarial losses $ (52) $ (47) Interest cost 86 91 Net periodic benefit cost $ 34 $ 44 Amount recognized in other comprehensive income $ (52) $ (48) |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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, 2024 Available-for-sale securities: U.S. Treasury $ 347,453 $ 347,453 $ — $ — Agency mortgage-backed securities 57,021 — 57,021 — I/O strip receivables 110 — 110 — Assets at December 31, 2023 Available-for-sale securities: U.S. Treasury $ 382,369 $ 382,369 $ — $ — Agency mortgage-backed securities 60,267 — 60,267 — I/O strip receivables 117 — 117 — |
Schedule of carrying amounts and estimated fair values of financial instruments | The carrying amounts and estimated fair values of financial instruments at March 31, 2024 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 $ 541,359 $ 541,359 $ — $ — $ 541,359 Securities available-for-sale 404,474 347,453 57,021 — 404,474 Securities held-to-maturity 636,249 — 542,858 — 542,858 Loans (including loans held-for-sale) 3,338,048 (1) — 1,946 3,142,873 3,144,819 FHLB stock, FRB stock, and other investments 32,544 — — — N/A Accrued interest receivable 16,246 1,592 2,482 12,172 16,246 I/O strips receivables 110 — 110 — 110 Liabilities: Time deposits $ 488,112 $ — $ 491,943 $ — $ 491,943 Other deposits 3,956,548 — 3,956,548 — 3,956,548 Subordinated debt 39,539 — 32,339 — 32,339 Accrued interest payable 5,296 — 5,296 — 5,296 (1) Before allowance for credit losses on loans of $47,888,000. The carrying amounts and estimated fair values of the Company’s financial instruments at December 31, 2023: 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 $ 408,129 $ 408,129 $ — $ — $ 408,129 Securities available-for-sale 442,636 382,369 60,267 — 442,636 Securities held-to-maturity 650,565 — 564,127 — 564,127 Loans (including loans held-for-sale) 3,352,583 (1) — 2,205 3,172,512 3,174,717 FHLB stock, FRB stock, and other investments 32,540 — — — N/A Accrued interest receivable 14,959 1,255 1,764 11,940 14,959 I/O strips receivables 117 — 117 — 117 Liabilities: Time deposits $ 469,472 $ — $ 471,693 $ — $ 471,693 Other deposits 3,908,986 — 3,908,986 — 3,908,986 Subordinated debt 39,502 — 31,902 — 31,902 Accrued interest payable 4,688 — 4,698 — 4,698 (1) Before allowance for credit losses on loans of $47,958,000. |
Equity Plan (Tables)
Equity Plan (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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, 2024 2,637,356 $ 10.40 Exercised (72,882) $ 5.29 Forfeited or expired (112,482) $ 9.85 Outstanding at March 31, 2024 2,451,992 $ 10.58 5.61 $ 1,086,661 Vested or expected to vest 2,304,872 5.61 $ 1,021,461 Exercisable at March 31, 2024 1,869,398 4.71 $ 748,468 |
Schedule of information related to the Equity Plans | March 31, 2024 2023 Intrinsic value of options exercised $ 268,715 $ 466,308 Cash received from option exercise $ 385,219 $ 682,825 Tax (expense) benefit realized from option exercises $ (22,452) $ 3,968 |
Schedule of restricted stock activity under Equity Plans | Weighted Average Grant Number Date Fair Total Restricted Stock Award of Shares Value Nonvested shares at January 1, 2024 185,413 $ 10.87 Granted 57,123 $ 8.49 Forfeited or expired (23,215) $ 11.36 Nonvested shares at March 31, 2024 219,321 $ 9.34 |
Schedule of restricted stock units under the Equity Plans | Weighted Average Grant Number Date Fair Total RSUs of Shares Value Nonvested shares at January 1, 2024 119,362 $ 7.41 Granted 239,531 $ 8.49 Forfeited or expired (18,355) $ 7.41 Nonvested shares at March 31, 2024 340,538 $ 8.17 |
Schedule of performance based restricted stock units under the Equity Plans | Weighted Average Grant Number Date Fair Total PRSUs of Shares Value Nonvested shares at January 1, 2024 119,358 $ 7.41 Granted 149,923 $ 8.49 Forfeited or expired (18,355) $ 7.41 Nonvested shares at March 31, 2024 250,926 $ 8.06 |
Borrowing Arrangements (Tables)
Borrowing Arrangements (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Borrowing Arrangements | |
Schedule of collateral value of loans and securities pledged | March 31, 2024 Collateral Total Remaining Value Available Outstanding Available (Dollars in thousands) FHLB collateralized borrowing capacity $ 1,569,070 $ 1,097,518 $ — $ 1,097,518 FRB discount window collateralized line of credit 1,639,038 1,245,362 — 1,245,362 Federal funds purchase arrangements N/A 90,000 — 90,000 Holding company line of credit N/A 20,000 — 20,000 $ 3,208,108 $ 2,452,880 $ — $ 2,452,880 December 31, 2023 Collateral Total Remaining Value Available Outstanding Available (Dollars in thousands) FHLB collateralized borrowing capacity $ 1,600,371 $ 1,100,931 $ — $ 1,100,931 FRB discount window collateralized line of credit 1,658,642 1,235,573 — 1,235,573 Federal funds purchase arrangements N/A 90,000 — 90,000 Holding company line of credit N/A 20,000 — 20,000 Total $ 3,259,013 $ 2,446,504 $ — $ 2,446,504 |
Capital Requirements (Tables)
Capital Requirements (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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, 2024 Total Capital $ 598,795 15.6 % $ 402,267 10.5 % (to risk-weighted assets) Tier 1 Capital $ 513,473 13.4 % $ 325,644 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 513,473 13.4 % $ 268,178 7.0 % (to risk-weighted assets) Tier 1 Capital $ 513,473 10.2 % $ 200,413 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, 2023 Total Capital $ 594,371 15.5 % $ 403,060 10.5 % (to risk-weighted assets) Tier 1 Capital $ 511,799 13.3 % $ 326,287 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 511,799 13.3 % $ 268,707 7.0 % (to risk-weighted assets) Tier 1 Capital $ 511,799 10.0 % $ 204,024 4.0 % (to average assets) (1) Includes 2.5% capital conservation buffer, except the Tier 1 Capital to average assets ratio. |
HBC | |
Capital Requirements | |
Schedule of actual capital and required amounts and ratios | Required For Capital To Be Well-Capitalized Adequacy Under PCA Regulatory Purposes Actual Guidelines Under Basel III Amount Ratio Amount Ratio Amount Ratio (1) (Dollars in thousands) As of March 31, 2024 Total Capital $ 577,519 15.1 % $ 382,910 10.0 % $ 402,055 10.5 % (to risk-weighted assets) Tier 1 Capital $ 531,736 13.9 % $ 306,328 8.0 % $ 325,473 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 531,736 13.9 % $ 248,891 6.5 % $ 268,037 7.0 % (to risk-weighted assets) Tier 1 Capital $ 531,736 10.6 % $ 250,346 5.0 % $ 200,277 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, 2023 Total Capital $ 572,907 14.9 % $ 383,542 10.0 % $ 402,719 10.5 % (to risk-weighted assets) Tier 1 Capital $ 529,836 13.8 % $ 306,834 8.0 % $ 326,011 8.5 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 529,836 13.8 % $ 249,302 6.5 % $ 268,479 7.0 % (to risk-weighted assets) Tier 1 Capital $ 529,836 10.4 % $ 254,869 5.0 % $ 203,895 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, 2024 | |
Commitments and Loss Contingencies | |
Schedule of commitments to extend credit | March 31, 2024 December 31, 2023 Fixed Variable Fixed Variable Rate Rate Total Rate Rate Total (Dollars in thousands) Unused lines of credit and commitments to make loans $ 73,278 $ 1,068,636 $ 1,141,914 $ 96,166 $ 1,041,608 $ 1,137,774 Standby letters of credit 6,101 7,985 14,086 4,283 6,999 11,282 $ 79,379 $ 1,076,621 $ 1,156,000 $ 100,449 $ 1,048,607 $ 1,149,056 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Revenue Recognition | |
Schedule of noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606 | Three Months Ended March 31, 2024 2023 (Dollars in thousands) Noninterest Income In-scope of Topic 606: Service charges and fees on deposit accounts $ 877 $ 1,743 Total noninterest income in-scope of Topic 606 877 1,743 Noninterest Income Out-of-scope of Topic 606 1,170 1,023 Total noninterest income $ 2,047 $ 2,766 |
Noninterest Expense (Tables)
Noninterest Expense (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Noninterest Expense | |
Schedule of noninterest expense | Three Months Ended March 31, 2024 2023 (Dollars in thousands) Salaries and employee benefits $ 15,509 $ 14,809 Occupancy and equipment 2,443 2,400 Insurance expense 1,634 1,520 Professional fees 1,327 1,399 Data processing 840 774 Client services 782 445 Federal Deposit Insurance Corporation ("FDIC") assessments 670 417 Other 4,331 3,637 Total noninterest expense $ 27,536 $ 25,401 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases | |
Schedule of leases | Three Months Ended March 31, 2024 2023 (Dollars in thousands) Operating Lease Cost (Cost resulting from lease payments) $ 1,676 $ 1,701 Operating Lease - Operating Cash Flows (Fixed Payments) $ 1,684 $ 1,645 Operating Lease - ROU assets $ 30,726 $ 32,123 Operating Lease - Liabilities $ 30,726 $ 32,123 Weighted Average Lease Term - Operating Leases 5.65 years 6.44 years Weighted Average Discount Rate - Operating Leases 5.03% 4.54% |
Schedule of maturity analysis shows the undiscounted cash flows due on the company's operating lease liabilities | (Dollars in thousands) 2024 remaining $ 5,085 2025 6,412 2026 5,835 2027 5,575 2028 4,971 Thereafter 7,532 Total undiscounted cash flows 35,410 Discount on cash flows (4,684) Total lease liability $ 30,726 |
Business Segment Information (T
Business Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Business Segment Information | |
Schedule of information by operating segment | Three Months Ended March 31, 2024 Banking (1) Factoring Consolidated (Dollars in thousands) Interest income $ 54,713 $ 2,838 $ 57,551 Intersegment interest allocations 423 (423) — Total interest expense 17,458 — 17,458 Net interest income 37,678 2,415 40,093 Provision for (recapture of) credit losses on loans 285 (101) 184 Net interest income after provision 37,393 2,516 39,909 Noninterest income 1,959 88 2,047 Noninterest expense 26,089 1,447 27,536 Intersegment expense allocations 128 (128) — Income before income taxes 13,391 1,029 14,420 Income tax expense 3,950 304 4,254 Net income $ 9,441 $ 725 $ 10,166 Total assets $ 5,172,553 $ 83,521 $ 5,256,074 Loans, net of deferred fees $ 3,280,404 $ 55,698 $ 3,336,102 Goodwill $ 154,587 $ 13,044 $ 167,631 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 |
Basis of Presentation (Details)
Basis of Presentation (Details) | 3 Months Ended |
Mar. 31, 2024 customer segment | |
Segment Reporting | |
Number of customers accounting for more than 10 percent of revenue for HBC or the Company | customer | 0 |
Number of business segments | segment | 2 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Reconciliation of factors used in computing basic and diluted earnings per common share | ||
Net income | $ 10,166 | $ 18,917 |
Weighted average common shares outstanding for basic earnings per common share (in shares) | 61,186,623 | 60,908,221 |
Dilutive potential common shares | 283,929 | 359,851 |
Shares used in computing diluted earnings per common share (in shares) | 61,470,552 | 61,268,072 |
Basic earnings per share (in dollars per share) | $ 0.17 | $ 0.31 |
Diluted earnings per share (in dollars per share) | $ 0.17 | $ 0.31 |
Number of shares in computing diluted earnings per common share | 1,904,786 | 1,314,428 |
Restricted Stock Units (RSUs) | ||
Reconciliation of factors used in computing basic and diluted earnings per common share | ||
Number of shares in computing diluted earnings per common share | 65,805 | 0 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (AOCI) - Changes in AOCI by Component (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Changes in AOCI by Component | ||
Balance at the beginning of the period, net of taxes | $ (12,730) | |
Net current period other comprehensive income (loss), net of taxes | 142 | $ 2,539 |
Balance at the end of the period, net of taxes | (12,588) | |
Accumulated Other Comprehensive Loss | ||
Changes in AOCI by Component | ||
Balance at the beginning of the period, net of taxes | (12,730) | (16,856) |
Other comprehensive income (loss) before reclassification, net of taxes | 160 | 2,563 |
Amounts reclassified from other comprehensive income (loss), net of taxes | (18) | (24) |
Net current period other comprehensive income (loss), net of taxes | 142 | 2,539 |
Balance at the end of the period, net of taxes | (12,588) | (14,317) |
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 | (7,029) | (11,394) |
Other comprehensive income (loss) before reclassification, net of taxes | 176 | 2,577 |
Net current period other comprehensive income (loss), net of taxes | 176 | 2,577 |
Balance at the end of the period, net of taxes | (6,853) | (8,817) |
Defined Benefit Pension Plan Items | ||
Changes in AOCI by Component | ||
Balance at the beginning of the period, net of taxes | (5,701) | (5,462) |
Other comprehensive income (loss) before reclassification, net of taxes | (16) | (14) |
Amounts reclassified from other comprehensive income (loss), net of taxes | (18) | (24) |
Net current period other comprehensive income (loss), net of taxes | (34) | (38) |
Balance at the end of the period, net of taxes | $ (5,735) | $ (5,500) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Loss) (AOCI)- Amount Reclassified from AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Defined Benefit Pension Plan Items | ||
Amount Reclassified from AOCI | ||
Net of tax | $ 18 | $ 24 |
Defined Benefit Pension Plan Items | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Other noninterest expense | 26 | 34 |
Income tax benefit | (8) | (10) |
Net of tax | 18 | 24 |
Prior transition obligation and actuarial losses | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Other noninterest expense | 52 | 47 |
Prior service cost and actuarial losses | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Other noninterest expense | (26) | (13) |
Accumulated Other Comprehensive Loss | ||
Amount Reclassified from AOCI | ||
Net of tax | 18 | 24 |
Accumulated Other Comprehensive Loss | Amount Reclassified from AOCI | ||
Amount Reclassified from AOCI | ||
Net of tax | $ 18 | $ 24 |
Securities - Amortized Cost and
Securities - Amortized Cost and Estimated Fair Value of Securities - Securities Available-for-sale (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Securities available-for-sale: | ||
Total | $ 414,153 | $ 452,570 |
Gross Unrealized (Losses) | (9,679) | (9,934) |
Estimated Fair Value | 404,474 | 442,636 |
U.S. Treasury | ||
Securities available-for-sale: | ||
Total | 352,237 | 387,990 |
Gross Unrealized (Losses) | (4,784) | (5,621) |
Estimated Fair Value | 347,453 | 382,369 |
Agency mortgage-backed securities | ||
Securities available-for-sale: | ||
Total | 61,916 | 64,580 |
Gross Unrealized (Losses) | (4,895) | (4,313) |
Estimated Fair Value | $ 57,021 | $ 60,267 |
Securities - Amortized Cost a_2
Securities - Amortized Cost and Estimated Fair Value of Securities - Securities Held-to-maturity (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Securities held-to-maturity: | ||
Total | $ 636,261,000 | $ 650,577,000 |
Gross Unrecognized Gains | 84,000 | 285,000 |
Gross Unrecognized (Losses) | (93,487,000) | (86,735,000) |
Estimated Fair Value | 542,858,000 | 564,127,000 |
Allowance for credit loss current period | (12,000) | (12,000) |
Agency mortgage-backed securities | ||
Securities held-to-maturity: | ||
Total | 604,458,000 | 618,374,000 |
Gross Unrecognized Gains | 83,000 | 282,000 |
Gross Unrecognized (Losses) | (92,415,000) | (86,011,000) |
Estimated Fair Value | 512,126,000 | 532,645,000 |
Municipals - exempt from Federal tax | ||
Securities held-to-maturity: | ||
Total | 31,803,000 | 32,203,000 |
Gross Unrecognized Gains | 1,000 | 3,000 |
Gross Unrecognized (Losses) | (1,072,000) | (724,000) |
Estimated Fair Value | 30,732,000 | 31,482,000 |
Allowance for credit loss current period | $ (12,000) | $ (12,000) |
Securities - Securities with Un
Securities - Securities with Unrealized Losses - Securities Held-to-maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Securities, Fair Value | ||
Less Than 12 Months | $ 4,907 | $ 4,926 |
12 Months or More | 399,567 | 437,710 |
Total | 404,474 | 442,636 |
Less Than 12 Months | 9,246 | 9,790 |
12 Months or More | 520,555 | 533,766 |
Total | 529,801 | 543,556 |
Securities, Unrealized (Losses) | ||
Less Than 12 Months | (65) | (40) |
12 Months or More | (9,614) | (9,894) |
Total | (9,679) | (9,934) |
Less Than 12 Months | (147) | (176) |
12 Months or More | (93,340) | (86,559) |
Total | (93,487) | (86,735) |
U.S. Treasury | ||
Securities, Fair Value | ||
Less Than 12 Months | 4,907 | 4,926 |
12 Months or More | 342,546 | 377,443 |
Total | 347,453 | 382,369 |
Securities, Unrealized (Losses) | ||
Less Than 12 Months | (65) | (40) |
12 Months or More | (4,719) | (5,581) |
Total | (4,784) | (5,621) |
Agency mortgage-backed securities | ||
Securities, Fair Value | ||
12 Months or More | 57,021 | 60,267 |
Total | 57,021 | 60,267 |
12 Months or More | 500,329 | 520,615 |
Total | 500,329 | 520,615 |
Securities, Unrealized (Losses) | ||
12 Months or More | (4,895) | (4,313) |
Total | (4,895) | (4,313) |
12 Months or More | (92,415) | (86,011) |
Total | (92,415) | (86,011) |
Municipals - exempt from Federal tax | ||
Securities, Fair Value | ||
Less Than 12 Months | 9,246 | 9,790 |
12 Months or More | 20,226 | 13,151 |
Total | 29,472 | 22,941 |
Securities, Unrealized (Losses) | ||
Less Than 12 Months | (147) | (176) |
12 Months or More | (925) | (548) |
Total | $ (1,072) | $ (724) |
Securities - Additional Informa
Securities - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2024 item security | |
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 | 429 |
Number of available for sale securities held | 157 |
Number of held to maturity securities held | 272 |
Number of securities with fair values below amortized cost | 419 |
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, 2024 | Dec. 31, 2023 |
Available-for-sale, Amortized Cost | ||
Due three months or less | $ 110,872 | |
Due after three months through one year | 100,763 | |
Due after one through five years | 140,602 | |
Agency mortgage-backed securities | 61,916 | |
Total | 414,153 | $ 452,570 |
Available-for-sale, Estimated Fair Value | ||
Due 3 months or less | 110,511 | |
Due after three months through one year | 99,531 | |
Due after one through five years | 137,411 | |
Agency mortgage-backed securities | 57,021 | |
Total | $ 404,474 | $ 442,636 |
Securities - Amortized Cost a_4
Securities - Amortized Cost and Fair Value of Debt Securities by Contractual Maturity - Securities Held-to-maturity (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Held-to-maturity, Amortized Cost | ||
Due after three months through one year | $ 665,000 | |
Due after one through five years | 8,362,000 | |
Due after five through ten years | 22,776,000 | |
Agency mortgage-backed securities | 604,458,000 | |
Total | 636,261,000 | |
Held-to-maturity, Estimated Fair Value | ||
Due after three months through one year | 661,000 | |
Due after one through five years | 8,140,000 | |
Due after five through ten years | 21,931,000 | |
Agency mortgage-backed securities | 512,126,000 | |
Total | 542,858,000 | $ 564,127,000 |
Allowance for credit loss current period | $ 12,000 | $ 12,000 |
Securities - Securities Pledged
Securities - Securities Pledged to Secure Public Deposits and for Other Purposes (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
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 | $ 991,078,000 | $ 1,041,608,000 |
Securities - Roll-forward by ma
Securities - Roll-forward by major security type (Details) | Mar. 31, 2024 USD ($) |
Securities | |
Allowance for credit loss current period - Beginning Balance | $ 12,000 |
Allowance for credit loss current period - Ending Balance | $ 12,000 |
Loans and Allowance for Credi_3
Loans and Allowance for Credit Losses on Loans - Loans Balance (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Loans held-for-investment: | ||||
Total loan balance | $ 3,336,689,000 | $ 3,350,873,000 | ||
Deferred loan fees, net | (587,000) | (495,000) | ||
Loans, net of deferred fees | 3,336,102,000 | 3,350,378,000 | $ 3,261,915,000 | |
Allowance for credit losses on loans | (47,888,000) | (47,958,000) | (47,273,000) | $ (47,512,000) |
Loans, net | 3,288,214,000 | 3,302,420,000 | ||
Accrued interest related to financial assets held at amortized cost | 16,246,000 | 14,959,000 | ||
Commercial. | Commercial | ||||
Loans held-for-investment: | ||||
Total loan balance | 452,231,000 | 463,778,000 | ||
Allowance for credit losses on loans | (5,029,000) | (5,853,000) | (6,534,000) | (6,617,000) |
Commercial. | Bay View Funding | ||||
Loans held-for-investment: | ||||
Loans, net | 55,698,000 | 57,458,000 | ||
Real estate | CRE - Owner Occupied | ||||
Loans held-for-investment: | ||||
Total loan balance | 585,031,000 | 583,253,000 | ||
Allowance for credit losses on loans | (5,141,000) | (5,121,000) | (5,453,000) | (5,751,000) |
Real estate | CRE - Non-Owner Occupied | ||||
Loans held-for-investment: | ||||
Total loan balance | 1,271,184,000 | 1,256,590,000 | ||
Allowance for credit losses on loans | (26,409,000) | (25,323,000) | (22,677,000) | (22,135,000) |
Real estate | Land & Construction | ||||
Loans held-for-investment: | ||||
Total loan balance | 129,712,000 | 140,513,000 | ||
Allowance for credit losses on loans | (1,882,000) | (2,352,000) | (3,176,000) | (2,941,000) |
Real estate | Home Equity | ||||
Loans held-for-investment: | ||||
Total loan balance | 122,794,000 | 119,125,000 | ||
Allowance for credit losses on loans | (753,000) | (644,000) | (688,000) | (666,000) |
Real estate | Multi-Family | ||||
Loans held-for-investment: | ||||
Total loan balance | 269,263,000 | 269,734,000 | ||
Allowance for credit losses on loans | (4,309,000) | (5,053,000) | (4,392,000) | (3,366,000) |
Real estate | Residential Mortgage | ||||
Loans held-for-investment: | ||||
Total loan balance | 490,035,000 | 496,961,000 | ||
Allowance for credit losses on loans | (4,199,000) | (3,425,000) | (4,196,000) | (5,907,000) |
Consumer | Consumer and Other | ||||
Loans held-for-investment: | ||||
Total loan balance | 16,439,000 | 20,919,000 | ||
Allowance for credit losses on loans | $ (166,000) | $ (187,000) | $ (157,000) | $ (129,000) |
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, 2024 | Mar. 31, 2023 | |
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | $ 47,958,000 | $ 47,512,000 |
Charge-offs | (358,000) | (380,000) |
Recoveries | 104,000 | 109,000 |
Net (charge-offs) recoveries | (254,000) | (271,000) |
Provision for (recapture of) credit losses on loans | 184,000 | 32,000 |
End of period balance | 47,888,000 | 47,273,000 |
Commercial. | Commercial | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | 5,853,000 | 6,617,000 |
Charge-offs | (358,000) | (134,000) |
Recoveries | 82,000 | 80,000 |
Net (charge-offs) recoveries | (276,000) | (54,000) |
Provision for (recapture of) credit losses on loans | (548,000) | (29,000) |
End of period balance | 5,029,000 | 6,534,000 |
Real estate | CRE - Owner Occupied | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | 5,121,000 | 5,751,000 |
Recoveries | 4,000 | 4,000 |
Net (charge-offs) recoveries | 4,000 | 4,000 |
Provision for (recapture of) credit losses on loans | 16,000 | (302,000) |
End of period balance | 5,141,000 | 5,453,000 |
Real estate | CRE - Non-Owner Occupied | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | 25,323,000 | 22,135,000 |
Provision for (recapture of) credit losses on loans | 1,086,000 | 542,000 |
End of period balance | 26,409,000 | 22,677,000 |
Real estate | Land & Construction | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | 2,352,000 | 2,941,000 |
Provision for (recapture of) credit losses on loans | (470,000) | 235,000 |
End of period balance | 1,882,000 | 3,176,000 |
Real estate | Home Equity | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | 644,000 | 666,000 |
Charge-offs | (246,000) | |
Recoveries | 18,000 | 25,000 |
Net (charge-offs) recoveries | 18,000 | (221,000) |
Provision for (recapture of) credit losses on loans | 91,000 | 243,000 |
End of period balance | 753,000 | 688,000 |
Real estate | Multi-Family | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | 5,053,000 | 3,366,000 |
Provision for (recapture of) credit losses on loans | (744,000) | 1,026,000 |
End of period balance | 4,309,000 | 4,392,000 |
Real estate | Residential Mortgage | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | 3,425,000 | 5,907,000 |
Provision for (recapture of) credit losses on loans | 774,000 | (1,711,000) |
End of period balance | 4,199,000 | 4,196,000 |
Consumer | Consumer and Other | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Beginning of period balance | 187,000 | 129,000 |
Provision for (recapture of) credit losses on loans | (21,000) | 28,000 |
End of period balance | $ 166,000 | $ 157,000 |
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, 2024 | Dec. 31, 2023 |
Nonperforming Loans by Class | ||
Nonaccrual with no Specific Allowance for Credit Losses | $ 5,717 | $ 6,528 |
Nonaccrual with Specific Allowance for Credit | 203 | 290 |
Loans over 90 Days Past Due and Still Accruing | 1,951 | 889 |
Total | 7,871 | 7,707 |
Commercial. | Commercial | ||
Nonperforming Loans by Class | ||
Nonaccrual with no Specific Allowance for Credit Losses | 924 | 946 |
Nonaccrual with Specific Allowance for Credit | 203 | 290 |
Loans over 90 Days Past Due and Still Accruing | 1,443 | 889 |
Total | 2,570 | 2,125 |
Real estate | Land & Construction | ||
Nonperforming Loans by Class | ||
Nonaccrual with no Specific Allowance for Credit Losses | 4,673 | 4,661 |
Total | 4,673 | 4,661 |
Real estate | Home Equity | ||
Nonperforming Loans by Class | ||
Nonaccrual with no Specific Allowance for Credit Losses | 120 | 142 |
Total | 120 | 142 |
Real estate | Residential Mortgage | ||
Nonperforming Loans by Class | ||
Nonaccrual with no Specific Allowance for Credit Losses | 779 | |
Loans over 90 Days Past Due and Still Accruing | 508 | |
Total | $ 508 | $ 779 |
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 ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | $ 3,336,689 | $ 3,350,873 |
30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 13,175 | 12,726 |
60-89 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 1,180 | 2,540 |
90 Days or Greater Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 7,135 | 5,891 |
Past due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 21,490 | 21,157 |
Current | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 3,315,199 | 3,329,716 |
Commercial. | Commercial | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 452,231 | 463,778 |
Commercial. | Commercial | 30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 3,522 | 6,688 |
Commercial. | Commercial | 60-89 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 1,180 | 2,030 |
Commercial. | Commercial | 90 Days or Greater Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 1,955 | 1,264 |
Commercial. | Commercial | Past due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 6,657 | 9,982 |
Commercial. | Commercial | Current | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 445,574 | 453,796 |
Real estate | CRE - Owner Occupied | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 585,031 | 583,253 |
Real estate | CRE - Owner Occupied | Current | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 585,031 | 583,253 |
Real estate | CRE - Non-Owner Occupied | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 1,271,184 | 1,256,590 |
Real estate | CRE - Non-Owner Occupied | 30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 5,662 | 1,289 |
Real estate | CRE - Non-Owner Occupied | Past due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 5,662 | 1,289 |
Real estate | CRE - Non-Owner Occupied | Current | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 1,265,522 | 1,255,301 |
Real estate | Land & Construction | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 129,712 | 140,513 |
Real estate | Land & Construction | 30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 3,550 | 955 |
Real estate | Land & Construction | 90 Days or Greater Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 4,672 | 3,706 |
Real estate | Land & Construction | Past due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 8,222 | 4,661 |
Real estate | Land & Construction | Current | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 121,490 | 135,852 |
Real estate | Home Equity | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 122,794 | 119,125 |
Real estate | Home Equity | 30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 441 | |
Real estate | Home Equity | 90 Days or Greater Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 142 | |
Real estate | Home Equity | Past due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 441 | 142 |
Real estate | Home Equity | Current | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 122,353 | 118,983 |
Real estate | Multi-Family | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 269,263 | 269,734 |
Real estate | Multi-Family | Current | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 269,263 | 269,734 |
Real estate | Residential Mortgage | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 490,035 | 496,961 |
Real estate | Residential Mortgage | 30-59 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 3,794 | |
Real estate | Residential Mortgage | 60-89 Days Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 510 | |
Real estate | Residential Mortgage | 90 Days or Greater Past Due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 508 | 779 |
Real estate | Residential Mortgage | Past due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 508 | 5,083 |
Real estate | Residential Mortgage | Current | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 489,527 | 491,878 |
Consumer | Consumer and Other | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 16,439 | 20,919 |
Consumer | Consumer and Other | Current | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | $ 16,439 | $ 20,919 |
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 ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | $ 3,336,689 | $ 3,350,873 |
Nonaccrual loans | 5,920 | 6,818 |
Nonaccrual loans | 7,871 | 7,707 |
Past due | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 21,490 | 21,157 |
Nonaccrual loans | 5,184 | 6,100 |
Current | ||
Aging of Past Due Loans by Class of Loans | ||
Total loan balance | 3,315,199 | 3,329,716 |
Nonaccrual loans | $ 736 | $ 718 |
Loans and Allowance for Credi_8
Loans and Allowance for Credit Losses on Loans - Credit Quality Indicators (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Loans | ||
2024/2023 | $ 123,693 | $ 455,535 |
2023/2022 | 384,695 | 642,395 |
2022/2021 | 613,186 | 757,210 |
2021/2020 | 751,043 | 128,649 |
2020/2019 | 125,874 | 217,307 |
Prior Periods | 949,302 | 743,954 |
Revolving Loans Amortized Cost Basis | 388,896 | 405,823 |
Total loan balance | 3,336,689 | 3,350,873 |
Balance to report | 3,288,214 | 3,302,420 |
Loan classified as loss | ||
Loans | ||
Balance to report | 0 | 0 |
Risk Grades | ||
Loans | ||
2024/2023 | 123,693 | 455,535 |
2023/2022 | 384,695 | 642,395 |
2022/2021 | 613,186 | 757,210 |
2021/2020 | 751,043 | 128,649 |
2020/2019 | 125,874 | 217,307 |
Prior Periods | 949,302 | 743,954 |
Revolving Loans Amortized Cost Basis | 388,896 | 405,823 |
Total loan balance | 3,336,689 | 3,350,873 |
Risk Grades | Pass | ||
Loans | ||
2024/2023 | 121,669 | 449,132 |
2023/2022 | 383,908 | 637,785 |
2022/2021 | 608,307 | 749,811 |
2021/2020 | 738,465 | 127,132 |
2020/2019 | 121,311 | 208,280 |
Prior Periods | 914,921 | 715,749 |
Revolving Loans Amortized Cost Basis | 380,390 | 398,528 |
Total loan balance | 3,268,971 | 3,286,417 |
Risk Grades | Special Mention | ||
Loans | ||
2024/2023 | 2,020 | 4,270 |
2023/2022 | 787 | 1,342 |
2022/2021 | 2,637 | 3,344 |
2021/2020 | 3,965 | 462 |
2020/2019 | 457 | 7,626 |
Prior Periods | 17,733 | 13,072 |
Revolving Loans Amortized Cost Basis | 4,727 | 2,577 |
Total loan balance | 32,326 | 32,693 |
Risk Grades | Substandard | ||
Loans | ||
2024/2023 | 4 | 2,133 |
2023/2022 | 2,489 | |
2022/2021 | 2,242 | |
2021/2020 | 4,564 | 100 |
2020/2019 | 3,139 | 1,285 |
Prior Periods | 15,744 | 14,362 |
Revolving Loans Amortized Cost Basis | 3,779 | 4,576 |
Total loan balance | 29,472 | 24,945 |
Risk Grades | Substandard-Nonaccrual | ||
Loans | ||
2023/2022 | 779 | |
2022/2021 | 4,055 | |
2021/2020 | 4,049 | 955 |
2020/2019 | 967 | 116 |
Prior Periods | 904 | 771 |
Revolving Loans Amortized Cost Basis | 142 | |
Total loan balance | 5,920 | 6,818 |
Commercial. | Commercial | ||
Loans | ||
2024/2023 | 76,030 | 101,498 |
2023/2022 | 36,708 | 27,858 |
2022/2021 | 26,317 | 20,122 |
2021/2020 | 19,189 | 15,029 |
2020/2019 | 13,465 | 12,327 |
Prior Periods | 38,837 | 27,874 |
Revolving Loans Amortized Cost Basis | 241,685 | 259,070 |
Total loan balance | 452,231 | 463,778 |
Commercial. | Commercial | Pass | ||
Loans | ||
2024/2023 | 74,006 | 99,387 |
2023/2022 | 36,626 | 25,250 |
2022/2021 | 23,777 | 19,732 |
2021/2020 | 18,808 | 14,929 |
2020/2019 | 13,368 | 11,893 |
Prior Periods | 30,291 | 22,134 |
Revolving Loans Amortized Cost Basis | 239,157 | 258,461 |
Total loan balance | 436,033 | 451,786 |
Commercial. | Commercial | Special Mention | ||
Loans | ||
2024/2023 | 2,020 | 2,107 |
2023/2022 | 82 | 1,092 |
2022/2021 | 1,062 | 41 |
2021/2020 | 38 | |
2020/2019 | 133 | |
Prior Periods | 3,272 | 1,134 |
Revolving Loans Amortized Cost Basis | 2,471 | 467 |
Total loan balance | 8,945 | 4,974 |
Commercial. | Commercial | Substandard | ||
Loans | ||
2024/2023 | 4 | 4 |
2023/2022 | 1,516 | |
2022/2021 | 1,478 | |
2021/2020 | 100 | |
2020/2019 | 97 | 185 |
Prior Periods | 4,490 | 3,835 |
Revolving Loans Amortized Cost Basis | 57 | 142 |
Total loan balance | 6,126 | 5,782 |
Commercial. | Commercial | Substandard-Nonaccrual | ||
Loans | ||
2022/2021 | 349 | |
2021/2020 | 343 | |
2020/2019 | 116 | |
Prior Periods | 784 | 771 |
Total loan balance | 1,127 | 1,236 |
Real estate | CRE - Owner Occupied | ||
Loans | ||
2024/2023 | 12,117 | 32,993 |
2023/2022 | 32,194 | 86,938 |
2022/2021 | 84,598 | 113,854 |
2021/2020 | 112,960 | 68,646 |
2020/2019 | 68,091 | 53,985 |
Prior Periods | 264,964 | 216,535 |
Revolving Loans Amortized Cost Basis | 10,107 | 10,302 |
Total loan balance | 585,031 | 583,253 |
Real estate | CRE - Owner Occupied | Pass | ||
Loans | ||
2024/2023 | 12,117 | 32,993 |
2023/2022 | 32,194 | 86,688 |
2022/2021 | 84,349 | 110,613 |
2021/2020 | 109,741 | 68,184 |
2020/2019 | 64,592 | 52,885 |
Prior Periods | 262,613 | 214,729 |
Revolving Loans Amortized Cost Basis | 10,107 | 10,302 |
Total loan balance | 575,713 | 576,394 |
Real estate | CRE - Owner Occupied | Special Mention | ||
Loans | ||
2023/2022 | 250 | |
2022/2021 | 249 | 3,241 |
2021/2020 | 3,219 | 462 |
2020/2019 | 457 | |
Prior Periods | 1,251 | 1,802 |
Total loan balance | 5,176 | 5,755 |
Real estate | CRE - Owner Occupied | Substandard | ||
Loans | ||
2020/2019 | 3,042 | 1,100 |
Prior Periods | 1,100 | 4 |
Total loan balance | 4,142 | 1,104 |
Real estate | CRE - Non-Owner Occupied | ||
Loans | ||
2024/2023 | 21,427 | 225,505 |
2023/2022 | 226,112 | 243,080 |
2022/2021 | 240,250 | 267,870 |
2021/2020 | 265,890 | 28,315 |
2020/2019 | 27,717 | 100,141 |
Prior Periods | 484,346 | 388,206 |
Revolving Loans Amortized Cost Basis | 5,442 | 3,473 |
Total loan balance | 1,271,184 | 1,256,590 |
Real estate | CRE - Non-Owner Occupied | Pass | ||
Loans | ||
2024/2023 | 21,427 | 225,505 |
2023/2022 | 226,112 | 243,080 |
2022/2021 | 240,250 | 267,870 |
2021/2020 | 260,618 | 28,315 |
2020/2019 | 27,717 | 92,648 |
Prior Periods | 465,826 | 370,552 |
Revolving Loans Amortized Cost Basis | 5,116 | 3,199 |
Total loan balance | 1,247,066 | 1,231,169 |
Real estate | CRE - Non-Owner Occupied | Special Mention | ||
Loans | ||
2021/2020 | 708 | |
2020/2019 | 7,493 | |
Prior Periods | 10,958 | 10,040 |
Total loan balance | 11,666 | 17,533 |
Real estate | CRE - Non-Owner Occupied | Substandard | ||
Loans | ||
2021/2020 | 4,564 | |
Prior Periods | 7,562 | 7,614 |
Revolving Loans Amortized Cost Basis | 326 | 274 |
Total loan balance | 12,452 | 7,888 |
Real estate | Land & Construction | ||
Loans | ||
2024/2023 | 9,596 | 44,434 |
2023/2022 | 38,701 | 52,862 |
2022/2021 | 39,325 | 31,125 |
2021/2020 | 26,789 | 10,228 |
2020/2019 | 10,213 | 1,864 |
Prior Periods | 5,088 | |
Total loan balance | 129,712 | 140,513 |
Real estate | Land & Construction | Pass | ||
Loans | ||
2024/2023 | 9,596 | 40,142 |
2023/2022 | 38,701 | 52,862 |
2022/2021 | 39,325 | 27,419 |
2021/2020 | 23,083 | 9,273 |
2020/2019 | 9,246 | 1,864 |
Prior Periods | 1,844 | |
Total loan balance | 121,795 | 131,560 |
Real estate | Land & Construction | Special Mention | ||
Loans | ||
2024/2023 | 2,163 | |
Prior Periods | 2,163 | |
Total loan balance | 2,163 | 2,163 |
Real estate | Land & Construction | Substandard | ||
Loans | ||
2024/2023 | 2,129 | |
Prior Periods | 1,081 | |
Total loan balance | 1,081 | 2,129 |
Real estate | Land & Construction | Substandard-Nonaccrual | ||
Loans | ||
2022/2021 | 3,706 | |
2021/2020 | 3,706 | 955 |
2020/2019 | 967 | |
Total loan balance | 4,673 | 4,661 |
Real estate | Home Equity | ||
Loans | ||
Prior Periods | 2,175 | 1,463 |
Revolving Loans Amortized Cost Basis | 120,619 | 117,662 |
Total loan balance | 122,794 | 119,125 |
Real estate | Home Equity | Pass | ||
Loans | ||
Prior Periods | 2,055 | 1,463 |
Revolving Loans Amortized Cost Basis | 114,967 | 111,250 |
Total loan balance | 117,022 | 112,713 |
Real estate | Home Equity | Special Mention | ||
Loans | ||
Revolving Loans Amortized Cost Basis | 2,256 | 2,110 |
Total loan balance | 2,256 | 2,110 |
Real estate | Home Equity | Substandard | ||
Loans | ||
Revolving Loans Amortized Cost Basis | 3,396 | 4,160 |
Total loan balance | 3,396 | 4,160 |
Real estate | Home Equity | Substandard-Nonaccrual | ||
Loans | ||
Prior Periods | 120 | |
Revolving Loans Amortized Cost Basis | 142 | |
Total loan balance | 120 | 142 |
Real estate | Multi-Family | ||
Loans | ||
2024/2023 | 4,523 | 47,089 |
2023/2022 | 47,031 | 41,112 |
2022/2021 | 40,893 | 55,557 |
2021/2020 | 54,977 | 5,394 |
2020/2019 | 5,358 | 42,129 |
Prior Periods | 116,026 | 78,098 |
Revolving Loans Amortized Cost Basis | 455 | 355 |
Total loan balance | 269,263 | 269,734 |
Real estate | Multi-Family | Pass | ||
Loans | ||
2024/2023 | 4,523 | 47,089 |
2023/2022 | 47,031 | 41,112 |
2022/2021 | 40,893 | 55,557 |
2021/2020 | 54,977 | 5,394 |
2020/2019 | 5,358 | 42,129 |
Prior Periods | 116,026 | 75,890 |
Revolving Loans Amortized Cost Basis | 455 | 355 |
Total loan balance | 269,263 | 267,526 |
Real estate | Multi-Family | Substandard | ||
Loans | ||
Prior Periods | 2,208 | |
Total loan balance | 2,208 | |
Real estate | Residential Mortgage | ||
Loans | ||
2024/2023 | 1,684 | |
2023/2022 | 1,678 | 189,169 |
2022/2021 | 180,430 | 268,617 |
2021/2020 | 271,180 | 1,037 |
2020/2019 | 1,030 | 6,861 |
Prior Periods | 35,717 | 29,593 |
Total loan balance | 490,035 | 496,961 |
Real estate | Residential Mortgage | Pass | ||
Loans | ||
2024/2023 | 1,684 | |
2023/2022 | 1,678 | 187,417 |
2022/2021 | 178,340 | 268,617 |
2021/2020 | 271,180 | 1,037 |
2020/2019 | 1,030 | 6,861 |
Prior Periods | 34,206 | 28,892 |
Total loan balance | 486,434 | 494,508 |
Real estate | Residential Mortgage | Special Mention | ||
Loans | ||
2022/2021 | 1,326 | |
Total loan balance | 1,326 | |
Real estate | Residential Mortgage | Substandard | ||
Loans | ||
2023/2022 | 973 | |
2022/2021 | 764 | |
Prior Periods | 1,511 | 701 |
Total loan balance | 2,275 | 1,674 |
Real estate | Residential Mortgage | Substandard-Nonaccrual | ||
Loans | ||
2023/2022 | 779 | |
Total loan balance | 779 | |
Consumer | Consumer and Other | ||
Loans | ||
2024/2023 | 2,332 | |
2023/2022 | 2,271 | 1,376 |
2022/2021 | 1,373 | 65 |
2021/2020 | 58 | |
Prior Periods | 2,149 | 2,185 |
Revolving Loans Amortized Cost Basis | 10,588 | 14,961 |
Total loan balance | 16,439 | 20,919 |
Consumer | Consumer and Other | Pass | ||
Loans | ||
2024/2023 | 2,332 | |
2023/2022 | 1,566 | 1,376 |
2022/2021 | 1,373 | 3 |
2021/2020 | 58 | |
Prior Periods | 2,060 | 2,089 |
Revolving Loans Amortized Cost Basis | 10,588 | 14,961 |
Total loan balance | 15,645 | 20,761 |
Consumer | Consumer and Other | Special Mention | ||
Loans | ||
2023/2022 | 705 | |
2022/2021 | 62 | |
Prior Periods | 89 | 96 |
Total loan balance | $ 794 | $ 158 |
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, 2024 | Mar. 31, 2023 | |
Current period gross charge-offs | ||
2020/2019 | $ 49 | |
Prior Periods | $ 358 | 85 |
Revolving Loans | 246 | |
Total | 358 | 380 |
Commercial. | Commercial | ||
Current period gross charge-offs | ||
2020/2019 | 49 | |
Prior Periods | 358 | 85 |
Total | $ 358 | 134 |
Real estate | Home Equity | ||
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, 2024 | Dec. 31, 2023 |
Business Assets | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Collateral dependent loans | $ 203,000 | $ 290,000 |
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, 2024 USD ($) loan | Mar. 31, 2023 USD ($) | |
Financing Receivable, Modifications [Line Items] | ||
Number of loans for which multiple concessions are provided | loan | 1 | |
Total | $ 3,000 | |
Total Class of Financing Receivables | 0.01% | 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 | $ 33,000 | 36,000 |
Commercial | ||
Financing Receivable, Modifications [Line Items] | ||
Total | $ 3,000 | |
Commercial. | Commercial | ||
Financing Receivable, Modifications [Line Items] | ||
Total Class of Financing Receivables | 0.01% | 0.03% |
Commercial. | Commercial | Principal Forgiveness | ||
Financing Receivable, Modifications [Line Items] | ||
Total | $ 6,000 | |
Commercial. | Commercial | Payment Delay | ||
Financing Receivable, Modifications [Line Items] | ||
Total | 88,000 | |
Commercial. | Commercial | Term Extension | ||
Financing Receivable, Modifications [Line Items] | ||
Total | $ 33,000 | $ 36,000 |
Loans and Allowance for Cred_12
Loans and Allowance for Credit Losses on Loans - Performance of loans that have been modified (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Financing Receivable, Recorded Investment, Past Due [Line Items] | |
Total financing receivable modified | $ 42 |
60-89 Days Past Due | |
Financing Receivable, Recorded Investment, Past Due [Line Items] | |
Total financing receivable modified | 36 |
90 Days or Greater Past Due | |
Financing Receivable, Recorded Investment, Past Due [Line Items] | |
Total financing receivable modified | 6 |
Commercial. | Commercial | |
Financing Receivable, Recorded Investment, Past Due [Line Items] | |
Total financing receivable modified | 42 |
Commercial. | Commercial | 60-89 Days Past Due | |
Financing Receivable, Recorded Investment, Past Due [Line Items] | |
Total financing receivable modified | 36 |
Commercial. | Commercial | 90 Days or Greater Past Due | |
Financing Receivable, Recorded Investment, Past Due [Line Items] | |
Total financing receivable modified | $ 6 |
Loans and Allowance for Cred_13
Loans and Allowance for Credit Losses on Loans - Financial effect of the loan modification (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Financing Receivable, Modifications [Line Items] | ||
Principal Forgiveness | $ 3,000 | |
Weighted Average Term Extension (Months) | 10 months | 9 months |
Payment default for loans modified | $ 0 | $ 0 |
Principal Forgiveness [Member] | ||
Financing Receivable, Modifications [Line Items] | ||
Principal Forgiveness | 6,000 | |
Commercial | ||
Financing Receivable, Modifications [Line Items] | ||
Principal Forgiveness | $ 3,000 | |
Weighted Average Term Extension (Months) | 9 months | |
Commercial. | Commercial | ||
Financing Receivable, Modifications [Line Items] | ||
Weighted Average Term Extension (Months) | 10 months | |
Commercial. | Commercial | Principal Forgiveness [Member] | ||
Financing Receivable, Modifications [Line Items] | ||
Principal Forgiveness | $ 6,000 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 | |
Goodwill | |||
Goodwill | $ 167,631,000 | $ 167,631,000 | $ 167,631,000 |
BVF/CSNK | |||
Goodwill | |||
Goodwill acquired | 13,044,000 | ||
Focus | |||
Goodwill | |||
Goodwill acquired | 32,619,000 | ||
Tri Valley Bank | |||
Goodwill | |||
Goodwill acquired | 13,819,000 | ||
United American Bank | |||
Goodwill | |||
Goodwill acquired | 24,271,000 | ||
Presidio bank | |||
Goodwill | |||
Goodwill acquired | 83,878,000 | ||
Banking | |||
Goodwill | |||
Goodwill | 154,587,000 | 154,587,000 | 154,587,000 |
Factoring | |||
Goodwill | |||
Goodwill | $ 13,044,000 | $ 13,044,000 | $ 13,044,000 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Other Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Other Intangible Assets | ||
Gross Carrying amount | $ 27,033 | $ 27,033 |
Accumulated Amortization | (18,959) | (18,406) |
Total | 8,074 | 8,627 |
Core deposit intangibles | ||
Other Intangible Assets | ||
Gross Carrying amount | 25,023 | 25,023 |
Accumulated Amortization | (17,152) | (16,646) |
Total | 7,871 | 8,377 |
Customer relationship and brokered relationship intangibles | ||
Other Intangible Assets | ||
Gross Carrying amount | 1,900 | 1,900 |
Accumulated Amortization | (1,788) | (1,741) |
Total | 112 | 159 |
Below market leases | ||
Other Intangible Assets | ||
Gross Carrying amount | 110 | 110 |
Accumulated Amortization | (19) | (19) |
Total | $ 91 | $ 91 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Estimated Amortization Expense (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Estimated Amortization Expense | ||
2024 remaining | $ 1,634 | |
2025 | 1,813 | |
2026 | 1,530 | |
2027 | 1,456 | |
2028 | 1,017 | |
2029 | 624 | |
Total | 8,074 | $ 8,627 |
Core deposit | ||
Estimated Amortization Expense | ||
2024 remaining | 1,517 | |
2025 | 1,795 | |
2026 | 1,512 | |
2027 | 1,438 | |
2028 | 999 | |
2029 | 610 | |
Total | 7,871 | 8,377 |
Customer relationship and brokered relationship intangibles | ||
Estimated Amortization Expense | ||
2024 remaining | 112 | |
Total | 112 | 159 |
Below/ (Above) market-value lease | ||
Estimated Amortization Expense | ||
2024 remaining | 5 | |
2025 | 18 | |
2026 | 18 | |
2027 | 18 | |
2028 | 18 | |
2029 | 14 | |
Total | $ 91 | $ 91 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Impairment of Intangible Assets (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
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, 2024 | Dec. 31, 2023 |
Net deferred tax assets | ||
Net deferred tax assets | $ 27,513 | $ 29,765 |
Valuation allowance for deferred tax assets | $ 0 | $ 0 |
Income Taxes - Carry Amounts of
Income Taxes - Carry Amounts of the Low Income Housing Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Income Taxes | ||
Low income housing investments | $ 2,615 | $ 2,794 |
Future commitments | $ 494 | $ 494 |
Income Taxes - Future Commitmen
Income Taxes - Future Commitments of the Low Income Housing Investments (Details) - Low income housing investments | Mar. 31, 2024 USD ($) |
Future Commitments | |
Remaining period of 2024 | $ 14,000 |
2025 through 2027 | $ 480,000 |
Income Taxes - Components of Lo
Income Taxes - Components of Low Income Housing Investment (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Taxes | ||
Low income housing tax credits | $ 141,000 | $ 180,000 |
Low income housing investment expense | $ 148,000 | $ 186,000 |
Benefit Plans - Defined Benefit
Benefit Plans - Defined Benefit Plans - Nonqualified Defined Benefit Pension Plan (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Supplemental Retirement Plan | |
Supplemental Retirement Plan | |
Plan assets associated with the plan | $ 0 |
Benefit Plans - Defined Benef_2
Benefit Plans - Defined Benefit Plans - Change in Projected Benefit Obligation (Details) - Split-Dollar Life Insurance Benefit Plan - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Change in projected benefit obligation: | |||
Projected benefit obligation at beginning of year | $ 6,951 | $ 7,060 | $ 7,060 |
Interest cost | 86 | $ 91 | 365 |
Actuarial loss | (474) | ||
Projected benefit obligation at end of period | $ 7,037 | $ 6,951 |
Benefit Plans - Defined Benef_3
Benefit Plans - Defined Benefit Plans - Amounts Recognized in Accumulated Other Comprehensive Loss (Details) - Split-Dollar Life Insurance Benefit Plan - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Amounts Recognized in Accumulated Other Comprehensive Loss | ||
Net actuarial loss | $ 2,183 | $ 2,108 |
Prior transition obligation | 678 | 701 |
Accumulated other comprehensive loss | $ 2,861 | $ 2,809 |
Benefit Plans - Defined Benef_4
Benefit Plans - Defined Benefit Plans - Components of Pension Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Supplemental Retirement Plan | |||
Components of net periodic benefit cost: | |||
Service cost | $ 50 | $ 48 | |
Interest cost | 318 | 324 | |
Amortization of net actuarial loss | 27 | 13 | |
Net periodic benefit cost | 395 | 385 | |
Amount recognized in other comprehensive income (loss) | 18 | 8 | |
Split-Dollar Life Insurance Benefit Plan | |||
Components of net periodic benefit cost: | |||
Amortization of prior transition obligation and actuarial losses | (52) | (47) | |
Interest cost | 86 | 91 | $ 365 |
Net periodic benefit cost | 34 | 44 | |
Amount recognized in other comprehensive income (loss) | $ (52) | $ (48) |
Fair Value - Financial Assets a
Fair Value - Financial Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | $ 404,474 | $ 442,636 |
U.S. Treasury | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 347,453 | 382,369 |
Agency mortgage-backed securities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 57,021 | 60,267 |
Significant Other Observable Inputs (Level 2) | Agency mortgage-backed securities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 60,267 | |
Recurring basis | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
I/O strip receivables | 110 | 117 |
Transfers between Level 1 and Level 2: | ||
Transfers between Level 1 and Level 2 | 0 | 0 |
Recurring basis | U.S. Treasury | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 347,453 | 382,369 |
Recurring basis | Agency mortgage-backed securities | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
Securities available-for-sale | 57,021 | |
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 | 347,453 | 382,369 |
Recurring basis | Significant Other Observable Inputs (Level 2) | ||
Financial Assets and Liabilities Measured on a Recurring Basis | ||
I/O strip receivables | 110 | $ 117 |
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 | $ 57,021 |
Fair Value - Impaired Loans Hel
Fair Value - Impaired Loans Held-for-investment - Additional Disclosures (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
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, 2024 | Dec. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Assets | ||||
Securities available-for-sale | $ 404,474,000 | $ 442,636,000 | ||
Securities held-to-maturity | 542,858,000 | 564,127,000 | ||
FHLB stock, FRB stock, and other investments | 32,544,000 | 32,540,000 | ||
Liabilities | ||||
Subordinated debt | 39,539,000 | 39,502,000 | ||
Allowance for credit losses on loans | 47,888,000 | 47,958,000 | $ 47,273,000 | $ 47,512,000 |
Carrying Amounts | ||||
Assets | ||||
Cash and cash equivalents | 541,359,000 | 408,129,000 | ||
Securities available-for-sale | 404,474,000 | 442,636,000 | ||
Securities held-to-maturity | 636,249,000 | 650,565,000 | ||
Loans (including loans held-for-sale) | 3,338,048,000 | 3,352,583,000 | ||
FHLB stock, FRB stock, and other investments | 32,544,000 | 32,540,000 | ||
Accrued interest receivable | 16,246,000 | 14,959,000 | ||
I/O strips receivables | 110,000 | 117,000 | ||
Liabilities | ||||
Time deposits | 488,112,000 | 469,472,000 | ||
Other deposits | 3,956,548,000 | 3,908,986,000 | ||
Subordinated debt | 39,539,000 | 39,502,000 | ||
Accrued interest payable | 5,296,000 | 4,688,000 | ||
Balance | ||||
Assets | ||||
Cash and cash equivalents | 541,359,000 | 408,129,000 | ||
Securities available-for-sale | 404,474,000 | 442,636,000 | ||
Securities held-to-maturity | 542,858,000 | 564,127,000 | ||
Loans (including loans held-for-sale) | 3,144,819,000 | 3,174,717,000 | ||
Accrued interest receivable | 16,246,000 | 14,959,000 | ||
I/O strips receivables | 110,000 | 117,000 | ||
Liabilities | ||||
Time deposits | 491,943,000 | 471,693,000 | ||
Other deposits | 3,956,548,000 | 3,908,986,000 | ||
Subordinated debt | 32,339,000 | 31,902,000 | ||
Accrued interest payable | 5,296,000 | 4,698,000 | ||
Balance | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||||
Assets | ||||
Cash and cash equivalents | 541,359,000 | 408,129,000 | ||
Securities available-for-sale | 347,453,000 | 382,369,000 | ||
Accrued interest receivable | 1,592,000 | 1,255,000 | ||
Balance | Significant Other Observable Inputs (Level 2) | ||||
Assets | ||||
Securities available-for-sale | 57,021,000 | 60,267,000 | ||
Securities held-to-maturity | 542,858,000 | 564,127,000 | ||
Loans (including loans held-for-sale) | 1,946,000 | 2,205,000 | ||
Accrued interest receivable | 2,482,000 | 1,764,000 | ||
I/O strips receivables | 110,000 | 117,000 | ||
Liabilities | ||||
Time deposits | 491,943,000 | 471,693,000 | ||
Other deposits | 3,956,548,000 | 3,908,986,000 | ||
Subordinated debt | 32,339,000 | 31,902,000 | ||
Accrued interest payable | 5,296,000 | 4,698,000 | ||
Balance | Significant Unobservable Inputs (Level 3) | ||||
Assets | ||||
Loans (including loans held-for-sale) | 3,142,873,000 | 3,172,512,000 | ||
Accrued interest receivable | $ 12,172,000 | $ 11,940,000 |
Equity Plan - General Disclosur
Equity Plan - General Disclosures (Details) - shares | 3 Months Ended | |||
Mar. 31, 2024 | May 25, 2023 | May 21, 2020 | May 20, 2020 | |
2013 Plan | ||||
Equity Plan | ||||
Number of shares authorized for equity plan | 5,000,000 | 3,000,000 | ||
2023 Plan | ||||
Equity Plan | ||||
Number of shares reserved for future issuance | 600,000 | |||
Number of shares available for future grants | 946,954 | |||
Employee Stock Option [Member] | ||||
Equity Plan | ||||
Vesting period | 4 years | |||
Expiration term | 10 years | |||
Restricted stock | ||||
Equity Plan | ||||
Stocks granted other than stock (or unit) option plans (in shares) | 57,123 | |||
RSU | ||||
Equity Plan | ||||
Stocks granted other than stock (or unit) option plans (in shares) | 239,531 | |||
RSU | 2023 Plan | ||||
Equity Plan | ||||
Vesting period | 3 years | |||
PRSU | ||||
Equity Plan | ||||
Performance period | 3 years | |||
Stocks granted other than stock (or unit) option plans (in shares) | 149,923 | |||
Percentage of award value in PRSUs | 50% | |||
Duration to cliff vesting | 3 years | |||
Nonqualified stock options | ||||
Equity Plan | ||||
Stock options granted (in shares) | 57,123 | |||
Board of Directors | Restricted stock | ||||
Equity Plan | ||||
Vesting period | 1 year |
Equity Plan - Stock Option Acti
Equity Plan - Stock Option Activity (Details) - Employee Stock Option [Member] | 3 Months Ended |
Mar. 31, 2024 USD ($) $ / shares shares | |
Number of Shares | |
Outstanding at the beginning of the period (in shares) | 2,637,356 |
Exercised (in shares) | (72,882) |
Forfeited or expired (in shares) | (112,482) |
Outstanding at the end of the period (in shares) | 2,451,992 |
Vested or expected to vest (in shares) | 2,304,872 |
Exercisable at the end of the period (in shares) | 1,869,398 |
Weighted Average Exercise Price | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 10.40 |
Exercised (in dollars per share) | $ / shares | 5.29 |
Forfeited or expired (in dollars per share) | $ / shares | 9.85 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 10.58 |
Additional Information | |
Weighted Average Remaining Contractual Life - Outstanding at the end of the period (in years) | 5 years 7 months 9 days |
Weighted Average Remaining Contractual Life - Vested or expected to vest (in years) | 5 years 7 months 9 days |
Weighted Average Remaining Contractual Life - Exercisable at the end of the period (in years) | 4 years 8 months 15 days |
Aggregate Intrinsic Value - Outstanding at the end of the period (in dollars) | $ | $ 1,086,661 |
Aggregate Intrinsic Value - Vested or expected to vest (in dollars) | $ | 1,021,461 |
Aggregate Intrinsic Value - Exercisable at the end of the period (in dollars) | $ | $ 748,468 |
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, 2024 | Mar. 31, 2023 | |
Information Related to the Equity Plans | ||
Cash received from option exercise | $ 385 | $ 683 |
Employee Stock Option [Member] | ||
Information Related to the Equity Plans | ||
Intrinsic value of options exercised | 268,715 | 466,308 |
Cash received from option exercise | 385,219 | 682,825 |
Tax (expense) benefit realized from option exercises | $ (22,452) | $ 3,968 |
Equity Plan - Unrecognized Comp
Equity Plan - Unrecognized Compensation Cost -Nonvested Stock Options (Details) | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Employee Stock Option [Member] | |
Unrecognized Compensation Cost | |
Total unrecognized compensation cost related to nonvested stock options granted | $ 1,014,000 |
Expected weighted-average period for recognition of compensation costs related to nonvested stock options | 2 years 5 months 23 days |
Restricted stock | |
Unrecognized Compensation Cost | |
Total unrecognized compensation cost related to nonvested stock options granted | $ 1,056,000 |
Expected weighted-average period for recognition of compensation costs related to nonvested stock options | 1 year 1 month 2 days |
Restricted Stock Units (RSUs) | |
Unrecognized Compensation Cost | |
Total unrecognized compensation cost related to nonvested stock options granted | $ 2,508,000 |
Expected weighted-average period for recognition of compensation costs related to nonvested stock options | 2 years 8 months 8 days |
PRSU | |
Unrecognized Compensation Cost | |
Total unrecognized compensation cost related to nonvested stock options granted | $ 1,764,000 |
Expected weighted-average period for recognition of compensation costs related to nonvested stock options | 2 years 7 months 6 days |
Equity Plan - Restricted Stock
Equity Plan - Restricted Stock Activity (Details) | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Nonqualified stock options | |
Number of Shares | |
Stock options granted (in shares) | 57,123 |
Restricted stock | |
Number of Shares | |
Nonvested shares at the beginning of the period (in shares) | 185,413 |
Stocks granted other than stock (or unit) option plans (in shares) | 57,123 |
Forfeited or expired (in shares) | (23,215) |
Nonvested shares at the end of the period (in shares) | 219,321 |
Weighted Average Grant Date Fair Value | |
Nonvested shares at the beginning of the period (in dollars per share) | $ / shares | $ 10.87 |
Granted (in dollars per share) | $ / shares | 8.49 |
Forfeited or expired (in dollars per share) | $ / shares | 11.36 |
Nonvested shares at the end of the period (in dollars per share) | $ / shares | $ 9.34 |
Restricted Stock Units (RSUs) | |
Number of Shares | |
Nonvested shares at the beginning of the period (in shares) | 119,362 |
Stocks granted other than stock (or unit) option plans (in shares) | 239,531 |
Forfeited or expired (in shares) | (18,355) |
Nonvested shares at the end of the period (in shares) | 340,538 |
Weighted Average Grant Date Fair Value | |
Nonvested shares at the beginning of the period (in dollars per share) | $ / shares | $ 7.41 |
Granted (in dollars per share) | $ / shares | 8.49 |
Forfeited or expired (in dollars per share) | $ / shares | 7.41 |
Nonvested shares at the end of the period (in dollars per share) | $ / shares | $ 8.17 |
PRSU | |
Number of Shares | |
Nonvested shares at the beginning of the period (in shares) | 119,358 |
Stocks granted other than stock (or unit) option plans (in shares) | 149,923 |
Forfeited or expired (in shares) | (18,355) |
Nonvested shares at the end of the period (in shares) | 250,926 |
Weighted Average Grant Date Fair Value | |
Nonvested shares at the beginning of the period (in dollars per share) | $ / shares | $ 7.41 |
Granted (in dollars per share) | $ / shares | 8.49 |
Forfeited or expired (in dollars per share) | $ / shares | 7.41 |
Nonvested shares at the end of the period (in dollars per share) | $ / shares | $ 8.06 |
Borrowing Arrangements - Collat
Borrowing Arrangements - Collateral value of loans and securities pledged (Details) - Line of credit - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Borrowing Arrangements | ||
Collateral value | $ 3,208,108 | $ 3,259,013 |
Total Available | 2,452,880 | 2,446,504 |
Remaining Available | 2,452,880 | 2,446,504 |
FHLB collateralized borrowing capacity | ||
Borrowing Arrangements | ||
Collateral value | 1,569,070 | 1,600,371 |
Total Available | 1,097,518 | 1,100,931 |
Remaining Available | 1,097,518 | 1,100,931 |
FRB discount window collateralized line of credit | ||
Borrowing Arrangements | ||
Collateral value | 1,639,038 | 1,658,642 |
Total Available | 1,245,362 | 1,235,573 |
Remaining Available | 1,245,362 | 1,235,573 |
Federal funds purchase arrangements | ||
Borrowing Arrangements | ||
Total Available | 90,000 | 90,000 |
Remaining Available | 90,000 | 90,000 |
Holding company line of credit | ||
Borrowing Arrangements | ||
Total Available | 20,000 | 20,000 |
Remaining Available | $ 20,000 | $ 20,000 |
Borrowing Arrangements - Securi
Borrowing Arrangements - Securities Sold under Repurchase Agreements (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Borrowing Arrangements | ||
Amount of securities sold under agreements | $ 0 | $ 0 |
Borrowing Arrangements - Subord
Borrowing Arrangements - Subordinated Debt (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | May 11, 2022 |
Subordinated Debt | |||
Subordinated debt, net of issuance costs | $ 39,539,000 | $ 39,502,000 | |
Sub Debt Due 2032 | |||
Subordinated Debt | |||
Principal amount | $ 40,000,000 | ||
Fixed interest rate (as a percent) | 5% | ||
Debt Issuance Costs | 461,000 | ||
Subordinated debt, net of issuance costs | $ 39,539,000 | ||
Sub Debt Due 2027 | |||
Subordinated Debt | |||
Principal amount | $ 40,000,000 | ||
Fixed interest rate (as a percent) | 5.25% |
Capital Requirements - General
Capital Requirements - General Information (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Capital Requirements | ||
Capital conservation buffer (as a percent) | 0.025% | 0.025% |
HBC | ||
Capital Requirements | ||
Capital conservation buffer (as a percent) | 0.025% | 0.025% |
Capital Requirements - Tabular
Capital Requirements - Tabular Disclosure (Details) $ in Thousands | Mar. 31, 2024 USD ($) | Dec. 31, 2023 USD ($) |
Total Capital (to risk-weighted assets) | ||
Actual, Amount | $ 598,795 | $ 594,371 |
Required For Capital Adequacy Purposes, Amount | $ 402,267 | $ 403,060 |
Actual, Ratio (as a percent) | 0.156 | 0.155 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.105 | 0.105 |
Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 513,473 | $ 511,799 |
Required For Capital Adequacy Purposes, Amount | $ 325,644 | $ 326,287 |
Actual, Ratio (as a percent) | 0.134 | 0.133 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.085 | 0.085 |
Common Equity Tier 1 Capital (to risk-weighted assets) | ||
Actual, Amount | $ 513,473 | $ 511,799 |
Required For Capital Adequacy Purposes, Amount | $ 268,178 | $ 268,707 |
Actual, Ratio (as a percent) | 0.134% | 0.133% |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.07% | 0.07% |
Tier 1 Capital (to average assets) | ||
Actual, Amount | $ 513,473 | $ 511,799 |
Required For Capital Adequacy Purposes, Amount | $ 200,413 | $ 204,024 |
Actual, Ratio (as a percent) | 0.102 | 0.100 |
Required For Capital Adequacy Purposes, Ratio (as a percent) | 0.040 | 0.040 |
HBC | ||
Total Capital (to risk-weighted assets) | ||
Actual, Amount | $ 577,519 | $ 572,907 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 382,910 | 383,542 |
Required For Capital Adequacy Purposes, Amount | $ 402,055 | $ 402,719 |
Actual, Ratio (as a percent) | 0.151 | 0.149 |
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 | $ 531,736 | $ 529,836 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 306,328 | 306,834 |
Required For Capital Adequacy Purposes, Amount | $ 325,473 | $ 326,011 |
Actual, Ratio (as a percent) | 0.139 | 0.138 |
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 | $ 531,736 | $ 529,836 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 248,891 | 249,302 |
Required For Capital Adequacy Purposes, Amount | $ 268,037 | $ 268,479 |
Actual, Ratio (as a percent) | 0.139% | 0.138% |
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 | $ 531,736 | $ 529,836 |
To Be Well Capitalized Under Regulatory Requirements, Amount | 250,346 | 254,869 |
Required For Capital Adequacy Purposes, Amount | $ 200,277 | $ 203,895 |
Actual, Ratio (as a percent) | 0.106 | 0.104 |
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, 2024 | Dec. 31, 2023 | |
Cash dividend | ||
Subordinated debt | $ 39,539,000 | $ 39,502,000 |
HBC | ||
Cash dividend | ||
Cash dividend available | 87,477,000 | |
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, 2024 USD ($) item person | Dec. 31, 2023 USD ($) | |
Commitments and Contingencies | ||
Number of pending legal proceedings | item | 3 | |
Number of employees filed employment-related lawsuits against the Bank | person | 3 | |
Commitments to extend credit, fixed rate | $ 79,379,000 | $ 100,449,000 |
Commitments to extend credit, variable rate | 1,076,621,000 | 1,048,607,000 |
Commitment to extend credit, total | $ 1,156,000,000 | $ 1,149,056,000 |
Percentage of unused commitments to outstanding gross loans | 35% | 34% |
Increase (decrease) to the allowance for credit losses on loans | $ (44,000) | |
Off-balance sheet, credit loss liability increase due to offsetting increase in loss factors in CECL model | 723,000 | $ 767,000 |
Unused lines of credit and commitments to make loans | ||
Commitments and Contingencies | ||
Commitments to extend credit, fixed rate | 73,278,000 | 96,166,000 |
Commitments to extend credit, variable rate | 1,068,636,000 | 1,041,608,000 |
Commitment to extend credit, total | 1,141,914,000 | 1,137,774,000 |
Standby letters of credit | ||
Commitments and Contingencies | ||
Commitments to extend credit, fixed rate | 6,101,000 | 4,283,000 |
Commitments to extend credit, variable rate | 7,985,000 | 6,999,000 |
Commitment to extend credit, total | $ 14,086,000 | $ 11,282,000 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Disaggregation of Revenue [Line Items] | ||
Noninterest Income In-scope of Topic 606 | $ 877 | $ 1,743 |
Noninterest Income Out-of-scope of Topic 606 | 1,170 | 1,023 |
Total noninterest income | 2,047 | 2,766 |
Service charges and fees on deposit accounts | ||
Disaggregation of Revenue [Line Items] | ||
Noninterest Income In-scope of Topic 606 | $ 877 | $ 1,743 |
Noninterest Expense (Details)
Noninterest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Noninterest Expense | ||
Salaries and employee benefits | $ 15,509 | $ 14,809 |
Occupancy and equipment | 2,443 | 2,400 |
Insurance expense | 1,634 | 1,520 |
Professional fees | 1,327 | 1,399 |
Data processing | 840 | 774 |
Client services | 782 | 445 |
Federal Deposit Insurance Corporation ("FDIC") assessments | 670 | 417 |
Other | 4,331 | 3,637 |
Total noninterest expense | $ 27,536 | $ 25,401 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Leases | ||
Lessee, Operating Lease, Option to renew | true | |
Operating Lease Cost (Cost resulting from lease payments) | $ 1,676 | $ 1,701 |
Operating Lease - Operating Cash Flows (Fixed Payments) | 1,684 | 1,645 |
Operating Lease - ROU assets | $ 30,726 | $ 32,123 |
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 | $ 30,726 | $ 32,123 |
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 | 5 years 7 months 24 days | 6 years 5 months 8 days |
Weighted Average Discount Rate - Operating Leases | 5.03% | 4.54% |
Leases - Maturity Analysis (Det
Leases - Maturity Analysis (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Mar. 31, 2023 |
Operating Lease Payments Due | ||
2024 remaining | $ 5,085 | |
2025 | 6,412 | |
2026 | 5,835 | |
2027 | 5,575 | |
2028 | 4,971 | |
Thereafter | 7,532 | |
Total undiscounted cash flows | 35,410 | |
Discount on cash flows | (4,684) | |
Total lease liability | $ 30,726 | $ 32,123 |
Business Segment Information -
Business Segment Information - Business Segments (Details) | 3 Months Ended |
Mar. 31, 2024 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 ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Operating Income | |||
Interest income | $ 57,551,000 | $ 56,274,000 | |
Total interest expense | 17,458,000 | 7,016,000 | |
Net interest income | 40,093,000 | 49,258,000 | |
Provision for (recapture of) credit losses on loans | 184,000 | 32,000 | |
Net interest income after provision | 39,909,000 | 49,226,000 | |
Noninterest income | 2,047,000 | 2,766,000 | |
Noninterest expense | 27,536,000 | 25,401,000 | |
Income before income taxes | 14,420,000 | 26,591,000 | |
Income tax expense | 4,254,000 | 7,674,000 | |
Net income | 10,166,000 | 18,917,000 | |
Total assets | 5,256,074,000 | 5,536,540,000 | $ 5,194,095,000 |
Loans, net of deferred fees | 3,336,102,000 | 3,261,915,000 | 3,350,378,000 |
Goodwill | 167,631,000 | 167,631,000 | 167,631,000 |
Banking | |||
Operating Income | |||
Interest income | 54,713,000 | 52,273,000 | |
Intersegment interest allocations | 423,000 | 705,000 | |
Total interest expense | 17,458,000 | 7,016,000 | |
Net interest income | 37,678,000 | 45,962,000 | |
Provision for (recapture of) credit losses on loans | 285,000 | 144,000 | |
Net interest income after provision | 37,393,000 | 45,818,000 | |
Noninterest income | 1,959,000 | 2,682,000 | |
Noninterest expense | 26,089,000 | 23,728,000 | |
Intersegment expense allocations | 128,000 | 174,000 | |
Income before income taxes | 13,391,000 | 24,946,000 | |
Income tax expense | 3,950,000 | 7,188,000 | |
Net income | 9,441,000 | 17,758,000 | |
Total assets | 5,172,553,000 | 5,453,352,000 | |
Loans, net of deferred fees | 3,280,404,000 | 3,192,491,000 | |
Goodwill | 154,587,000 | 154,587,000 | 154,587,000 |
Factoring | |||
Operating Income | |||
Interest income | 2,838,000 | 4,001,000 | |
Intersegment interest allocations | (423,000) | (705,000) | |
Net interest income | 2,415,000 | 3,296,000 | |
Provision for (recapture of) credit losses on loans | (101,000) | (112,000) | |
Net interest income after provision | 2,516,000 | 3,408,000 | |
Noninterest income | 88,000 | 84,000 | |
Noninterest expense | 1,447,000 | 1,673,000 | |
Intersegment expense allocations | (128,000) | (174,000) | |
Income before income taxes | 1,029,000 | 1,645,000 | |
Income tax expense | 304,000 | 486,000 | |
Net income | 725,000 | 1,159,000 | |
Total assets | 83,521,000 | 83,188,000 | |
Loans, net of deferred fees | 55,698,000 | 69,424,000 | |
Goodwill | $ 13,044,000 | $ 13,044,000 | $ 13,044,000 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | 3 Months Ended | ||
Apr. 25, 2024 | Mar. 31, 2024 | Mar. 31, 2023 | |
Subsequent Events | |||
Quarterly cash dividends declared to holders of common stock | $ 0.13 | $ 0.13 | |
Subsequent event | |||
Subsequent Events | |||
Quarterly cash dividends declared to holders of common stock | $ 0.13 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ 10,166 | $ 18,917 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |