Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 06, 2019 | |
Document And Entity Information Abstract | ||
Entity Registrant Name | First Western Financial Inc | |
Entity Central Index Key | 0001327607 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 7,986,128 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Cash and cash equivalents: | ||
Cash and due from banks | $ 3,828 | $ 1,574 |
Interest-bearing deposits in other financial institutions | 142,348 | 71,783 |
Total cash and cash equivalents | 146,176 | 73,357 |
Available-for-sale securities | 61,491 | 43,695 |
Correspondent bank stock, at cost | 582 | 2,488 |
Mortgage loans held for sale | 69,231 | 14,832 |
Loans, net of allowance of $7,675 and $7,451 | 918,911 | 886,515 |
Premises and equipment, net | 5,483 | 6,100 |
Accrued interest receivable | 2,968 | 2,844 |
Accounts receivable | 4,978 | 4,492 |
Other receivables | 865 | 1,391 |
Other real estate owned, net | 658 | 658 |
Goodwill | 19,686 | 24,811 |
Other intangible assets, net | 36 | 402 |
Deferred tax assets, net | 4,765 | 4,306 |
Company-owned life insurance | 14,993 | 14,709 |
Other assets | 17,549 | 3,724 |
Assets held for sale | 3,553 | |
Total assets | 1,271,925 | 1,084,324 |
Deposits: | ||
Noninterest-bearing | 231,535 | 202,856 |
Interest-bearing | 877,369 | 734,902 |
Total deposits | 1,108,904 | 937,758 |
Borrowings: | ||
Federal Home Loan Bank Topeka borrowings | 10,000 | 15,000 |
Subordinated notes | 6,560 | 6,560 |
Accrued interest payable | 356 | 231 |
Other liabilities | 20,262 | 7,900 |
Liabilities held for sale | 111 | |
Total liabilities | 1,146,193 | 967,449 |
COMMITMENTS AND CONTINGENCIES | ||
SHAREHOLDERS’ EQUITY | ||
Preferred stock - no par value; 1,000,000 shares authorized; 0 issued and outstanding | ||
Convertible preferred stock - no par value; 150,000 shares authorized; 0 shares issued and outstanding | ||
Common stock - no par value; 10,000,000 shares authorized; 7,983,284 and 7,968,420 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | ||
Additional paid-in capital | 143,026 | 141,359 |
Accumulated deficit | (17,527) | (23,199) |
Accumulated other comprehensive loss | 233 | (1,285) |
Total shareholders’ equity | 125,732 | 116,875 |
Total liabilities and shareholders’ equity | $ 1,271,925 | $ 1,084,324 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Allowance for loans | $ 7,675 | $ 7,451 |
Preferred Stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred Stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0 | $ 0 |
Common Stock, shares authorized | 10,000,000 | 10,000,000 |
Common Stock, shares issued | 7,983,284 | 7,968,420 |
Common Stock, shares outstanding | 7,983,284 | 7,968,420 |
Series D | ||
Preferred Stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred Stock, shares authorized | 150,000 | 150,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Interest and dividend income: | ||||
Loans, including fees | $ 10,672 | $ 9,468 | $ 31,490 | $ 27,144 |
Investment securities | 312 | 266 | 954 | 824 |
Federal funds sold and other | 489 | 206 | 1,254 | 483 |
Total interest and dividend income | 11,473 | 9,940 | 33,698 | 28,451 |
Interest expense: | ||||
Deposits | 3,363 | 1,761 | 9,268 | 4,332 |
Other borrowed funds | 170 | 391 | 559 | 1,394 |
Total interest expense | 3,533 | 2,152 | 9,827 | 5,726 |
Net interest income | 7,940 | 7,788 | 23,871 | 22,725 |
Less: provision for (recovery of) credit losses | 100 | 18 | 216 | (169) |
Net interest income, after provision for (recovery of) credit losses | 7,840 | 7,770 | 23,655 | 22,894 |
Non-interest income: | ||||
Trust and investment management fees | 4,824 | 4,770 | 14,186 | 14,413 |
Net gain on mortgage loans sold | 3,291 | 1,159 | 8,009 | 3,769 |
Bank fees | 283 | 361 | 912 | 1,426 |
Risk management and insurance fees | 176 | 249 | 838 | 916 |
Net gain on sale of securities | 119 | 119 | ||
Income on company-owned life insurance | 95 | 99 | 284 | 298 |
Total non-interest income | 8,788 | 6,638 | 24,348 | 20,822 |
Total income before non-interest expense | 16,628 | 14,408 | 48,003 | 43,716 |
Non-interest expense: | ||||
Salaries and employee benefits | 8,504 | 7,221 | 23,821 | 23,061 |
Occupancy and equipment | 1,388 | 1,427 | 4,193 | 4,439 |
Professional services | 745 | 805 | 2,557 | 2,637 |
Technology and information systems | 961 | 965 | 3,046 | 3,028 |
Data processing | 854 | 697 | 2,282 | 2,024 |
Marketing | 272 | 274 | 991 | 875 |
Amortization of other intangible assets | 52 | 208 | 366 | 668 |
Goodwill impairment | 1,572 | |||
Other | 666 | 579 | 1,873 | 1,814 |
Total non-interest expense | 13,442 | 12,176 | 40,701 | 38,546 |
Income (loss) before income tax | 3,186 | 2,232 | 7,302 | 5,170 |
Income tax expense | 780 | 543 | 1,865 | 1,247 |
Net income | 2,406 | 1,689 | 5,437 | 3,923 |
Preferred stock dividends | (255) | (1,378) | ||
Net income available to common shareholders | $ 2,406 | $ 1,434 | $ 5,437 | $ 2,545 |
Earnings per common share: | ||||
Basic | $ 0.30 | $ 0.19 | $ 0.69 | $ 0.40 |
Diluted | $ 0.30 | $ 0.19 | $ 0.69 | $ 0.40 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 2,406 | $ 1,689 | $ 5,437 | $ 3,923 |
Other comprehensive income (loss) items: | ||||
Net change in unrealized gains (losses) on available-for-sale securities | 321 | (373) | 2,364 | (1,219) |
Income tax effects | (83) | 136 | (611) | 309 |
Total other comprehensive income (loss) | 238 | (237) | 1,753 | (910) |
Comprehensive income | $ 2,644 | $ 1,452 | $ 7,190 | $ 3,013 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - USD ($) $ in Thousands | Preferred StockSeries A-C | Preferred Stock | Convertible Preferred StockSeries D | Convertible Preferred Stock | Common Stock | Additional Paid-In CapitalSeries A-C | Additional Paid-In CapitalSeries D | Additional Paid-In Capital | Accumulated DeficitSeries A-C | Accumulated DeficitSeries D | Accumulated Deficit | Accumulated Other Comprehensive Income (loss) | Series A-C | Series D | Total |
Balance at Beginning at Dec. 31, 2017 | $ 130,070 | $ (27,296) | $ (928) | $ 101,846 | |||||||||||
Balance at Beginning (in shares) at Dec. 31, 2017 | 20,868 | 41,000 | 5,833,456 | ||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||
Net income | 3,923 | 3,923 | |||||||||||||
Issuance of common stock, net of issuance costs | 34,450 | 34,450 | |||||||||||||
Issuance of common stock (in shares) | 1,989,017 | ||||||||||||||
Make whole share issuance (in shares) | 128,978 | ||||||||||||||
Reclassification of unrealized loss on equity securities | (41) | 41 | |||||||||||||
Preferred stock redemption | $ (20,783) | $ (4,054) | $ (85) | $ (46) | $ (20,868) | $ (4,100) | |||||||||
Preferred stock redemption (in shares) | (20,868) | (41,000) | |||||||||||||
Other comprehensive loss, net of tax | (951) | (951) | |||||||||||||
Settlement of share awards | (181) | (181) | |||||||||||||
Settlement of share awards (in shares) | 16,969 | ||||||||||||||
Stock-based compensation | 1,423 | 1,423 | |||||||||||||
Preferred stock dividends | (1,378) | (1,378) | |||||||||||||
Balance at Ending at Sep. 30, 2018 | 140,925 | (24,923) | (1,838) | 114,164 | |||||||||||
Balance at Ending (in shares) at Sep. 30, 2018 | 7,968,420 | ||||||||||||||
Balance at Beginning at Jun. 30, 2018 | 132,785 | (26,226) | (1,601) | 104,958 | |||||||||||
Balance at Beginning (in shares) at Jun. 30, 2018 | 20,868 | 41,000 | 5,917,667 | ||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||
Net income | 1,689 | 1,689 | |||||||||||||
Issuance of common stock, net of issuance costs | 32,541 | 32,541 | |||||||||||||
Issuance of common stock (in shares) | 1,921,775 | ||||||||||||||
Make whole share issuance (in shares) | 128,978 | ||||||||||||||
Preferred stock redemption | $ (20,783) | $ (4,054) | $ (85) | $ (46) | $ (20,868) | $ (4,100) | |||||||||
Preferred stock redemption (in shares) | (20,868) | (41,000) | |||||||||||||
Other comprehensive loss, net of tax | (237) | (237) | |||||||||||||
Stock-based compensation | 436 | 436 | |||||||||||||
Preferred stock dividends | (255) | (255) | |||||||||||||
Balance at Ending at Sep. 30, 2018 | 140,925 | (24,923) | (1,838) | 114,164 | |||||||||||
Balance at Ending (in shares) at Sep. 30, 2018 | 7,968,420 | ||||||||||||||
Balance at Beginning at Dec. 31, 2018 | 141,359 | (23,199) | (1,285) | 116,875 | |||||||||||
Balance at Beginning (in shares) at Dec. 31, 2018 | 7,968,420 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||
Net income | 5,437 | 5,437 | |||||||||||||
Adoption of ASU 2018-02 - Reclassification of stranded tax effect | 235 | (235) | 235 | ||||||||||||
Stock repurchase | (8) | (8) | |||||||||||||
Stock repurchase (in shares) | (582) | ||||||||||||||
Other comprehensive loss, net of tax | 1,753 | 1,753 | |||||||||||||
Settlement of share awards | (110) | (110) | |||||||||||||
Settlement of share awards (in shares) | 15,446 | ||||||||||||||
Stock-based compensation | 1,785 | 1,785 | |||||||||||||
Balance at Ending at Sep. 30, 2019 | 143,026 | (17,527) | 233 | 125,732 | |||||||||||
Balance at Ending (in shares) at Sep. 30, 2019 | 7,983,284 | ||||||||||||||
Balance at Beginning at Jun. 30, 2019 | 142,095 | (19,933) | (5) | 122,157 | |||||||||||
Balance at Beginning (in shares) at Jun. 30, 2019 | 7,983,866 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||
Net income | 2,406 | 2,406 | |||||||||||||
Stock repurchase | (8) | (8) | |||||||||||||
Stock repurchase (in shares) | (582) | ||||||||||||||
Other comprehensive loss, net of tax | 238 | 238 | |||||||||||||
Stock-based compensation | 939 | 939 | |||||||||||||
Balance at Ending at Sep. 30, 2019 | $ 143,026 | $ (17,527) | $ 233 | $ 125,732 | |||||||||||
Balance at Ending (in shares) at Sep. 30, 2019 | 7,983,284 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Parenthetical) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Consolidated Statements of Shareholders’ Equity | |
Common stock issuance costs | $ 4,411 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities | ||
Net income | $ 5,437 | $ 3,923 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,363 | 1,707 |
Deferred income tax expense | 218 | 1,361 |
Stock-based compensation | 1,785 | 1,423 |
Provision for (recovery of) credit losses | 216 | (169) |
Net amortization of investment securities | 118 | 150 |
Change in fair value of equity securities | 11 | |
Stock dividends received on correspondent bank stock | (25) | (111) |
Increase in cash surrender value of company-owned life insurance | (284) | (298) |
Net gain on mortgage loans sold | (8,009) | (3,769) |
Origination of mortgage loans held for sale | (501,312) | (364,962) |
Proceeds from mortgage loans sold | 452,601 | 372,298 |
Proceeds from sale of securities | (119) | |
Loss on impairment of goodwill | 1,572 | |
Net changes in operating assets and liabilities: | ||
Accounts receivable | (486) | 856 |
Accrued interest receivable and other assets | (81) | (1,731) |
Accrued interest payable and other liabilities | 727 | (2,132) |
Net cash used in operating activities | (46,279) | 8,557 |
Activity in available-for-sale securities: | ||
Maturities, prepayments, and calls | 6,202 | 11,663 |
Sales | 7,506 | 250 |
Purchases | (29,750) | (250) |
Purchases of correspondent bank stock | (1,237) | (726) |
Redemption of correspondent bank stock | 3,168 | |
Purchases of premises and equipment | (380) | (525) |
Payments received on promissory notes from related parties | 3,701 | |
Loan and note receivable originations and principal collections, net | (32,439) | (41,359) |
Net cash used in investing activities | (46,930) | (27,246) |
Cash flows from financing activities | ||
Net change in deposits | 171,146 | 62,522 |
Payments on Subordinated Notes | (6,875) | |
Proceeds from issuance of common stock, net | 34,450 | |
Repurchase of common stock | (8) | |
Settlement of restricted stock | (110) | (181) |
Dividends paid on preferred stock | (1,378) | |
Redemption of preferred stock Series A-C | (20,783) | |
Redemption of preferred stock Series D | (4,054) | |
Redemption costs | (131) | |
Payments to Federal Home Loan Bank Topeka borrowings | (72,346) | (188,200) |
Proceeds from Federal Home Loan Bank Topeka borrowings | 67,346 | 204,235 |
Net cash provided by financing activities | 166,028 | 79,605 |
Net change in cash and cash equivalents | 72,819 | 60,916 |
Cash and cash equivalents, beginning of year | 73,357 | 9,502 |
Cash and cash equivalents, end of period | 146,176 | 70,418 |
Supplemental cash flow information: | ||
Interest paid on deposits and borrowed funds | 9,702 | 5,712 |
Income tax payment, net of refunds received | 1,562 | 552 |
Cash paid for amounts included in the measurement of lease liabilities | 4,091 | |
Supplemental noncash disclosures: | ||
Reclass of promissory note to loans | 2,134 | |
Available-for-sale reclass of equity securities | 703 | |
Adoption of ASU 2018-02 - Reclassification of stranded tax effects | 235 | |
Reclass of unrealized loss on equity securities | $ 52 | |
Lease right-of-use-asset obtained in exchange for lease liabilities | 16,580 | |
Reclass of held for sale assets net of liabilities | $ 3,442 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2019 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business and Basis of Presentation : The condensed consolidated financial statements include the accounts of First Western Financial, Inc. (“FWFI”), incorporated in Colorado on July 18, 2002, and its direct and indirect wholly‑owned subsidiaries listed below (collectively referred to as the “Company”). FWFI is a bank holding company with financial holding company status registered with the Board of Governors of the Federal Reserve System. FWFI wholly owns the following subsidiaries: First Western Trust Bank (the “Bank”), First Western Capital Management Company (“FWCM”), and Ryder, Stilwell Inc. (“RSI”). The Bank wholly owns the following subsidiaries, which are therefore indirectly wholly‑owned by FWFI: First Western Merger Corporation (“Merger Corp.”), and RRI, LLC (“RRI”). RSI and RRI are not active operating entities. The Company provides a fully‑integrated suite of wealth management services including, private banking, personal trust, investment management, mortgage loans, and institutional asset management services to individual and corporate customers principally in Colorado (metro Denver, Aspen, Boulder, Fort Collins and Vail Valley), Arizona (Phoenix and Scottsdale), California (Century City, Los Angeles) and Wyoming (Jackson Hole and Laramie). The Company’s revenues are generated from its full range of product offerings as noted above, but principally from net interest income (the interest income earned on the Bank’s assets net of funding costs), fee‑based wealth advisory, investment management, asset management and personal trust services, and net gains earned on selling mortgage loans. The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. The December 31, 2018 condensed consolidated balance sheet has been derived from the audited financial statements for the year ended December 31, 2018. In the opinion of management, all adjustments that were recurring in nature and considered necessary have been included for fair presentation of the Company’s financial position and results of operations. Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of results that may be expected for the full year ending December 31, 2019. In preparing the condensed consolidated financial statements, the Company is required to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could be significantly different from those estimates. The condensed consolidated financial statements and notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 as filed with the SEC. Consolidation : The Company’s policy is to consolidate all majority‑owned subsidiaries in which it has a controlling financial interest and variable‑interest entities where the Company is deemed to be the primary beneficiary. All material intercompany accounts and transactions have been eliminated in consolidation. Concentration of Credit Risk : Most of the Company’s lending activity is to customers located in and around Denver, Colorado; Phoenix and Scottsdale, Arizona; and Jackson Hole, Wyoming. The Company does not believe it has significant concentrations in any one industry or customer. At September 30, 2019 and December 31, 2018, 71.5%, and 73.6%, respectively, of the Company’s loan portfolio was secured by real estate collateral. Declines in real estate values in the primary markets the Company operates in could negatively impact the Company. Revenue Recognition : In accordance with the Financial Accounting Standards Board (“FASB”), Revenue Contracts with Customers (“Topic 606”), trust and investment management fees are earned by providing trust and investment services to customers. The Company’s performance obligation under these contracts is satisfied over time as the services are provided. Fees are recognized monthly based on the average monthly value of the assets under management and the corresponding fee rate based on the terms of the contract. Performance based incentive fees are earned with respect to investment management contracts for the three and nine months ended September 30, 2019 and the year ended December 31, 2018 were immaterial. Receivables are recorded on the condensed consolidated balance sheet in the accounts receivable line item. Income related to trust and investment management fees, bank fees, and risk management and insurance fees on the condensed consolidated statement of operations for the three and nine months ended September 30, 2019 are considered in scope of Topic 606. Reclassifications : Certain items in prior year financial statements were reclassified to conform to the current presentation. Such reclassifications had no impact on net income or total shareholders’ equity. Adoption of new accounting standards : The following reflect recent accounting pronouncements that have been adopted by the Company since the end of the Company’s fiscal year ended December 31, 2018. In February 2016, the FASB issued ASU 2016-02, Lease Accounting (Topic 842) (“ASU 2016-02”). Under ASU 2016-02, a lessee is required to recognize assets and liabilities for leases with lease terms of more than twelve months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, ASU 2016-02 requires both types of leases to be recognized on the balance sheet. The ASU also requires disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. Upon adoption of ASU 2016-02 with its March 31, 2019 Quarterly Report on Form 10-Q for the three months ended March 31, 2019, the Company recorded a right-of-use asset and related lease liability. We elected the modified retrospective transition approach. We also elected and applied the package of practical expedients whereby we will not reassess prior to the effective date (i) whether any expired contracts contain leases, (ii) the lease classification for any existing or expired lease, and (iii) initial direct costs of any existing leases. See Note 5 – Leases, for further information. In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20) (“ASU 2017-08”). ASU 2017-08 amends the amortization period for certain purchased callable debt securities held at a premium. Prior to the issuance of this guidance, premiums were amortized as an adjustment of yield over the contractual life of the instrument. ASU 2017-08 requires premiums on purchased callable debt securities that have explicit, non-contingent call features that are callable at fixed prices to be amortized to the earliest call date. There are no accounting changes for securities held at a discount. ASU 2017-08 became effective for the Company beginning January 1, 2019 and did not have a significant impact on the financial statements and disclosures. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”), which provided guidance to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. ASU 2017-12 was effective for the Company on January 1, 2019 and did not have a significant impact on the financial statements and disclosures. In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220) (“ASU 2018-02”). ASU 2018-02 allows an entity to elect to reclassify the stranded tax effects related to the Tax Cuts and Jobs Act of 2017 from accumulated other comprehensive income into retained earnings. ASU 2018-02 was effective for the Company beginning January 1, 2019 and did not have a significant impact on the financial statements and disclosures. Recently issued accounting pronouncements, not yet adopted : The following reflects a pending pronouncement with an update to the expected impact since the end of the Company’s fiscal year ended December 31, 2018. In February 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) (“ASU 2016-13”). ASU 2016-13 replaces the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (“CECL”) model. The CECL model is applicable to the measurement of credit losses on the financial assets measured at amortized cost, including loan receivables, held-to-maturity debt securities, and reinsurance receivables. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor. For all other assets within the scope of CECL, a cumulative-effect adjustment will be recognized in retained earnings and the allowance for loan losses as of the beginning of the first reporting period in which the guidance is effective. ASU 2016-13 will be effective for most public companies on January 1, 2020. On July 17, 2019, the FASB voted to delay CECL implementation for certain companies including smaller reporting companies (“SRCs”) as defined by the SEC. The Company is designated as a SRC with the SEC. The proposed delay by FASB was subject to a comment period. At the October 16, 2019 FASB meeting, the FASB voted unanimously to delay the effective date of CECL adoption for SRCs to January 1, 2023. The proposal approved by the FASB on October 16 th has led to the creation of a framework for future standard setting where two “buckets” are used, allowing at least a two-year difference in the effective dates for major standards. The “buckets” the FASB proposed are SEC filers other than SRCs and all other companies including SRCs. The final amendment is expected later in 2019. During the three months ended September 30, 2019, the CECL committee of the Company continued to work through its implementation plan. The Company has integrated historical and current loan level data as required by CECL and is working with its third-party vendor solution to begin evaluating the methodologies available under the CECL model on its loan portfolios. The Company also continues to evaluate documentation requirements, internal control structure, relevant data sources, and system configurations. The Company has completed a successful integration of the required fields and historical data for key loan, customer and collateral data within the third-party solution and has been able to run parallels of our current ALLL calculation in the software to compare to our internal calculation and reconcile known differences. Currently, we are unable to estimate the impact the adoption of this update will have on the consolidated financial statements and disclosures. However, the Company expects the impact of the adoption will be significantly influenced by the composition and characteristics of its loan portfolios along with economic conditions prevalent as of the date of adoption. |
INVESTMENT SECURITIES
INVESTMENT SECURITIES | 9 Months Ended |
Sep. 30, 2019 | |
INVESTMENT SECURITIES | |
INVESTMENT SECURITIES | NOTE 2 - INVESTMENT SECURITIES The following presents the amortized cost and fair value of securities available‑for‑sale, with gross unrealized gains and losses recognized in accumulated other comprehensive income as of September 30, 2019 and December 31, 2018 (in thousands): Gross Gross Amortized Unrealized Unrealized Fair September 30, 2019 Cost Gains Losses Value Investment securities available-for-sale: U.S. Treasury debt $ 250 $ 5 $ — $ 255 Government National Mortgage Association mortgage-backed securities—residential (“GNMA”) 45,439 389 (93) 45,735 Federal National Mortgage Association mortgage-backed securities—residential (“FNMA”) 3,326 10 (27) 3,309 Securities issued by U.S. government sponsored entities and agencies — — — — Corporate collateralized mortgage obligations (”CMO”) and mortgage-backed securities (”MBS”) 12,140 77 (25) 12,192 Total securities available-for-sale $ 61,155 $ 481 $ (145) $ 61,491 Gross Gross Amortized Unrealized Unrealized Fair December 31, 2018 Cost Gains Losses Value Investment securities available-for-sale: U.S. Treasury debt $ 250 $ — $ — $ 250 GNMA 35,591 8 (1,597) 34,002 FNMA 4,076 2 (208) 3,870 Securities issued by U.S. government sponsored entities and agencies 4,525 — (223) 4,302 Corporate CMO and MBS 1,281 1 (11) 1,271 Total securities available-for-sale $ 45,723 $ 11 $ (2,039) $ 43,695 At September 30, 2019, the amortized cost and estimated fair value of available‑for‑sale securities have contractual maturity dates shown in the table below (in thousands). Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately. Amortized Fair September 30, 2019 Cost Value Due within one year through five years $ 250 $ 255 Securities (agency and CMO) 60,905 61,236 Total $ 61,155 $ 61,491 At September 30, 2019 and December 31, 2018, securities with carrying values totaling $5.9 million and $5.4 million, respectively, were pledged to secure various public deposits and credit facilities of the Company. At September 30, 2019 and December 31, 2018, there were no holdings of securities of any one issuer, other than the U.S. Government sponsored entities and agencies, in an amount greater than 10% of shareholders’ equity. At September 30, 2019 and December 31, 2018, ten securities and thirty-three securities, respectively were in an unrealized loss position, with unrealized losses totaling $0.1 million and $2.0 million, respectively. Three of the securities in an unrealized loss position at September 30, 2019 have been in a continuous unrealized loss position for more than twelve months, and the remaining securities in a loss position have been in a continuous unrealized loss position for less than twelve months. The unrealized loss positions were caused primarily by interest rate changes and market assumptions about prepayments of principal and interest on the underlying mortgages. Because the decline in market value is attributable to market conditions, not credit quality, and because the Company has the ability and intent to hold these investments until a recovery of fair value, which may be near or at maturity, the Company does not consider these investments to be other‑than‑temporarily impaired at September 30, 2019. The following table summarizes securities with unrealized losses at September 30, 2019 and December 31, 2018, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands, before tax): Less than 12 Months 12 Months or Longer Total Fair Unrealized Fair Unrealized Fair Unrealized September 30, 2019 Value Losses Value Losses Value Losses U.S. Treasury debt $ — $ — $ — $ — $ — $ — GNMA 1,439 (5) 4,584 (88) 6,023 (93) FNMA — — 2,737 (27) 2,737 (27) Corporate CMO and MBS 7,995 (25) — — 7,995 (25) Total $ 9,434 $ (30) $ 7,321 $ (115) $ 16,755 $ (145) Less than 12 Months 12 Months or Longer Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2018 Value Losses Value Losses Value Losses U.S. Treasury debt $ — $ — $ — $ — $ — $ — GNMA 201 — 32,696 (1,597) 32,897 (1,597) FNMA 436 (3) 3,215 (205) 3,651 (208) Securities issued by U.S. government sponsored entities and agencies — — 4,302 (223) 4,302 (223) Corporate CMO and MBS 1,145 (9) 63 (2) 1,208 (11) Total $ 1,782 $ (12) $ 40,276 $ (2,027) $ 42,058 $ (2,039) The Company sold $7.5 million of securities and realized $0.1 million of gains, from the sale of securities using the specific identification method for the three and nine months ended September 30, 2019. The Company did not sell any securities during the three and nine months ended September 30, 2018. |
LOANS AND THE ALLOWANCE FOR LOA
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | 9 Months Ended |
Sep. 30, 2019 | |
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | |
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | NOTE 3 - LOANS AND THE ALLOWANCE FOR LOAN LOSSES The following presents a summary of the Company’s loans as of the dates noted (in thousands): September 30, December 31, 2019 2018 Cash, Securities and Other $ 146,622 $ 114,165 Construction and Development 42,059 31,897 1-4 Family Residential 366,238 350,852 Non-Owner Occupied CRE 138,753 173,741 Owner Occupied CRE 119,497 108,480 Commercial and Industrial 111,187 113,660 Total loans 924,356 892,795 Deferred costs, net 2,230 1,171 Allowance for loan losses (7,675) (7,451) Loans, net $ 918,911 $ 886,515 The following presents, by class, an aging analysis of the recorded investments (excluding accrued interest receivable, deferred loan fees and deferred costs which are not material) in loans past due as of September 30, 2019 and December 31, 2018 (in thousands): 30-59 60-89 90 or Total Total Days Days More Days Loans Recorded September 30, 2019 Past Due Past Due Past Due Past Due Current Investment Cash, Securities and Other $ 339 $ — $ — $ 339 $ 146,283 $ 146,622 Construction and Development — — — — 42,059 42,059 1-4 Family Residential — — 1,213 1,213 365,025 366,238 Non-Owner Occupied CRE 902 — — 902 137,851 138,753 Owner Occupied CRE — — — — 119,497 119,497 Commercial and Industrial 4,599 — — 4,599 106,588 111,187 Total $ 5,840 $ — $ 1,213 $ 7,053 $ 917,303 $ 924,356 30-59 60-89 90 or Total Total Days Days More Days Loans Recorded December 31, 2018 Past Due Past Due Past Due Past Due Current Investment Cash, Securities and Other $ 331 $ — $ 11,252 $ 11,583 $ 102,582 $ 114,165 Construction and Development — — — — 31,897 31,897 1-4 Family Residential — — 1,217 1,217 349,635 350,852 Non-Owner Occupied CRE 567 — — 567 173,174 173,741 Owner Occupied CRE — — — — 108,480 108,480 Commercial and Industrial — — 1,735 1,735 111,925 113,660 Total $ 898 $ — $ 14,204 $ 15,102 $ 877,693 $ 892,795 At September 30, 2019 and December 31, 2018, the Company had a 1‑4 Family Residential loan totaling $1.2 million, which was more than 90 days delinquent and accruing interest. Non‑Accrual Loans and Troubled Debt Restructurings (“TDR”) The following presents the recorded investment in non‑accrual loans by class as of the dates noted (in thousands): September 30, December 31, 2019 2018 Cash, Securities and Other $ 5,264 $ 11,252 Construction and Development — — 1-4 Family Residential — — Non-Owner Occupied CRE — — Owner Occupied CRE — — Commercial and Industrial 1,035 1,735 Total $ 6,299 $ 12,987 Non-accrual loans classified as TDR accounted for $6.1 million of the recorded investment at September 30, 2019 and $13.0 million at December 31, 2018, respectively. Non‑accrual loans are classified as impaired loans and individually evaluated for impairment. The following presents a summary of the unpaid principal balance of loans classified as TDRs by loan type and delinquency status as of the dates noted (in thousands): September 30, December 31, September 30, 2019 2018 2018 Accruing Commercial and Industrial $ 6,468 $ 4,848 $ — Nonaccrual Cash, Securities, and Other 5,017 11,252 — Commercial and Industrial 1,035 1,735 1,835 Allowance for loan associated with TDR (693) (940) (1,040) Net recorded investment $ 11,827 $ 16,895 $ 795 At September 30, 2019, the Company extended an additional $1.0 million to a Commercial and Industrial borrower with a loan classified as a TDR for operational needs as allowed under the commitment. The majority owner for this borrower provided $1.5 million of pledged cash as collateral in exchange for this additional funding. At December 31, 2018, the Company had not committed any additional funds to a borrower with a loan classified as a TDR. One Cash, Securities and Other loan, which was modified resulting in TDR status in the previous twelve months, has defaulted on the modified terms of the agreement one time in the three and nine months ended September 30, 2019. The Company did not modify any loans into a TDR for the three and nine months ended September 30, 2019. The Company modified two loans into a TDR for the year ended December 31, 2018. The modification of two loans in TDR performed during the year ended December 31, 2018 included an extension of the maturity dates at the same rates as before that the Company would not have otherwise considered as a result of the Borrowers’ financial difficulties. The extensionson the modified loans ranged from three months to a year. TDRs are reviewed individually for impairment and are included in the Company’s specific reserves in the allowance for loan losses. If charged off, the amount of the charge-off is included in the Company’s charge-off factors, which impact the Company’s reserves on non‑impaired loans. The following table presents impaired loans by portfolio and related valuation allowance as of the periods presented (in thousands): September 30, 2019 December 31, 2018 Unpaid Allowance Unpaid Allowance Total Contractual for Total Contractual for Recorded Principal Loan Recorded Principal Loan Investment Balance Losses Investment Balance Losses Impaired loans with a valuation allowance: Commercial and Industrial $ 1,035 $ 1,035 $ 693 $ 1,735 $ 1,735 $ 940 Cash, Securities, and Other 247 247 247 — — — Total $ 1,282 $ 1,282 $ 940 $ 1,735 $ 1,735 $ 940 Impaired loans with no related valuation allowance: Commercial and Industrial $ 6,468 $ 6,468 $ — $ 4,848 $ 4,848 $ — Cash, Securities, and Other 5,017 5,017 — 11,252 11,252 — 1-4 Family Residential 1,213 1,213 — — — — Total $ 12,698 $ 12,698 $ — $ 16,100 $ 16,100 $ — Total impaired loans: Commercial and Industrial $ 7,503 $ 7,503 $ 693 $ 6,583 $ 6,583 $ 940 Cash, Securities, and Other 5,264 5,264 247 11,252 11,252 — 1-4 Family Residential 1,213 1,213 — — — — Total $ 13,980 $ 13,980 $ 940 $ 17,835 $ 17,835 $ 940 The recorded investment in loans in the previous tables excludes accrued interest and deferred loan fees and costs which are not material. Interest income, if any, was recognized on the cash basis on non-accrual loans. The average balance of impaired loans and interest income recognized on impaired loans during the three months ended September 30, 2019 and 2018 are included in the table below (in thousands): Three Months Ended September 30, 2019 2018 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized Impaired loans with a valuation allowance: Commercial and Industrial $ 1,035 $ — $ 1,835 $ — Cash, Securities, and Other 185 — — — Total $ 1,220 $ — $ 1,835 $ — Impaired loans with no related valuation allowance: Commercial and Industrial $ 5,958 $ 138 $ — $ — Cash, Securities, and Other 5,062 — 11,277 — 1-4 Family Residential 1,213 26 — — Total $ 12,233 $ 164 $ 11,277 $ — Total impaired loans: Commercial and Industrial $ 6,993 $ 138 $ 1,835 $ — Cash, Securities, and Other 5,247 — 11,277 — 1-4 Family Residential 1,213 26 — — Total $ 13,453 $ 164 $ 13,112 $ — The average balance of impaired loans and interest income recognized on impaired loans during the nine months ended September 30, 2019 and 2018 are included in the table below (in thousands): Nine Months Ended September 30, 2019 2018 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized Impaired loans with a valuation allowance: Commercial and Industrial $ 1,310 $ — $ 1,835 $ — Cash, Securities, and Other 185 — — — Total $ 1,495 $ — $ 1,835 $ — Impaired loans with no related valuation allowance: Commercial and Industrial $ 5,463 $ 326 $ — $ — Cash, Securities, and Other 8,088 — 11,388 — 1-4 Family Residential 1,213 77 — — Total $ 14,764 $ 403 $ 11,388 $ — Total impaired loans: Commercial and Industrial $ 6,773 $ 326 $ 1,835 $ — Cash, Securities, and Other 8,273 — 11,388 — 1-4 Family Residential 1,213 77 — — Total $ 16,259 $ 403 $ 13,223 $ — Allowance for Loan Losses Allocation of a portion of the allowance for loan losses to one category of loans does not preclude its availability to absorb losses in other categories. The following presents the activity in the Company’s allowance for loan losses by portfolio class for the periods presented (in thousands): Cash, Construction 1-4 Non-Owner Owner Commercial Securities and Family Occupied Occupied and and Other Development Residential CRE CRE Industrial Total Changes in allowance for loan losses for the three months ended September 30, 2019 Beginning balance $ 1,049 $ 290 $ 2,650 $ 1,086 $ 800 $ 1,700 $ 7,575 Provision for (recovery of) credit losses 258 18 27 (68) 76 (211) 100 Charge-offs — — — — — — — Recoveries — — — — — — — Ending balance $ 1,307 $ 308 $ 2,677 $ 1,018 $ 876 $ 1,489 $ 7,675 Changes in allowance for loan losses for the nine months ended September 30, 2019 Beginning balance $ 764 $ 232 $ 2,552 $ 1,264 $ 789 $ 1,850 $ 7,451 Provision for (recovery of) credit losses 535 76 125 (246) 87 (361) 216 Charge-offs — — — — — — — Recoveries 8 — — — — — 8 Ending balance $ 1,307 $ 308 $ 2,677 $ 1,018 $ 876 $ 1,489 $ 7,675 Allowance for loan losses at September 30, 2019 allocated to loans evaluated for impairment: Individually $ 247 $ — $ — $ — $ — $ 693 $ 940 Collectively 1,060 308 2,677 1,018 876 796 6,735 Ending balance $ 1,307 $ 308 $ 2,677 $ 1,018 $ 876 $ 1,489 $ 7,675 Loans at September 30, 2019, evaluated for impairment: Individually $ 5,264 $ — $ 1,213 $ — $ — $ 7,503 $ 13,980 Collectively 141,358 42,059 365,025 138,753 119,497 103,684 910,376 Ending balance $ 146,622 $ 42,059 $ 366,238 $ 138,753 $ 119,497 $ 111,187 $ 924,356 Cash, Construction 1-4 Non-Owner Owner Commercial Securities and Family Occupied Occupied and and Other Development Residential CRE CRE Industrial Total Changes in allowance for loan losses for the three months ended September 30, 2018 Beginning balance $ 934 $ 227 $ 1,957 $ 1,199 $ 626 $ 2,157 $ 7,100 Provision for (recovery of) credit losses (94) 12 132 11 (22) (21) 18 Charge-offs — — — — — — — Recoveries — — — — — — — Ending balance $ 840 $ 239 $ 2,089 $ 1,210 $ 604 $ 2,136 $ 7,118 Changes in allowance for loan losses for the nine months ended September 30, 2018 Beginning balance $ 1,066 $ 202 $ 2,283 $ 1,433 $ 751 $ 1,552 $ 7,287 Provision for (recovery of) credit losses (226) 37 (194) (223) (147) 584 (169) Charge-offs — — — — — — — Recoveries — — — — — — — Ending balance $ 840 $ 239 $ 2,089 $ 1,210 $ 604 $ 2,136 $ 7,118 Allowance for loan losses at December 31, 2018 allocated to loans evaluated for impairment: Individually $ — $ — $ — $ — $ — $ 940 $ 940 Collectively 764 232 2,552 1,264 789 910 6,511 Ending balance $ 764 $ 232 $ 2,552 $ 1,264 $ 789 $ 1,850 $ 7,451 Loans at December 31, 2018, evaluated for impairment: Individually $ 11,252 $ — $ — $ — $ — $ 6,583 $ 17,835 Collectively 102,913 31,897 173,741 107,077 Ending balance $ 114,165 $ 31,897 $ 350,852 $ 173,741 $ $ 113,660 $ The Company categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk on a quarterly basis. The Company uses the following definitions for risk ratings: Special Mention—Loans classified as special mention have a potential weakness or borrowing relationships that require more than the usual amount of management attention. Adverse industry conditions, deteriorating financial conditions, declining trends, management problems, documentation deficiencies or other similar weaknesses may be evident. Ability to meet current payment schedules may be questionable, even though interest and principal are still being paid as agreed. The asset has potential weaknesses that may result in deteriorating repayment prospects if left uncorrected. Loans in this risk grade are not considered adversely classified. Substandard—Substandard loans are considered “classified” and are inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Loans so classified have a well‑defined weakness or weaknesses that jeopardizes the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans in this category may be placed on non‑accrual status and may individually be evaluated for impairment if indicators of impairment exist. Doubtful—Loans graded doubtful are considered “classified” and 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 known facts, conditions and values, highly questionable and improbable. However, the amount of certainty of eventual loss is not known because of specific pending factors. Loans not meeting any of the three criteria above are considered to be pass‑rated loans. The following presents, by class and by credit quality indicator, the recorded investment in the Company’s loans as of September 30, 2019 and December 31, 2018 (in thousands): Special September 30, 2019 Pass Mention Substandard Total Cash, Securities and Other $ 141,358 $ — $ 5,264 $ 146,622 Construction and Development 42,059 — — 42,059 1-4 Family Residential 359,030 — 7,208 366,238 Non-Owner Occupied CRE 137,582 1,171 — 138,753 Owner Occupied CRE 119,497 — — 119,497 Commercial and Industrial 95,371 — 15,816 111,187 Total $ 894,897 $ 1,171 $ 28,288 $ 924,356 Special December 31, 2018 Pass Mention Substandard Total Cash, Securities and Other $ 102,913 $ — $ 11,252 $ 114,165 Construction and Development 31,897 — — 31,897 1-4 Family Residential 349,635 — 1,217 350,852 Non-Owner Occupied CRE 165,164 8,117 460 173,741 Owner Occupied CRE 108,480 — — 108,480 Commercial and Industrial 100,929 — 12,731 113,660 Total $ 859,018 $ 8,117 $ 25,660 $ 892,795 The Company had no loans graded doubtful as of September 30, 2019 and December 31, 2018 . |
GOODWILL
GOODWILL | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill. | |
Goodwill | NOTE 4 - GOODWILL Changes in the carrying amount of goodwill were as follows: Wealth Capital Management Management Consolidated Balance at December 31, 2018 $ 15,994 $ 8,817 $ 24,811 Impairment - (1,572) (1,572) Reclass of goodwill held for sale - (3,553) (3,553) Balance at September 30, 2019 $ 15,994 $ 3,692 $ 19,686 Goodwill is tested annually for impairment on October 31 or earlier upon the occurrence of certain events. During the second quarter of 2019, the Company received an unsolicited offer to purchase its Los Angeles-based fixed income team, a portion of the Capital Management segment. The Company determined the sale of a portion of this segment would benefit the Company by optimizing the cost structure and freeing up capital and resources to strengthen the Wealth Management and Mortgage segments. The Company determined that it was more likely than not that it would sign this agreement to dispose of a portion of this segment. The agreement to sell a portion of the Capital Management segment represented an event affecting a specific segment. As a result, the Company proceeded to perform an interim impairment test for the Capital Management segment. As part of the qualitative assessment, it did indicate that it was more likely than not that the carrying value of the Capital Management segment exceeded its fair value. Therefore, the Company proceeded to Step 1 of the interim goodwill impairment test. Step 1 of the goodwill impairment analysis includes the determination of the carrying value of the segment, including the existing goodwill, and estimating the fair value of the segment. If the carrying amount of a segment exceeds its fair value, we are required to perform Step 2 of the impairment test. To estimate the fair value of our segments, an independent valuation specialist assisted us and we used an income approach, specifically a discounted cash flow methodology, and a market approach. The discounted cash flow methodology includes assumptions for forecasted revenues, growth rates, discount rates, and market multiples, which all require significant judgment and estimates by management and are inherently uncertain. The fair value did not exceed the carrying value of the Capital Management segment at the time of testing. During the first half of 2019, the growth in revenue had not been realized at previously forecasted levels for the Capital Management segment. The Company had focused on revenue growth in the more core areas in Wealth Management and Mortgage. Our outlook for the Capital Management segment had declined driven by the lower market penetration and slower growth in assets under management which had negatively impacted our near-term earnings outlook for this segment. The sale would put the team into a group with distribution capabilities and a structure to support them. As such, this had caused a downward revision for our forecast on current and projected cash flows for the Capital Management segment which resulted in a lower fair value. Therefore, we conducted Step 2 of the goodwill impairment test for the Capital Management segment. Step 2 requires that we allocate the fair value of segment to identifiable assets and liabilities of the segment. Any residual fair value after this allocation is compared to the goodwill balance and any excess goodwill is charged to expense. As a result of our two step evaluation, we recorded a goodwill impairment loss of $1.6 million during the second quarter of 2019 in the Capital Management segment. As of September 30, 2019, there was $3.7 million of goodwill remaining in the Capital Management segment. As of September 30, 2019, there was an outstanding agreement with Lido Advisors, LCC for a portion of the Capital Management segment. As such, goodwill was allocated based on the relative fair value for the portion of the segment held for sale, in the amount of $3.6 million, and was reclassified to assets held for sale at the end of the third quarter 2019. As of September 30, 2019, the remaining value of goodwill in the Capital Management segment was $3.7 million. For events occurring after the period which pertain to this transaction see Note 17 – Subsequent Events. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2019 | |
LEASES | |
LEASES | NOTE 5 - LEASES A lease is defined as a contract that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. The Company adopted ASC 842 on January 1, 2019 and recorded an initial right-of-use asset and related lease liability of $12.9 million and $16.6 million, respectively. There was no cumulative effect upon adoption. Leases in which the Company is determined to be the lessee are primarily operating leases comprised of real estate property and office space for our corporate headquarters and profit centers with terms that extend to 2025. Certain properties contain portions that are subleased with terms that extend through 2020. In accordance with ASC 842, operating leases are required to be recognized as a right-of-use asset with a corresponding lease liability. The following table presents the classification of the right-of-use asset and corresponding liability within the condensed consolidated balance sheet. The Company elected to not include short-term leases with initial terms of twelve months or less, on the condensed consolidated balance sheet. September 30, 2019 Lease Right-of-Use Assets Classification Operating lease right-of-use assets Other assets $ 10,959 Lease Liabilities Classification Operating lease liabilities Other liabilities $ 14,284 The Company’s operating lease agreements typically include an option to renew the lease at the Company’s discretion. To the extent the Company is reasonably certain it will exercise the renewal option at the inception of the lease, the Company will include the extended term in the calculation of the right-of-use asset and lease liability. ASC 842 requires the use of the rate implicit in the lease when it is readily determinable. As this rate is typically not readily determinable, at the inception of the lease, the Company uses its collateralized incremental borrowing rate over a similar term. The amount of the right-of-use asset and lease liability are impacted by the discount rate used to calculate the present value of the minimum lease payments over the term of the lease. September 30, 2019 Weighted-Average Remaining Lease Term Operating leases years Weighted-Average Discount Rate Operating leases % The Company’s operating leases contain fixed and variable lease components and it has elected to account for all classes of underlying assets as a single lease component. Variable lease costs primarily represent common area maintenance and parking. The following table represents the Company’s net lease costs. Three Months Ended Nine Months Ended September 30, 2019 September 30, 2019 Lease Costs Operating lease cost $ 810 $ 2,382 Variable lease cost 395 1,168 Sublease income (99) (298) Lease costs, net $ 1,106 $ 3,252 The Company recognized lease costs of $1.1 million and $3.4 million for the three and nine months ended September 30, 2018. The following table presents a maturity analysis of the Company’s operating lease liabilities on an annual basis for each of the first five years and total amounts thereafter as of September 30, 2019. Operating Leases Twelve Months Ended September 30, 2020 $ 3,601 September 30, 2021 2,941 September 30, 2022 2,683 September 30, 2023 2,462 September 30, 2024 2,241 Thereafter 1,768 Total future minimum lease payments $ 15,696 Less: Imputed interest (1,412) Present value of net future minimum lease payments $ 14,284 The following presents minimum lease payments due pursuant to the leases as of December 31, 2018 for the years indicated. Year Operating Leases 2019 $ 3,570 2020 3,374 2021 2,815 2022 2,675 2023 2,358 Thereafter 3,446 $ 18,238 |
DEPOSITS
DEPOSITS | 9 Months Ended |
Sep. 30, 2019 | |
DEPOSITS | |
DEPOSITS | NOTE 6 - DEPOSITS The following presents the Company’s interest-bearing deposits at the dates noted (in thousands): September 30, December 31, 2019 2018 Money market deposit accounts $ 620,434 $ 489,506 Time deposits 170,457 178,743 Negotiable order of withdrawal accounts 83,022 64,853 Savings accounts 3,456 1,800 Total interest bearing deposits $ 877,369 $ 734,902 Aggregate time deposits of $250,000 or greater $ 68,328 $ 83,550 Overdraft balances classified as loans totaled $0.3 million and $0.3 million at September 30, 2019 and December 31, 2018, respectively. |
BORROWINGS
BORROWINGS | 9 Months Ended |
Sep. 30, 2019 | |
BORROWINGS | |
BORROWINGS | NOTE 7 - BORROWINGS FHLB Topeka Borrowings The Bank has executed a blanket pledge and security agreement with the Federal Home Loan Bank (“FHLB”) Topeka that requires certain loans and securities be pledged as collateral for any outstanding borrowings under the agreement. The collateral pledged as of September 30, 2019 and December 31, 2018 amounted to $536.9 million and $475.4 million, respectively. Based on this collateral and the Company’s holdings of FHLB Topeka stock, the Company was eligible to borrow an additional $366.2 million at September 30, 2019. Each advance is payable at its maturity date. The Company had the following borrowings from FHLB Topeka at the dates noted (in thousands): September 30, December 31, Maturity Date Rate % 2019 2018 August 2, 2019 2.65 $ — $ 5,000 August 26, 2020 1.94 10,000 10,000 Total $ 10,000 $ 15,000 The Bank has borrowing capacity associated with three unsecured federal funds lines of credit up to $10.0 million, $19.0 million, and $25.0 million. As of September 30, 2019 and December 31, 2018, there were no amounts outstanding on any of the federal funds lines. The Company’s borrowing facilities include various financial and other covenants, including, but not limited to, a requirement that the Bank maintains regulatory capital that is deemed “well capitalized” by federal banking agencies (see Note 16 – Regulatory Capital Matters). As of September 30, 2019 and December 31, 2018, the Company was in compliance with the covenant requirements. |
COMMITMENTS AND COMMITMENTS AND
COMMITMENTS AND COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 8 - COMMITMENTS AND CONTINGENCIES The Bank is party to credit‑related financial instruments with off‑balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the condensed consolidated balance sheets. Commitments may expire without being utilized. The Bank’s exposure to credit loss is represented by the contractual amount of these commitments, although material losses are not anticipated. The Bank follows the same credit policies in making commitments as it does for on‑balance sheet instruments. The following presents the Company’s financial instruments whose contract amounts represent credit risk, as of the dates noted (in thousands): September 30, 2019 December 31, 2018 Fixed Rate Variable Rate Fixed Rate Variable Rate Unused lines of credit $ 35,724 $ 245,642 $ 33,571 $ 271,580 Standby letters of credit 65 23,499 40 23,508 Commitments to make loans to sell 81,158 — 17,207 — Commitments to make loans — 10,000 — — Unused lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Several of the commitments may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Bank, is based on management’s credit evaluation of the customer. Unused lines of credit under commercial lines of credit, revolving credit lines and overdraft protection agreements are commitments for possible future extensions of credit to existing customers. These lines of credit are uncollateralized and usually do not contain a specified maturity date and may not be drawn upon to the total extent to which the Bank is committed. Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. Substantially all letters of credit issued have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank holds collateral supporting those commitments if deemed necessary. Commitments to make loans to sell are agreements to sell a loan to an investor in the secondary market for which the interest rate has been locked with the customer, provided there is no violation of any condition within the contract with either party. Commitments to make loans to sell have fixed interest rates. Since commitments may expire without being extended, total commitment amounts may not necessarily represent cash requirements. Commitments to make loans are agreements to lend to a customer, provided there is no violation of any condition within the contract. Commitments to make loans generally have fixed expiration dates or other termination clauses. Since commitments may expire without being extended, total commitment amounts may not necessarily represent cash requirements. Litigation, Claims and Settlements The Company, from time to time, is involved in various legal actions arising in the normal course of business. While the ultimate outcome of any such proceedings cannot be predicted with certainty, it is the opinion of management, based on advice from legal counsel, that no proceedings exist, either individually or in the aggregate, which, if determined adversely to the Company, would have a material effect on the Company’s condensed consolidated financial statements. |
SHAREHOLDERS EQUITY
SHAREHOLDERS EQUITY | 9 Months Ended |
Sep. 30, 2019 | |
SHAREHOLDERS EQUITY | |
SHAREHOLDERS EQUITY | NOTE 9 - SHAREHOLDERS’ EQUITY Common Stock The Company’s common stock has no par value and each holder of common stock is entitled to one vote for each share (though certain voting restrictions may exist on non‑vested restricted stock) held. On June 14, 2019, the Company announced that its Board of Directors had authorized a share repurchase program under which the Company may repurchase up to 300,000 shares of its common stock and that the Board of Governors of the Federal Reserve System advised the Company that it had no objection to the Company’s stock repurchase program. The repurchase program authorizes the Company to purchase its common stock from time to time in privately negotiated transactions, in the open market, including pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 plan promulgated by the Securities and Exchange Commissions, or otherwise in a manner that complies with applicable federal securities laws. The program will be in effect for a one-year period, with the timing of purchases and the number of shares repurchased under the program dependent upon a variety of factors including price, trading volume, corporate and regulatory requirements and market conditions. The repurchase program may be suspended or discontinued at any time without notice. During the three months ended September 30, 2019, the Company repurchased 582 shares at an average price of $14.00 and as of September 30, 2019, 299,418 shares may yet be purchased under the program. During the nine months ended September 30, 2019 the Company sold no shares of common stock. During the nine months ended September 30, 2018, the Company sold 67,242 shares of its common stock through a Private Placement Memorandum resulting in proceeds to the Company of $1.9 million (net of issuance costs of $0.1 million). During three and nine months ended September 30, 2018, the Company issued 16,969 shares of common stock upon the settlement of Time Vesting Units. Restricted Stock Awards As of September 30, 2019, the Restricted Stock Awards have a weighted-average grant date fair value of $28.50 per share. During the three months ended September 30, 2019 and 2018, the Company recognized stock based compensation expense of $0.5 million and $0.1 million, respectively, associated with Restricted Stock Awards. During the nine months ended September 30, 2019 and 2018, the Company has recognized compensation expense of $0.7 and $0.2 million for the Restricted Stock Awards, respectively. As of September 30, 2019, the Company has $1.9 million of unrecognized stock-based compensation expense related to the shares issued. As of September 30, 2019, the unrecognized stock-based compensation expense is expected to be recognized over a weighted average period of 3.0 years. Restricted Stock Awards representing 33,070 shares vested during the three and nine months ended September 30, 2019. Stock‑Based Compensation Plans As of September 30, 2019, there were a total of 648,414 shares available for issuance under the First Western Financial, Inc. 2016 Omnibus Incentive Plan (“the 2016 Plan”). If the Awards outstanding under the First Western 2008 Stock Incentive Plan (“the 2008 Plan”) or the 2016 Plan are forfeited, cancelled or terminated with no consideration paid to the Company, those amounts will increase the number of shares eligible to be granted under the 2016 Plan. Stock Options The Company did not grant any stock options during the nine months ended September 30, 2019 and 2018. During the three months ended September 30, 2019 and 2018, the Company recognized stock based compensation expense of $0.1 million and $0.1 million, respectively, associated with stock options. During the nine months ended September 30, 2019 and 2018, the Company recognized stock based compensation expense of $0.2 million and $0.4 million, respectively, associated with stock options. As of September 30, 2019, the Company has $0.3 million of unrecognized stock‑based compensation expense related to stock options which are unvested. As of September 30, 2019, the unrecognized cost is expected to be recognized over a weighted‑average period of approximately 0.8 of a year. The following summarizes activity for nonqualified stock options for the nine months ended September 30, 2019: : Weighted Weighted Average Number Average Remaining Aggregate of Exercise Contractual Intrinsic Options Price Term Value Outstanding at beginning of year 465,947 $ 28.84 Granted — — Exercised — — Forfeited or expired (42,750) 27.72 Outstanding at end of period 423,197 $ 28.95 3.8 (a) Options fully vested / exercisable at September 30, 2019 380,216 $ 29.34 3.5 (a) ________________________________________ (a) Nonqualified stock options outstanding at the end of the period and those fully vested / exercisable had immaterial aggregate intrinsic values. As of September 30, 2019 and December 31, 2018, there were 380,216 and 402,872 options, respectively, that were exercisable. Exercise prices are between $20.00 and $40.00 per share, and the options are exercisable for a period of ten‑years from the original grant date and expire on various dates between 2022 and 2026. Restricted Stock Units Pursuant to the 2016 Plan, the Company can grant associates and non‑associate directors long‑term cash and stock-based compensation. During the nine months ended September 30, 2019, the Company granted certain associates restricted stock units which are earned over time or based on various performance measures and convert to common stock upon vesting, which are summarized here and expanded further below. The following summarizes the activity for the Time Vesting Units, the Financial Performance Units and the Market Performance Units for the nine months ended September 30, 2019: Time Financial Market Vesting Performance Performance Units Units Units Outstanding at beginning of year 184,369 15,932 17,258 Granted 71,127 59,536 - Vested (23,281) - - Forfeited (22,824) (6,597) (1,933) Outstanding at end of period During the nine months ended September 30, 2019, the Company issued 15,446 shares of common stock upon the settlement of Time Vesting Units. The remaining 7,835 shares were surrendered with a combined market value at the dates of settlement of $0.1 million to cover employee withholding taxes. During the nine months ended September 30, 2018, the Company issued 16,969 shares of common stock upon the settlement of Time Vesting Units. The remaining 6,313 shares were surrendered with a combined market value at the dates of settlement of $0.2 million to cover employee withholding taxes. Time Vesting Units Time Vesting Units are granted to full‑time associates and board members at the date approved by the Company’s board of directors. The Company granted 3,779 Time Vesting Units with a five‑year service period during the nine months ended September 30, 2019, that vest in equal installments of 50% on the third and fifth anniversaries of the grant date, assuming continuous employment through the scheduled vesting dates. The Company granted 67,348 Time Vesting Units with a five year service period in the nine months ended September 30, 2019, that vest in equal installments of 20% on the anniversary of the grant date, assuming continuous employment through the scheduled vesting dates. Time Vesting Units granted in 2019 have a weighted‑average grant‑date fair value of $13.80 per unit. During the three months ended September 30, 2019 and 2018, the Company recognized compensation expense of $0.3 million and $0.1 million, respectively, for Time Vesting Units. During the nine months ended September 30, 2019 and 2018, the Company recognized compensation expense of $0.7 million and $0.7 million, respectively, for Time Vesting Units. As of September 30, 2019, there was $3.7 million of unrecognized compensation expense related to Time Vesting Units. As of September 30, 2019, the unrecognized stock-based compensation expense is expected to be recognized over a weighted‑average period of approximately 2.1 years. Financial Performance Units Granted Prior to 2019 Financial Performance Units were granted to certain key associates and are earned based on the Company achieving various financial performance metrics beginning on the grant date and ending on December 31, 2019. If the Company achieves the financial metrics, which include various thresholds from 0% up to 150%, then the Financial Performance Units will have a subsequent two‑year service period vesting requirement ending on December 31, 2021. As of September 30, 2019, the Company is accruing at the maximum threshold for 50% of the awards and at 50% for the remainder. The maximum shares that can be issued at 150% as of September 30, 2019 was approximately 20,800 shares. During the nine months ended September 30, 2019 and 2018, the Company recognized an immaterial amount of compensation expense for the Financial Performance Units. As of September 30, 2019, there was $0.2 million of unrecognized compensation expense related to the Financial Performance Units. As of September 30, 2019, the unrecognized stock-based compensation expense is expected to be recognized over a weighted‑average period of 2.3 years. Financial Performance Units Granted in 2019 On May 1, 2019, the Company granted an additional 59,536 Financial Performance Units to officers and other key employees. All Financial Performance Units granted on May 1, 2019, have a five-year term and are earned based on the Company achieving various financial metrics beginning on the grant date and ending on December 31, 2021, which include various thresholds from 0% to 150%, then the Financial Performance Units will have a subsequent two-year service period vesting requirement ending on December 31, 2023. As of September 30, 2019, the Company is accruing at the maximum threshold for the awards. The maximum shares that can be issued at 150% as of September 30, 2019 was approximately 82,500 shares. During the three months ended September 30, 2019, the Company recognized compensation expense of $0.1 million for the Financial Performance Units. As of September 30, 2019, there was $0.7 million of unrecognized compensation expense related to the Financial Performance Units. As of September 30, 2019, the unrecognized stock-based compensation expense is expected to be recognized over a weighted‑average period of 4.3 years. Market Performance Units Market Performance Units were granted to certain key associates and are earned based on growth in the value of the Company’s common stock and were dependent on the Company completing an initial public offering of stock during a defined period of time. If the Company’s common stock is trading at or above certain prices, over a performance period ending on June 30, 2020, the Market Performance Units will be determined to be earned and vest following the completion of a subsequent service period ending on June 30, 2022. On July 23, 2018, the Company completed its initial public offering and the Market Performance Units performance condition was met. Subsequent to the performance condition there is also a market condition as a vesting requirement for the Market Performance Units which affects the determination of the grant date fair value. The Company estimated the grant date fair value using various valuation assumptions. During the three and nine months ended September 30, 2019 and 2018 the Company recognized an immaterial amount of compensation expense for the Market Performance Units. As of September 30, 2019, there was $0.4 million of unrecognized compensation expense related to the Market Performance Units which is expected to be recognized over a weighted‑average period of 2.75 years. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 9 Months Ended |
Sep. 30, 2019 | |
EARNINGS PER COMMON SHARE | |
EARNINGS PER COMMON SHARE | NOTE 10 - EARNINGS PER COMMON SHARE The table below presents the calculation of basic and diluted earnings per common share for the periods indicated (amounts in thousands, except share and per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Earnings per common share - Basic Numerator: Net income $ 2,406 $ 1,689 $ 5,437 $ 3,923 Dividends on preferred stock — (255) — (1,378) Net income available for common shareholders $ 2,406 $ 1,434 $ 5,437 $ 2,545 Denominator: Basic weighted average shares 7,890,794 7,373,770 7,882,221 6,321,511 Earnings per common share - basic $ 0.30 $ 0.19 $ 0.69 $ 0.40 Earnings per common share - Diluted Numerator: Net income $ 2,406 $ 1,689 $ 5,437 $ 3,923 Dividends on preferred stock — (255) — (1,378) Net income available for common shareholders $ 2,406 $ 1,434 $ 5,437 $ 2,545 Denominator: Basic weighted average shares 7,890,794 7,373,770 7,882,221 6,321,511 Diluted effect of common stock equivalents: Stock options — — — 20,860 Time Vesting Units 10,702 — 4,942 14,841 Financial Performance Units 123 — 41 6,505 Market Performance Units 13,175 15,075 13,357 5,025 Restricted Stock Awards — — — 3,509 Total diluted effect of common stock equivalents 24,000 15,075 18,340 50,740 Diluted weighted average shares 7,914,794 7,388,845 7,900,561 6,372,251 Earnings per common share - diluted $ 0.30 $ 0.19 $ 0.69 $ 0.40 Diluted earnings per share was computed without consideration to potentially dilutive instruments as their inclusion would have been anti‑dilutive. As of September 30, 2019 and 2018, potentially dilutive securities excluded from the diluted earnings per share calculation are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Stock options 423,197 467,947 438,364 296,949 Convertible Preferred D shares — — — — Time Vesting Units 130,821 168,962 163,141 157,454 Financial Performance Units 55,028 16,345 47,008 5,448 Market Performance Units — — — — Restricted Stock Awards 61,668 43,830 83,713 14,610 Total potentially dilutive securities 670,714 697,084 732,226 474,461 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2019 | |
INCOME TAXES | |
INCOME TAXES | NOTE 11 - INCOME TAXES During the three and nine months ended September 30, 2019, the Company recorded an income tax provision of $0.8 million and $1.9 million, respectively, reflecting an effective tax rate of 24.5% and 25.5%, respectively. During the three and nine months ended September 30, 2018, the Company recorded an income tax provision of $0.5 million and $1.2 million, respectively, reflecting an effective tax rate of 24.3% and 24.1%, respectively. |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2019 | |
RELATED-PARTY TRANSACTIONS | |
RELATED-PARTY TRANSACTIONS | NOTE 12 - RELATED‑PARTY TRANSACTIONS The Bank granted loans to principal officers and directors and their affiliates, all of whom are deemed related parties. At September 30, 2019 and December 31, 2018, there were no delinquent or non‑performing loans to any officer or director of the Company. The following presents a summary of related‑party loan activity as of the dates noted (in thousands): September 30, 2019 December 31, 2018 Balance, beginning of period $ 2,659 $ 14,077 Funded loans 8,295 1,466 Payments collected (6,146) (9,386) Changes in related parties — (3,498) Balance, end of period $ 4,808 $ 2,659 Deposits from related parties held by the Bank at September 30, 2019 and December 31, 2018 totaled $27.6 million and $36.7 million, respectively. The Company leases office space from an entity controlled by one of the Company’s board members. During the nine months ended September 30, 2019 and 2018, the Company incurred $0.1 million and an immaterial amount of expense related to this lease. |
FAIR VALUE
FAIR VALUE | 9 Months Ended |
Sep. 30, 2019 | |
FAIR VALUE | |
FAIR VALUE | NOTE 13 - FAIR VALUE Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: 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; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. There were no transfers between levels during 2019 and 2018. The Company used the following methods and significant assumptions to estimate fair value: Investment Securities : The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Interest Rate Locks and Forward Delivery Commitments : Fair values of these mortgage derivatives are estimated based on changes in mortgage interest rates from the date the commitment related to the loan is locked. The fair value estimate is based on valuation models using market data from secondary market loan sales and direct contacts with third party investors as of the measurement date (Level 2). Derivative instruments are carried at fair value in the Company’s financial statements. The accounting for changes in the fair value of a derivative instrument are accounted for within the condensed consolidated statements of income. The following presents assets measured on a recurring basis at September 30, 2019 and December 31, 2018 (in thousands): Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Reported September 30, 2019 (Level 1) (Level 2) (Level 3) Balance Investment securities available-for-sale: U.S. Treasury debt $ 255 $ — $ — $ 255 GNMA — 45,735 — 45,735 FNMA — 3,309 — 3,309 Securities issued by US. Government sponsored entities and agencies — — — — Corporate CMO and MBS — 12,192 — 12,192 Total securities available-for-sale $ 255 $ 61,236 $ — $ 61,491 Equity securities $ 718 $ — $ — $ 718 Interest rate lock and forward delivery commitments $ — $ 2,148 $ — $ 2,148 Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Reported December 31, 2018 (Level 1) (Level 2) (Level 3) Balance Investment securities available-for-sale: U.S. Treasury debt $ 250 $ — $ — $ 250 GNMA — 34,002 — 34,002 FNMA — 3,870 — 3,870 Securities issued by US. Government sponsored entities and agencies — 4,302 4,302 Corporate CMO and MBS — 1,271 — 1,271 Total securities available-for-sale $ 250 $ 43,445 $ — $ 43,695 Equity securities $ 693 $ — $ — $ 693 Interest rate lock and forward delivery commitments $ — $ 890 $ — $ 890 Equity securities and U.S. Treasury debt are reported at fair value utilizing Level 1 inputs. The remaining portfolio of securities are reported at fair value with Level 2 inputs provided by a pricing service. As of September 30, 2019 and December 31, 2018, the majority of the securities have credit support provided by the Federal Home Loan Mortgage Corporation, GNMA, and FNMA. Factors used to value the securities by the pricing service include: benchmark yields, reported trades, interest spreads, prepayments, and other market research. In addition, ratings and collateral quality are considered. As of September 30, 2019, equity securities have been recorded at fair value within the other assets line item in the condensed consolidated balance sheet with changes recorded in the other line item in the condensed consolidated statement of income. Other Real Estate Owned : Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. They are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than on an annual basis. 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 independent appraisers to adjust for differences between comparable sales and income data available. Such adjustments can be significant and typically result in Level 3 classifications of the inputs for determining fair value. Other real estate owned is evaluated monthly for additional impairment and adjusted accordingly. Impaired Loans : The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent appraisals. These 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 independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments can be significant and typically result in Level 3 classifications of the inputs for determining fair value. Impaired loans are evaluated quarterly for additional impairment and adjusted accordingly. Appraisals for both collateral‑dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, the Company reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry‑wide statistics. The following presents assets measured on a nonrecurring basis as of September 30, 2019 and December 31, 2018 (in thousands): Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Reported September 30, 2019 (Level 1) (Level 2) (Level 3) Balance Other real estate owned: Commercial properties $ — $ — $ 658 $ 658 Total impaired loans: Commercial and industrial $ — $ — $ 342 $ 342 Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Reported December 31, 2018 (Level 1) (Level 2) (Level 3) Balance Other real estate owned: Commercial properties $ — $ — $ 658 $ 658 Total impaired loans: Commercial and industrial $ — $ — $ 795 $ 795 The sales comparison approach was utilized for estimating the fair value of non‑recurring assets. At September 30, 2019, other real estate owned remained unchanged from December 31, 2018 and had a carrying amount of $0.7 million, which is the cost basis of $2.4 million net of a valuation allowance of $1.7 million. At September 30, 2019, total impaired loans measured for impairment using the fair value of the collateral for collateral dependent loans had carrying values of $1.3 million with valuation allowances of $0.9 million and were classified as Level 3. As of December 31, 2018, impaired loans measured for impairment using the fair value of the collateral for collateral dependent loans had carrying values of $1.7 million with valuation allowances of $0.9 million and were classified as Level 3. Impaired loans valued using a discounted cash flow analyses were not deemed to be at fair value at September 30, 2019 and December 31, 2018. Impaired loans accounted for no provisions for loan losses for the three and nine months ended September 30, 2019. The following presents carrying amounts and estimated fair values for financial instruments as of September 30, 2019 and December 31, 2018 (in thousands): Carrying Fair Value Measurements Using: September 30, 2019 Amount Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 146,176 $ 146,176 $ — $ — Securities available-for-sale 61,491 255 61,236 — Loans, net 918,911 — — 899,750 Mortgage loans held for sale 69,231 — 69,231 — Accrued interest receivable 2,968 — 2,968 — Other assets 718 718 — — Liabilities: Deposits 1,108,904 — 1,111,853 — Borrowings: FHLB Topeka Borrowings – fixed rate 10,000 — 9,983 — 2016 Subordinated notes – fixed-to-floating rate 6,560 — — 6,110 Accrued interest payable 356 — 356 — Carrying Fair Value Measurements Using: December 31, 2018 Amount Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 73,357 $ 73,357 $ — $ — Securities available-for-sale 43,695 250 43,445 — Loans, net 886,515 — — 868,828 Mortgage loans held for sale 14,832 — 14,832 — Accrued interest receivable 2,844 — 2,844 — Other assets 693 693 — — Liabilities: Deposits 937,758 — 940,039 — Borrowings: FHLB Topeka Borrowings – fixed rate 15,000 — 14,833 — 2016 Subordinated notes – fixed-to-floating rate 6,560 — — 6,434 Accrued interest payable 231 — 231 — The fair value estimates presented and discussed above are based on pertinent information available to management as of the dates specified. The estimated fair value amounts are based on the exit price notion set forth by ASU 2016‑01 effective January 1, 2018 on a prospective basis. |
ASSETS AND LIABILITIES CLASSIFI
ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE | 9 Months Ended |
Sep. 30, 2019 | |
ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE | |
ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE | NOTE 14 – ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE At June 30, 2019, the Company determined that it was more likely than not that it would sign an agreement to dispose of a portion of the Capital Management segment. See note 15 – Segment Reporting for further information. The Company proceeded to perform an interim impairment test for the Capital Management segment, as a result of this evaluation, an impairment loss of $1.6 million was recorded during the nine months ended September 30, 2019, no impairment loss was recorded during the three months ended September 30, 2019. See note 4 – Goodwill for further information. On July 19, 2019, the Company entered into an agreement to sell the Company’s Los Angeles-based fixed income portfolio management team to Lido Advisors, LLC and Oakhurst Advisors, LLC. As of September 30, 2019, the sale was not yet completed and the assets and related liabilities attributable to the sale, which were expected to be sold within twelve months, were classified as a disposal group held for sale and are presented separately in the consolidated balance sheet. On November 1, 2019, the Company announced the proposed sale of the Los Angeles-based fixed income portfolio management team and certain advisory and sub-advisory arrangements to Lido Advisors, LLC and Oakhurst Advisors, LLC was cancelled. Management will continue to evaluate other opportunities to divest the Los Angeles-based fixed income portfolio management team. As a result, the disposal group held for sale classification remains appropriate. Assets and liabilities in disposal groups held for sale are as follows at the dates noted (in thousands): September 30, December 31, 2019 2018 ASSETS Goodwill $ 3,553 $ — Assets in disposal groups held for sale $ 3,553 $ — LIABILITIES Other liabilities $ 111 $ — Liabilities in disposal groups held for sale $ 111 $ — |
SEGMENT REPORTING
SEGMENT REPORTING | 9 Months Ended |
Sep. 30, 2019 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | NOTE 15 - SEGMENT REPORTING The Company’s reportable segments consist of Wealth Management, Capital Management, and Mortgage. The chief operating decision maker (“CODM”) is the Chief Executive Officer. The measure of profit or loss used by the CODM to identify and measure the Company’s reportable segments is income before income tax. The Wealth Management segment consists of operations relative to the Company’s fully integrated wealth management products and services. Services provided include deposit, loan, insurance, and trust and investment management advisory products and services. The Capital Management segment consists of operations relative to the Company’s institutional investment management services over proprietary fixed income, high yield, and equity strategies, including the advisor of three listed mutual funds. Capital Management products and services are financial in nature for which revenues are based on a percentage of assets under management or paid premiums. The Mortgage segment consists of operations relative to the Company’s residential mortgage service offerings. Mortgage products and services are financial in nature for which premiums are recognized net of expenses, upon the sale of mortgage loans to third parties. The tables below present the financial information for each segment that is specifically identifiable or based on allocations using internal methods for the three months and nine months ended September 30, 2019 and 2018 (in thousands): Three Months Ended September 30, 2019 Wealth Capital Mortgage Consolidated Income Statement Total interest income $ 11,473 $ — $ — $ 11,473 Total interest expense 3,533 — — 3,533 Provision for loan losses 100 — — 100 Net interest income 7,840 — — 7,840 Non-interest income 4,714 776 3,298 8,788 Total income 12,554 776 3,298 16,628 Depreciation and amortization expense 274 22 55 351 All other non-interest expense 10,434 701 1,956 13,091 Income before income tax $ 1,846 $ 53 $ 1,287 $ 3,186 Goodwill $ 15,994 $ 3,692 $ — $ 19,686 Assets held for sale — 3,553 — 3,553 Total assets $ 1,195,340 $ 8,528 $ 68,057 $ 1,271,925 Three Months Ended September 30, 2018 Wealth Capital Mortgage Consolidated Income Statement Total interest income $ 9,940 $ — $ — $ 9,940 Total interest expense 2,152 — — 2,152 Provision for loan losses 18 — — 18 Net interest income 7,770 — — 7,770 Non-interest income 4,613 850 1,175 6,638 Total income 12,383 850 1,175 14,408 Depreciation and amortization expense 323 130 104 557 All other non-interest expense 9,675 606 1,338 11,619 Income (loss) before income tax $ 2,385 $ 114 $ (267) $ 2,232 Goodwill $ 15,994 $ 8,817 $ — $ 24,811 Total assets $ 1,022,436 $ 9,853 $ 19,238 $ 1,051,527 Nine Months Ended September 30, 2019 Wealth Capital Mortgage Consolidated Income Statement Total interest income $ 33,698 $ - $ - $ 33,698 Total interest expense 9,827 - - 9,827 Provision for loan losses 216 - - 216 Net-interest income 23,655 - - 23,655 Non-interest income 13,956 2,339 8,053 24,348 Total income 37,611 2,339 8,053 48,003 Depreciation and amortization expense 902 248 197 1,347 All other non-interest expense 30,935 3,709 (1) 4,710 39,354 Income (loss) before income tax $ 5,774 $ (1,618) $ 3,146 $ 7,302 Goodwill $ 15,994 $ 3,692 $ — $ 19,686 Assets held for sale — 3,553 — 3,553 Total assets $ 1,195,340 $ 8,528 $ 68,057 $ 1,271,925 _______________________________________________ (1) Includes goodwill impairment charge of $1.6 million. Nine Months Ended September 30, 2018 Wealth Capital Mortgage Consolidated Income Statement Total interest income $ 28,451 $ — $ — $ 28,451 Total interest expense 5,726 — — 5,726 Recovery of loan losses (169) — — (169) Net-interest income 22,894 — — 22,894 Non-interest income 14,457 2,556 3,809 20,822 Total income 37,351 2,556 3,809 43,716 Depreciation and amortization expense 963 393 351 1,707 All other non-interest expense 29,839 2,882 4,118 36,839 Income (loss) before income tax $ 6,549 $ (719) $ (660) $ 5,170 Goodwill $ 15,994 $ 8,817 $ — $ 24,811 Total assets $ 1,022,436 $ 9,853 $ 19,238 $ 1,051,527 |
REGULATORY CAPITAL MATTERS
REGULATORY CAPITAL MATTERS | 9 Months Ended |
Sep. 30, 2019 | |
REGULATORY CAPITAL MATTERS | |
REGULATORY CAPITAL MATTERS | NOTE 16 - REGULATORY CAPITAL MATTERS The Bank is subject to various regulatory capital adequacy requirements administered by federal 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 consolidated financial statements. Under capital adequacy guidelines and, additionally for banks, the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off‑balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification is also subject to qualitative judgments by the regulators regarding components, risk weightings and other factors. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (“Basel III rules”) became effective for the Company on January 1, 2015 with full compliance with all of the requirements being phased in over a multi‑year schedule, and fully phased in by January 1, 2019. The net unrealized gain or loss on available‑for‑sale securities is not included in computing regulatory capital. Management believes as of September 30, 2019, the Bank meets all capital adequacy requirements to which it is subject to. Prompt corrective action regulations for the Bank provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. The standard ratios established by the Bank’s primary regulators to measure capital require the Bank to maintain minimum amounts and ratios. These ratios are common equity Tier 1 capital (“CET 1”), Tier 1 capital and total capital (as defined in the regulations) to risk‑weighted assets (as defined), and Tier 1 capital (as defined) to average assets (as defined). Actual capital ratios of the Bank, along with the applicable regulatory capital requirements as of September 30, 2019, which were calculated in accordance with the requirements of Basel III, became effective January 1, 2015. The final rules of Basel III also established a “capital conservation buffer” of 2.5% above new regulatory minimum capital ratios, that are fully effective in 2019, and resulted in the following minimum ratios: (i) a CET 1 ratio of 7.0%; (ii) a Tier 1 capital ratio of 8.5%; and (iii) a total capital ratio of 10.5%. The new capital conservation buffer requirement began phasing in, in January 2016 at 0.625% of risk‑weighted assets and increased each year until fully implemented in January 2019. An institution is subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations will establish a maximum percentage of eligible retained income that can be utilized for such activities. At September 30, 2019, required ratios including the capital conservation buffer were (i) CET 1 of 7.0%; (ii) a Tier 1 capital ratio of 8.5%; and (iii) a total capital ratio of 10.5%. As of September 30, 2019 and December 31, 2018, the most recent filings with the Federal Deposit Insurance Corporation (“FDIC”) categorized the Bank as well capitalized under the regulatory guidelines. To be categorized as well capitalized, an institution must maintain minimum CET 1 risk‑based, Tier 1 risk‑based, total risk‑based, and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since September 30, 2019, that the Company believes have changed the categorization of the Bank as well capitalized. Management believes the Bank met all capital adequacy requirements to which it was subject to as of September 30, 2019 and December 31, 2018. The following presents the actual and required capital amounts and ratios as of September 30, 2019 and December 31, 2018 (in thousands): To be Well Capitalized Under Prompt Required for Capital Corrective Action Actual Adequacy Purposes Regulations September 30, 2019 Amount Ratio Amount Ratio Amount Ratio Common Equity Tier 1(CET1) to risk-weighted assets Bank $ 96,495 10.98 % $ 39,547 4.5 % $ 57,123 6.5 % Consolidated 103,458 11.73 N/A N/A N/A N/A Tier 1 capital to risk-weighted assets Bank 96,495 10.98 52,729 6.0 70,305 8.0 Consolidated 103,458 11.73 N/A N/A N/A N/A Total capital to risk-weighted assets Bank 104,323 11.87 70,305 8.0 87,882 10.0 Consolidated 117,846 13.36 N/A N/A N/A N/A Tier 1 capital to average assets Bank 96,495 8.19 47,101 4.0 58,876 5.0 Consolidated 103,458 8.76 N/A N/A N/A N/A To be Well Capitalized Under Prompt Required for Capital Corrective Action Actual Adequacy Purposes Regulations December 31, 2018 Amount Ratio Amount Ratio Amount Ratio Common Equity Tier 1(CET1) to risk-weighted assets Bank $ 87,291 10.55 % $ 37,240 4.5 % $ 53,791 6.5 % Consolidated 94,335 11.35 N/A N/A N/A N/A Tier 1 capital to risk-weighted assets Bank 87,291 10.55 49,653 6.0 66,204 8.0 Consolidated 94,335 11.35 N/A N/A N/A N/A Total capital to risk-weighted assets Bank 94,906 11.47 66,204 8.0 82,755 10.0 Consolidated 108,510 13.06 N/A N/A N/A N/A Tier 1 capital to average assets Bank 87,291 8.63 40,459 4.0 50,574 5.0 Consolidated 94,335 9.28 N/A N/A N/A N/A |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 17 - SUBSEQUENT EVENTS On November 1, 2019, the Company cancelled the agreement to sell the Company’s Los Angeles-based fixed income portfolio management team, a portion of the Capital Management segment , to Lido Advisors, LLC and Oakhurst Advisors, LLC. |
ORGANIZATION AND SUMMARY OF S_2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Business and Basis of Presentation | Business and Basis of Presentation : The condensed consolidated financial statements include the accounts of First Western Financial, Inc. (“FWFI”), incorporated in Colorado on July 18, 2002, and its direct and indirect wholly‑owned subsidiaries listed below (collectively referred to as the “Company”). FWFI is a bank holding company with financial holding company status registered with the Board of Governors of the Federal Reserve System. FWFI wholly owns the following subsidiaries: First Western Trust Bank (the “Bank”), First Western Capital Management Company (“FWCM”), and Ryder, Stilwell Inc. (“RSI”). The Bank wholly owns the following subsidiaries, which are therefore indirectly wholly‑owned by FWFI: First Western Merger Corporation (“Merger Corp.”), and RRI, LLC (“RRI”). RSI and RRI are not active operating entities. The Company provides a fully‑integrated suite of wealth management services including, private banking, personal trust, investment management, mortgage loans, and institutional asset management services to individual and corporate customers principally in Colorado (metro Denver, Aspen, Boulder, Fort Collins and Vail Valley), Arizona (Phoenix and Scottsdale), California (Century City, Los Angeles) and Wyoming (Jackson Hole and Laramie). The Company’s revenues are generated from its full range of product offerings as noted above, but principally from net interest income (the interest income earned on the Bank’s assets net of funding costs), fee‑based wealth advisory, investment management, asset management and personal trust services, and net gains earned on selling mortgage loans. The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. The December 31, 2018 condensed consolidated balance sheet has been derived from the audited financial statements for the year ended December 31, 2018. In the opinion of management, all adjustments that were recurring in nature and considered necessary have been included for fair presentation of the Company’s financial position and results of operations. Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of results that may be expected for the full year ending December 31, 2019. In preparing the condensed consolidated financial statements, the Company is required to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could be significantly different from those estimates. The condensed consolidated financial statements and notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 as filed with the SEC. |
Consolidation | Consolidation : The Company’s policy is to consolidate all majority‑owned subsidiaries in which it has a controlling financial interest and variable‑interest entities where the Company is deemed to be the primary beneficiary. All material intercompany accounts and transactions have been eliminated in consolidation. |
Concentration of Credit Risk | Concentration of Credit Risk : Most of the Company’s lending activity is to customers located in and around Denver, Colorado; Phoenix and Scottsdale, Arizona; and Jackson Hole, Wyoming. The Company does not believe it has significant concentrations in any one industry or customer. At September 30, 2019 and December 31, 2018, 71.5%, and 73.6%, respectively, of the Company’s loan portfolio was secured by real estate collateral. Declines in real estate values in the primary markets the Company operates in could negatively impact the Company. Revenue Recognition : In accordance with the Financial Accounting Standards Board (“FASB”), Revenue Contracts with Customers (“Topic 606”), trust and investment management fees are earned by providing trust and investment services to customers. The Company’s performance obligation under these contracts is satisfied over time as the services are provided. Fees are recognized monthly based on the average monthly value of the assets under management and the corresponding fee rate based on the terms of the contract. Performance based incentive fees are earned with respect to investment management contracts for the three and nine months ended September 30, 2019 and the year ended December 31, 2018 were immaterial. Receivables are recorded on the condensed consolidated balance sheet in the accounts receivable line item. Income related to trust and investment management fees, bank fees, and risk management and insurance fees on the condensed consolidated statement of operations for the three and nine months ended September 30, 2019 are considered in scope of Topic 606. Reclassifications : Certain items in prior year financial statements were reclassified to conform to the current presentation. Such reclassifications had no impact on net income or total shareholders’ equity. Adoption of new accounting standards : The following reflect recent accounting pronouncements that have been adopted by the Company since the end of the Company’s fiscal year ended December 31, 2018. In February 2016, the FASB issued ASU 2016-02, Lease Accounting (Topic 842) (“ASU 2016-02”). Under ASU 2016-02, a lessee is required to recognize assets and liabilities for leases with lease terms of more than twelve months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, ASU 2016-02 requires both types of leases to be recognized on the balance sheet. The ASU also requires disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. Upon adoption of ASU 2016-02 with its March 31, 2019 Quarterly Report on Form 10-Q for the three months ended March 31, 2019, the Company recorded a right-of-use asset and related lease liability. We elected the modified retrospective transition approach. We also elected and applied the package of practical expedients whereby we will not reassess prior to the effective date (i) whether any expired contracts contain leases, (ii) the lease classification for any existing or expired lease, and (iii) initial direct costs of any existing leases. See Note 5 – Leases, for further information. In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20) (“ASU 2017-08”). ASU 2017-08 amends the amortization period for certain purchased callable debt securities held at a premium. Prior to the issuance of this guidance, premiums were amortized as an adjustment of yield over the contractual life of the instrument. ASU 2017-08 requires premiums on purchased callable debt securities that have explicit, non-contingent call features that are callable at fixed prices to be amortized to the earliest call date. There are no accounting changes for securities held at a discount. ASU 2017-08 became effective for the Company beginning January 1, 2019 and did not have a significant impact on the financial statements and disclosures. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”), which provided guidance to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. ASU 2017-12 was effective for the Company on January 1, 2019 and did not have a significant impact on the financial statements and disclosures. In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220) (“ASU 2018-02”). ASU 2018-02 allows an entity to elect to reclassify the stranded tax effects related to the Tax Cuts and Jobs Act of 2017 from accumulated other comprehensive income into retained earnings. ASU 2018-02 was effective for the Company beginning January 1, 2019 and did not have a significant impact on the financial statements and disclosures. |
Revenue Recognition | Revenue Recognition : In accordance with the Financial Accounting Standards Board (“FASB”), Revenue Contracts with Customers (“Topic 606”), trust and investment management fees are earned by providing trust and investment services to customers. The Company’s performance obligation under these contracts is satisfied over time as the services are provided. Fees are recognized monthly based on the average monthly value of the assets under management and the corresponding fee rate based on the terms of the contract. Performance based incentive fees are earned with respect to investment management contracts for the three and nine months ended September 30, 2019 and the year ended December 31, 2018 were immaterial. Receivables are recorded on the condensed consolidated balance sheet in the accounts receivable line item. Income related to trust and investment management fees, bank fees, and risk management and insurance fees on the condensed consolidated statement of operations for the three and nine months ended September 30, 2019 are considered in scope of Topic 606. |
Reclassifications | Reclassifications : Certain items in prior year financial statements were reclassified to conform to the current presentation. Such reclassifications had no impact on net income or total shareholders’ equity. |
Adoption of new accounting standards and Recently issued accounting pronouncements, not yet adopted | Adoption of new accounting standards : The following reflect recent accounting pronouncements that have been adopted by the Company since the end of the Company’s fiscal year ended December 31, 2018. In February 2016, the FASB issued ASU 2016-02, Lease Accounting (Topic 842) (“ASU 2016-02”). Under ASU 2016-02, a lessee is required to recognize assets and liabilities for leases with lease terms of more than twelve months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, ASU 2016-02 requires both types of leases to be recognized on the balance sheet. The ASU also requires disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. Upon adoption of ASU 2016-02 with its March 31, 2019 Quarterly Report on Form 10-Q for the three months ended March 31, 2019, the Company recorded a right-of-use asset and related lease liability. We elected the modified retrospective transition approach. We also elected and applied the package of practical expedients whereby we will not reassess prior to the effective date (i) whether any expired contracts contain leases, (ii) the lease classification for any existing or expired lease, and (iii) initial direct costs of any existing leases. See Note 5 – Leases, for further information. In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20) (“ASU 2017-08”). ASU 2017-08 amends the amortization period for certain purchased callable debt securities held at a premium. Prior to the issuance of this guidance, premiums were amortized as an adjustment of yield over the contractual life of the instrument. ASU 2017-08 requires premiums on purchased callable debt securities that have explicit, non-contingent call features that are callable at fixed prices to be amortized to the earliest call date. There are no accounting changes for securities held at a discount. ASU 2017-08 became effective for the Company beginning January 1, 2019 and did not have a significant impact on the financial statements and disclosures. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”), which provided guidance to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. ASU 2017-12 was effective for the Company on January 1, 2019 and did not have a significant impact on the financial statements and disclosures. In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220) (“ASU 2018-02”). ASU 2018-02 allows an entity to elect to reclassify the stranded tax effects related to the Tax Cuts and Jobs Act of 2017 from accumulated other comprehensive income into retained earnings. ASU 2018-02 was effective for the Company beginning January 1, 2019 and did not have a significant impact on the financial statements and disclosures. Recently issued accounting pronouncements, not yet adopted : The following reflects a pending pronouncement with an update to the expected impact since the end of the Company’s fiscal year ended December 31, 2018. In February 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) (“ASU 2016-13”). ASU 2016-13 replaces the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (“CECL”) model. The CECL model is applicable to the measurement of credit losses on the financial assets measured at amortized cost, including loan receivables, held-to-maturity debt securities, and reinsurance receivables. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor. For all other assets within the scope of CECL, a cumulative-effect adjustment will be recognized in retained earnings and the allowance for loan losses as of the beginning of the first reporting period in which the guidance is effective. ASU 2016-13 will be effective for most public companies on January 1, 2020. On July 17, 2019, the FASB voted to delay CECL implementation for certain companies including smaller reporting companies (“SRCs”) as defined by the SEC. The Company is designated as a SRC with the SEC. The proposed delay by FASB was subject to a comment period. At the October 16, 2019 FASB meeting, the FASB voted unanimously to delay the effective date of CECL adoption for SRCs to January 1, 2023. The proposal approved by the FASB on October 16 th has led to the creation of a framework for future standard setting where two “buckets” are used, allowing at least a two-year difference in the effective dates for major standards. The “buckets” the FASB proposed are SEC filers other than SRCs and all other companies including SRCs. The final amendment is expected later in 2019. During the three months ended September 30, 2019, the CECL committee of the Company continued to work through its implementation plan. The Company has integrated historical and current loan level data as required by CECL and is working with its third-party vendor solution to begin evaluating the methodologies available under the CECL model on its loan portfolios. The Company also continues to evaluate documentation requirements, internal control structure, relevant data sources, and system configurations. The Company has completed a successful integration of the required fields and historical data for key loan, customer and collateral data within the third-party solution and has been able to run parallels of our current ALLL calculation in the software to compare to our internal calculation and reconcile known differences. Currently, we are unable to estimate the impact the adoption of this update will have on the consolidated financial statements and disclosures. However, the Company expects the impact of the adoption will be significantly influenced by the composition and characteristics of its loan portfolios along with economic conditions prevalent as of the date of adoption. The Company expects to implement the new standard beginning January 1, 2023. |
INVESTMENT SECURITIES (Tables)
INVESTMENT SECURITIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
INVESTMENT SECURITIES | |
Schedule of the amortized cost and fair value of securities available for sale, with gross unrealized gains and losses recognized | The following presents the amortized cost and fair value of securities available‑for‑sale, with gross unrealized gains and losses recognized in accumulated other comprehensive income as of September 30, 2019 and December 31, 2018 (in thousands): Gross Gross Amortized Unrealized Unrealized Fair September 30, 2019 Cost Gains Losses Value Investment securities available-for-sale: U.S. Treasury debt $ 250 $ 5 $ — $ 255 Government National Mortgage Association mortgage-backed securities—residential (“GNMA”) 45,439 389 (93) 45,735 Federal National Mortgage Association mortgage-backed securities—residential (“FNMA”) 3,326 10 (27) 3,309 Securities issued by U.S. government sponsored entities and agencies — — — — Corporate collateralized mortgage obligations (”CMO”) and mortgage-backed securities (”MBS”) 12,140 77 (25) 12,192 Total securities available-for-sale $ 61,155 $ 481 $ (145) $ 61,491 Gross Gross Amortized Unrealized Unrealized Fair December 31, 2018 Cost Gains Losses Value Investment securities available-for-sale: U.S. Treasury debt $ 250 $ — $ — $ 250 GNMA 35,591 8 (1,597) 34,002 FNMA 4,076 2 (208) 3,870 Securities issued by U.S. government sponsored entities and agencies 4,525 — (223) 4,302 Corporate CMO and MBS 1,281 1 (11) 1,271 Total securities available-for-sale $ 45,723 $ 11 $ (2,039) $ 43,695 |
Summary of the amortized cost and estimated fair value of available for sale securities, excluding SBIC with contractual maturity dates | Amortized Fair September 30, 2019 Cost Value Due within one year through five years $ 250 $ 255 Securities (agency and CMO) 60,905 61,236 Total $ 61,155 $ 61,491 |
Summary of securities with unrealized losses aggregated by major security type and length of time in a continuous unrealized loss position | The following table summarizes securities with unrealized losses at September 30, 2019 and December 31, 2018, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands, before tax): Less than 12 Months 12 Months or Longer Total Fair Unrealized Fair Unrealized Fair Unrealized September 30, 2019 Value Losses Value Losses Value Losses U.S. Treasury debt $ — $ — $ — $ — $ — $ — GNMA 1,439 (5) 4,584 (88) 6,023 (93) FNMA — — 2,737 (27) 2,737 (27) Corporate CMO and MBS 7,995 (25) — — 7,995 (25) Total $ 9,434 $ (30) $ 7,321 $ (115) $ 16,755 $ (145) Less than 12 Months 12 Months or Longer Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2018 Value Losses Value Losses Value Losses U.S. Treasury debt $ — $ — $ — $ — $ — $ — GNMA 201 — 32,696 (1,597) 32,897 (1,597) FNMA 436 (3) 3,215 (205) 3,651 (208) Securities issued by U.S. government sponsored entities and agencies — — 4,302 (223) 4,302 (223) Corporate CMO and MBS 1,145 (9) 63 (2) 1,208 (11) Total $ 1,782 $ (12) $ 40,276 $ (2,027) $ 42,058 $ (2,039) |
LOANS AND THE ALLOWANCE FOR L_2
LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | |
Summary of the Company’s loans | The following presents a summary of the Company’s loans as of the dates noted (in thousands): September 30, December 31, 2019 2018 Cash, Securities and Other $ 146,622 $ 114,165 Construction and Development 42,059 31,897 1-4 Family Residential 366,238 350,852 Non-Owner Occupied CRE 138,753 173,741 Owner Occupied CRE 119,497 108,480 Commercial and Industrial 111,187 113,660 Total loans 924,356 892,795 Deferred costs, net 2,230 1,171 Allowance for loan losses (7,675) (7,451) Loans, net $ 918,911 $ 886,515 |
Summary of aging analysis of the recorded investments in loans past due | The following presents, by class, an aging analysis of the recorded investments (excluding accrued interest receivable, deferred loan fees and deferred costs which are not material) in loans past due as of September 30, 2019 and December 31, 2018 (in thousands): 30-59 60-89 90 or Total Total Days Days More Days Loans Recorded September 30, 2019 Past Due Past Due Past Due Past Due Current Investment Cash, Securities and Other $ 339 $ — $ — $ 339 $ 146,283 $ 146,622 Construction and Development — — — — 42,059 42,059 1-4 Family Residential — — 1,213 1,213 365,025 366,238 Non-Owner Occupied CRE 902 — — 902 137,851 138,753 Owner Occupied CRE — — — — 119,497 119,497 Commercial and Industrial 4,599 — — 4,599 106,588 111,187 Total $ 5,840 $ — $ 1,213 $ 7,053 $ 917,303 $ 924,356 30-59 60-89 90 or Total Total Days Days More Days Loans Recorded December 31, 2018 Past Due Past Due Past Due Past Due Current Investment Cash, Securities and Other $ 331 $ — $ 11,252 $ 11,583 $ 102,582 $ 114,165 Construction and Development — — — — 31,897 31,897 1-4 Family Residential — — 1,217 1,217 349,635 350,852 Non-Owner Occupied CRE 567 — — 567 173,174 173,741 Owner Occupied CRE — — — — 108,480 108,480 Commercial and Industrial — — 1,735 1,735 111,925 113,660 Total $ 898 $ — $ 14,204 $ 15,102 $ 877,693 $ 892,795 |
Schedule of recorded investment in non accrual loans by class | The following presents the recorded investment in non‑accrual loans by class as of the dates noted (in thousands): September 30, December 31, 2019 2018 Cash, Securities and Other $ 5,264 $ 11,252 Construction and Development — — 1-4 Family Residential — — Non-Owner Occupied CRE — — Owner Occupied CRE — — Commercial and Industrial 1,035 1,735 Total $ 6,299 $ 12,987 |
Summary of the unpaid principal balance of loans classified as TDRs | The following presents a summary of the unpaid principal balance of loans classified as TDRs by loan type and delinquency status as of the dates noted (in thousands): September 30, December 31, September 30, 2019 2018 2018 Accruing Commercial and Industrial $ 6,468 $ 4,848 $ — Nonaccrual Cash, Securities, and Other 5,017 11,252 — Commercial and Industrial 1,035 1,735 1,835 Allowance for loan associated with TDR (693) (940) (1,040) Net recorded investment $ 11,827 $ 16,895 $ 795 |
Summary of impaired loans by portfolio and related valuation allowance | The following table presents impaired loans by portfolio and related valuation allowance as of the periods presented (in thousands): September 30, 2019 December 31, 2018 Unpaid Allowance Unpaid Allowance Total Contractual for Total Contractual for Recorded Principal Loan Recorded Principal Loan Investment Balance Losses Investment Balance Losses Impaired loans with a valuation allowance: Commercial and Industrial $ 1,035 $ 1,035 $ 693 $ 1,735 $ 1,735 $ 940 Cash, Securities, and Other 247 247 247 — — — Total $ 1,282 $ 1,282 $ 940 $ 1,735 $ 1,735 $ 940 Impaired loans with no related valuation allowance: Commercial and Industrial $ 6,468 $ 6,468 $ — $ 4,848 $ 4,848 $ — Cash, Securities, and Other 5,017 5,017 — 11,252 11,252 — 1-4 Family Residential 1,213 1,213 — — — — Total $ 12,698 $ 12,698 $ — $ 16,100 $ 16,100 $ — Total impaired loans: Commercial and Industrial $ 7,503 $ 7,503 $ 693 $ 6,583 $ 6,583 $ 940 Cash, Securities, and Other 5,264 5,264 247 11,252 11,252 — 1-4 Family Residential 1,213 1,213 — — — — Total $ 13,980 $ 13,980 $ 940 $ 17,835 $ 17,835 $ 940 The recorded investment in loans in the previous tables excludes accrued interest and deferred loan fees and costs which are not material. Interest income, if any, was recognized on the cash basis on non-accrual loans. The average balance of impaired loans and interest income recognized on impaired loans during the three months ended September 30, 2019 and 2018 are included in the table below (in thousands): Three Months Ended September 30, 2019 2018 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized Impaired loans with a valuation allowance: Commercial and Industrial $ 1,035 $ — $ 1,835 $ — Cash, Securities, and Other 185 — — — Total $ 1,220 $ — $ 1,835 $ — Impaired loans with no related valuation allowance: Commercial and Industrial $ 5,958 $ 138 $ — $ — Cash, Securities, and Other 5,062 — 11,277 — 1-4 Family Residential 1,213 26 — — Total $ 12,233 $ 164 $ 11,277 $ — Total impaired loans: Commercial and Industrial $ 6,993 $ 138 $ 1,835 $ — Cash, Securities, and Other 5,247 — 11,277 — 1-4 Family Residential 1,213 26 — — Total $ 13,453 $ 164 $ 13,112 $ — The average balance of impaired loans and interest income recognized on impaired loans during the nine months ended September 30, 2019 and 2018 are included in the table below (in thousands): Nine Months Ended September 30, 2019 2018 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized Impaired loans with a valuation allowance: Commercial and Industrial $ 1,310 $ — $ 1,835 $ — Cash, Securities, and Other 185 — — — Total $ 1,495 $ — $ 1,835 $ — Impaired loans with no related valuation allowance: Commercial and Industrial $ 5,463 $ 326 $ — $ — Cash, Securities, and Other 8,088 — 11,388 — 1-4 Family Residential 1,213 77 — — Total $ 14,764 $ 403 $ 11,388 $ — Total impaired loans: Commercial and Industrial $ 6,773 $ 326 $ 1,835 $ — Cash, Securities, and Other 8,273 — 11,388 — 1-4 Family Residential 1,213 77 — — Total $ 16,259 $ 403 $ 13,223 $ — |
Schedule of activity in the Company’s allowance for loan losses by portfolio class | Allocation of a portion of the allowance for loan losses to one category of loans does not preclude its availability to absorb losses in other categories. The following presents the activity in the Company’s allowance for loan losses by portfolio class for the periods presented (in thousands): Cash, Construction 1-4 Non-Owner Owner Commercial Securities and Family Occupied Occupied and and Other Development Residential CRE CRE Industrial Total Changes in allowance for loan losses for the three months ended September 30, 2019 Beginning balance $ 1,049 $ 290 $ 2,650 $ 1,086 $ 800 $ 1,700 $ 7,575 Provision for (recovery of) credit losses 258 18 27 (68) 76 (211) 100 Charge-offs — — — — — — — Recoveries — — — — — — — Ending balance $ 1,307 $ 308 $ 2,677 $ 1,018 $ 876 $ 1,489 $ 7,675 Changes in allowance for loan losses for the nine months ended September 30, 2019 Beginning balance $ 764 $ 232 $ 2,552 $ 1,264 $ 789 $ 1,850 $ 7,451 Provision for (recovery of) credit losses 535 76 125 (246) 87 (361) 216 Charge-offs — — — — — — — Recoveries 8 — — — — — 8 Ending balance $ 1,307 $ 308 $ 2,677 $ 1,018 $ 876 $ 1,489 $ 7,675 Allowance for loan losses at September 30, 2019 allocated to loans evaluated for impairment: Individually $ 247 $ — $ — $ — $ — $ 693 $ 940 Collectively 1,060 308 2,677 1,018 876 796 6,735 Ending balance $ 1,307 $ 308 $ 2,677 $ 1,018 $ 876 $ 1,489 $ 7,675 Loans at September 30, 2019, evaluated for impairment: Individually $ 5,264 $ — $ 1,213 $ — $ — $ 7,503 $ 13,980 Collectively 141,358 42,059 365,025 138,753 119,497 103,684 910,376 Ending balance $ 146,622 $ 42,059 $ 366,238 $ 138,753 $ 119,497 $ 111,187 $ 924,356 Cash, Construction 1-4 Non-Owner Owner Commercial Securities and Family Occupied Occupied and and Other Development Residential CRE CRE Industrial Total Changes in allowance for loan losses for the three months ended September 30, 2018 Beginning balance $ 934 $ 227 $ 1,957 $ 1,199 $ 626 $ 2,157 $ 7,100 Provision for (recovery of) credit losses (94) 12 132 11 (22) (21) 18 Charge-offs — — — — — — — Recoveries — — — — — — — Ending balance $ 840 $ 239 $ 2,089 $ 1,210 $ 604 $ 2,136 $ 7,118 Changes in allowance for loan losses for the nine months ended September 30, 2018 Beginning balance $ 1,066 $ 202 $ 2,283 $ 1,433 $ 751 $ 1,552 $ 7,287 Provision for (recovery of) credit losses (226) 37 (194) (223) (147) 584 (169) Charge-offs — — — — — — — Recoveries — — — — — — — Ending balance $ 840 $ 239 $ 2,089 $ 1,210 $ 604 $ 2,136 $ 7,118 Allowance for loan losses at December 31, 2018 allocated to loans evaluated for impairment: Individually $ — $ — $ — $ — $ — $ 940 $ 940 Collectively 764 232 2,552 1,264 789 910 6,511 Ending balance $ 764 $ 232 $ 2,552 $ 1,264 $ 789 $ 1,850 $ 7,451 Loans at December 31, 2018, evaluated for impairment: Individually $ 11,252 $ — $ — $ — $ — $ 6,583 $ 17,835 Collectively 102,913 31,897 173,741 107,077 Ending balance $ 114,165 $ 31,897 $ 350,852 $ 173,741 $ $ 113,660 $ |
Summary of recorded investment in the Company’s loans by class and by credit quality indicator | Special September 30, 2019 Pass Mention Substandard Total Cash, Securities and Other $ 141,358 $ — $ 5,264 $ 146,622 Construction and Development 42,059 — — 42,059 1-4 Family Residential 359,030 — 7,208 366,238 Non-Owner Occupied CRE 137,582 1,171 — 138,753 Owner Occupied CRE 119,497 — — 119,497 Commercial and Industrial 95,371 — 15,816 111,187 Total $ 894,897 $ 1,171 $ 28,288 $ 924,356 Special December 31, 2018 Pass Mention Substandard Total Cash, Securities and Other $ 102,913 $ — $ 11,252 $ 114,165 Construction and Development 31,897 — — 31,897 1-4 Family Residential 349,635 — 1,217 350,852 Non-Owner Occupied CRE 165,164 8,117 460 173,741 Owner Occupied CRE 108,480 — — 108,480 Commercial and Industrial 100,929 — 12,731 113,660 Total $ 859,018 $ 8,117 $ 25,660 $ 892,795 |
GOODWILL (Tables)
GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill. | |
Schedule of changes in carrying amount of goodwill | Wealth Capital Management Management Consolidated Balance at December 31, 2018 $ 15,994 $ 8,817 $ 24,811 Impairment - (1,572) (1,572) Reclass of goodwill held for sale - (3,553) (3,553) Balance at September 30, 2019 $ 15,994 $ 3,692 $ 19,686 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
LEASES | |
Lease Balance Sheet Location | The following table presents the classification of the right-of-use asset and corresponding liability within the condensed consolidated balance sheet. The Company elected to not include short-term leases with initial terms of twelve months or less, on the condensed consolidated balance sheet. September 30, 2019 Lease Right-of-Use Assets Classification Operating lease right-of-use assets Other assets $ 10,959 Lease Liabilities Classification Operating lease liabilities Other liabilities $ 14,284 The Company’s operating lease agreements typically include an option to renew the lease at the Company’s discretion. To the extent the Company is reasonably certain it will exercise the renewal option at the inception of the lease, the Company will include the extended term in the calculation of the right-of-use asset and lease liability. ASC 842 requires the use of the rate implicit in the lease when it is readily determinable. As this rate is typically not readily determinable, at the inception of the lease, the Company uses its collateralized incremental borrowing rate over a similar term. The amount of the right-of-use asset and lease liability are impacted by the discount rate used to calculate the present value of the minimum lease payments over the term of the lease. September 30, 2019 Weighted-Average Remaining Lease Term Operating leases years Weighted-Average Discount Rate Operating leases % |
Lease Costs | The following table represents the Company’s net lease costs. Three Months Ended Nine Months Ended September 30, 2019 September 30, 2019 Lease Costs Operating lease cost $ 810 $ 2,382 Variable lease cost 395 1,168 Sublease income (99) (298) Lease costs, net $ 1,106 $ 3,252 |
Summary of Minimum Lease Payments | The Company recognized lease costs of $1.1 million and $3.4 million for the three and nine months ended September 30, 2018. The following table presents a maturity analysis of the Company’s operating lease liabilities on an annual basis for each of the first five years and total amounts thereafter as of September 30, 2019. Operating Leases Twelve Months Ended September 30, 2020 $ 3,601 September 30, 2021 2,941 September 30, 2022 2,683 September 30, 2023 2,462 September 30, 2024 2,241 Thereafter 1,768 Total future minimum lease payments $ 15,696 Less: Imputed interest (1,412) Present value of net future minimum lease payments $ 14,284 |
Schedule of Minimum Lease Payments Due | The following presents minimum lease payments due pursuant to the leases as of December 31, 2018 for the years indicated. Year Operating Leases 2019 $ 3,570 2020 3,374 2021 2,815 2022 2,675 2023 2,358 Thereafter 3,446 $ 18,238 |
DEPOSITS (Tables)
DEPOSITS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
DEPOSITS | |
Schedule of interest bearing deposits | The following presents the Company’s interest-bearing deposits at the dates noted (in thousands): September 30, December 31, 2019 2018 Money market deposit accounts $ 620,434 $ 489,506 Time deposits 170,457 178,743 Negotiable order of withdrawal accounts 83,022 64,853 Savings accounts 3,456 1,800 Total interest bearing deposits $ 877,369 $ 734,902 Aggregate time deposits of $250,000 or greater $ 68,328 $ 83,550 |
BORROWINGS (Tables)
BORROWINGS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
BORROWINGS | |
Schedule of borrowings from FHLB Topeka | The Company had the following borrowings from FHLB Topeka at the dates noted (in thousands): September 30, December 31, Maturity Date Rate % 2019 2018 August 2, 2019 2.65 $ — $ 5,000 August 26, 2020 1.94 10,000 10,000 Total $ 10,000 $ 15,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of contract amounts represent credit risk | The following presents the Company’s financial instruments whose contract amounts represent credit risk, as of the dates noted (in thousands): September 30, 2019 December 31, 2018 Fixed Rate Variable Rate Fixed Rate Variable Rate Unused lines of credit $ 35,724 $ 245,642 $ 33,571 $ 271,580 Standby letters of credit 65 23,499 40 23,508 Commitments to make loans to sell 81,158 — 17,207 — Commitments to make loans — 10,000 — — |
SHAREHOLDERS EQUITY (Tables)
SHAREHOLDERS EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
SHAREHOLDERS EQUITY | |
Schedule of summarizes activity for nonqualified stock options | : Weighted Weighted Average Number Average Remaining Aggregate of Exercise Contractual Intrinsic Options Price Term Value Outstanding at beginning of year 465,947 $ 28.84 Granted — — Exercised — — Forfeited or expired (42,750) 27.72 Outstanding at end of period 423,197 $ 28.95 3.8 (a) Options fully vested / exercisable at September 30, 2019 380,216 $ 29.34 3.5 (a) ________________________________________ (a) Nonqualified stock options outstanding at the end of the period and those fully vested / exercisable had immaterial aggregate intrinsic values. |
Schedule of summarizes the activity for the Time Vesting Units, the Financial Performance Units and the Market Performance Units | Time Financial Market Vesting Performance Performance Units Units Units Outstanding at beginning of year 184,369 15,932 17,258 Granted 71,127 59,536 - Vested (23,281) - - Forfeited (22,824) (6,597) (1,933) Outstanding at end of period |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
EARNINGS PER COMMON SHARE | |
Schedule of basic and diluted earning (loss) per share | The table below presents the calculation of basic and diluted earnings per common share for the periods indicated (amounts in thousands, except share and per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Earnings per common share - Basic Numerator: Net income $ 2,406 $ 1,689 $ 5,437 $ 3,923 Dividends on preferred stock — (255) — (1,378) Net income available for common shareholders $ 2,406 $ 1,434 $ 5,437 $ 2,545 Denominator: Basic weighted average shares 7,890,794 7,373,770 7,882,221 6,321,511 Earnings per common share - basic $ 0.30 $ 0.19 $ 0.69 $ 0.40 Earnings per common share - Diluted Numerator: Net income $ 2,406 $ 1,689 $ 5,437 $ 3,923 Dividends on preferred stock — (255) — (1,378) Net income available for common shareholders $ 2,406 $ 1,434 $ 5,437 $ 2,545 Denominator: Basic weighted average shares 7,890,794 7,373,770 7,882,221 6,321,511 Diluted effect of common stock equivalents: Stock options — — — 20,860 Time Vesting Units 10,702 — 4,942 14,841 Financial Performance Units 123 — 41 6,505 Market Performance Units 13,175 15,075 13,357 5,025 Restricted Stock Awards — — — 3,509 Total diluted effect of common stock equivalents 24,000 15,075 18,340 50,740 Diluted weighted average shares 7,914,794 7,388,845 7,900,561 6,372,251 Earnings per common share - diluted $ 0.30 $ 0.19 $ 0.69 $ 0.40 |
Schedule of Antidilutive securities | Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Stock options 423,197 467,947 438,364 296,949 Convertible Preferred D shares — — — — Time Vesting Units 130,821 168,962 163,141 157,454 Financial Performance Units 55,028 16,345 47,008 5,448 Market Performance Units — — — — Restricted Stock Awards 61,668 43,830 83,713 14,610 Total potentially dilutive securities 670,714 697,084 732,226 474,461 |
RELATED-PARTY TRANSACTIONS (Tab
RELATED-PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
RELATED-PARTY TRANSACTIONS | |
Summary of related-party loan activity | The following presents a summary of related‑party loan activity as of the dates noted (in thousands): September 30, 2019 December 31, 2018 Balance, beginning of period $ 2,659 $ 14,077 Funded loans 8,295 1,466 Payments collected (6,146) (9,386) Changes in related parties — (3,498) Balance, end of period $ 4,808 $ 2,659 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
FAIR VALUE | |
Summary of assets measured at fair value on recurring basis | The following presents assets measured on a recurring basis at September 30, 2019 and December 31, 2018 (in thousands): Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Reported September 30, 2019 (Level 1) (Level 2) (Level 3) Balance Investment securities available-for-sale: U.S. Treasury debt $ 255 $ — $ — $ 255 GNMA — 45,735 — 45,735 FNMA — 3,309 — 3,309 Securities issued by US. Government sponsored entities and agencies — — — — Corporate CMO and MBS — 12,192 — 12,192 Total securities available-for-sale $ 255 $ 61,236 $ — $ 61,491 Equity securities $ 718 $ — $ — $ 718 Interest rate lock and forward delivery commitments $ — $ 2,148 $ — $ 2,148 Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Reported December 31, 2018 (Level 1) (Level 2) (Level 3) Balance Investment securities available-for-sale: U.S. Treasury debt $ 250 $ — $ — $ 250 GNMA — 34,002 — 34,002 FNMA — 3,870 — 3,870 Securities issued by US. Government sponsored entities and agencies — 4,302 4,302 Corporate CMO and MBS — 1,271 — 1,271 Total securities available-for-sale $ 250 $ 43,445 $ — $ 43,695 Equity securities $ 693 $ — $ — $ 693 Interest rate lock and forward delivery commitments $ — $ 890 $ — $ 890 |
Summary of assets measured at fair value on nonrecurring basis | The following presents assets measured on a nonrecurring basis as of September 30, 2019 and December 31, 2018 (in thousands): Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Reported September 30, 2019 (Level 1) (Level 2) (Level 3) Balance Other real estate owned: Commercial properties $ — $ — $ 658 $ 658 Total impaired loans: Commercial and industrial $ — $ — $ 342 $ 342 Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Reported December 31, 2018 (Level 1) (Level 2) (Level 3) Balance Other real estate owned: Commercial properties $ — $ — $ 658 $ 658 Total impaired loans: Commercial and industrial $ — $ — $ 795 $ 795 |
Summary of carrying amounts and estimated fair values of financial instruments | The following presents carrying amounts and estimated fair values for financial instruments as of September 30, 2019 and December 31, 2018 (in thousands): Carrying Fair Value Measurements Using: September 30, 2019 Amount Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 146,176 $ 146,176 $ — $ — Securities available-for-sale 61,491 255 61,236 — Loans, net 918,911 — — 899,750 Mortgage loans held for sale 69,231 — 69,231 — Accrued interest receivable 2,968 — 2,968 — Other assets 718 718 — — Liabilities: Deposits 1,108,904 — 1,111,853 — Borrowings: FHLB Topeka Borrowings – fixed rate 10,000 — 9,983 — 2016 Subordinated notes – fixed-to-floating rate 6,560 — — 6,110 Accrued interest payable 356 — 356 — Carrying Fair Value Measurements Using: December 31, 2018 Amount Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 73,357 $ 73,357 $ — $ — Securities available-for-sale 43,695 250 43,445 — Loans, net 886,515 — — 868,828 Mortgage loans held for sale 14,832 — 14,832 — Accrued interest receivable 2,844 — 2,844 — Other assets 693 693 — — Liabilities: Deposits 937,758 — 940,039 — Borrowings: FHLB Topeka Borrowings – fixed rate 15,000 — 14,833 — 2016 Subordinated notes – fixed-to-floating rate 6,560 — — 6,434 Accrued interest payable 231 — 231 — |
ASSETS AND LIABILITIES CLASSI_2
ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE | |
Schedule of assets and liabilities in disposal groups held for sale | Assets and liabilities in disposal groups held for sale are as follows at the dates noted (in thousands): September 30, December 31, 2019 2018 ASSETS Goodwill $ 3,553 $ — Assets in disposal groups held for sale $ 3,553 $ — LIABILITIES Other liabilities $ 111 $ — Liabilities in disposal groups held for sale $ 111 $ — |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
SEGMENT REPORTING | |
Schedule of segment data | Three Months Ended September 30, 2019 Wealth Capital Mortgage Consolidated Income Statement Total interest income $ 11,473 $ — $ — $ 11,473 Total interest expense 3,533 — — 3,533 Provision for loan losses 100 — — 100 Net interest income 7,840 — — 7,840 Non-interest income 4,714 776 3,298 8,788 Total income 12,554 776 3,298 16,628 Depreciation and amortization expense 274 22 55 351 All other non-interest expense 10,434 701 1,956 13,091 Income before income tax $ 1,846 $ 53 $ 1,287 $ 3,186 Goodwill $ 15,994 $ 3,692 $ — $ 19,686 Assets held for sale — 3,553 — 3,553 Total assets $ 1,195,340 $ 8,528 $ 68,057 $ 1,271,925 Three Months Ended September 30, 2018 Wealth Capital Mortgage Consolidated Income Statement Total interest income $ 9,940 $ — $ — $ 9,940 Total interest expense 2,152 — — 2,152 Provision for loan losses 18 — — 18 Net interest income 7,770 — — 7,770 Non-interest income 4,613 850 1,175 6,638 Total income 12,383 850 1,175 14,408 Depreciation and amortization expense 323 130 104 557 All other non-interest expense 9,675 606 1,338 11,619 Income (loss) before income tax $ 2,385 $ 114 $ (267) $ 2,232 Goodwill $ 15,994 $ 8,817 $ — $ 24,811 Total assets $ 1,022,436 $ 9,853 $ 19,238 $ 1,051,527 Nine Months Ended September 30, 2019 Wealth Capital Mortgage Consolidated Income Statement Total interest income $ 33,698 $ - $ - $ 33,698 Total interest expense 9,827 - - 9,827 Provision for loan losses 216 - - 216 Net-interest income 23,655 - - 23,655 Non-interest income 13,956 2,339 8,053 24,348 Total income 37,611 2,339 8,053 48,003 Depreciation and amortization expense 902 248 197 1,347 All other non-interest expense 30,935 3,709 (1) 4,710 39,354 Income (loss) before income tax $ 5,774 $ (1,618) $ 3,146 $ 7,302 Goodwill $ 15,994 $ 3,692 $ — $ 19,686 Assets held for sale — 3,553 — 3,553 Total assets $ 1,195,340 $ 8,528 $ 68,057 $ 1,271,925 _______________________________________________ (1) Includes goodwill impairment charge of $1.6 million. Nine Months Ended September 30, 2018 Wealth Capital Mortgage Consolidated Income Statement Total interest income $ 28,451 $ — $ — $ 28,451 Total interest expense 5,726 — — 5,726 Recovery of loan losses (169) — — (169) Net-interest income 22,894 — — 22,894 Non-interest income 14,457 2,556 3,809 20,822 Total income 37,351 2,556 3,809 43,716 Depreciation and amortization expense 963 393 351 1,707 All other non-interest expense 29,839 2,882 4,118 36,839 Income (loss) before income tax $ 6,549 $ (719) $ (660) $ 5,170 Goodwill $ 15,994 $ 8,817 $ — $ 24,811 Total assets $ 1,022,436 $ 9,853 $ 19,238 $ 1,051,527 |
REGULATORY CAPITAL MATTERS (Tab
REGULATORY CAPITAL MATTERS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
REGULATORY CAPITAL MATTERS | |
Schedule of actual and required capital ratios | The following presents the actual and required capital amounts and ratios as of September 30, 2019 and December 31, 2018 (in thousands): To be Well Capitalized Under Prompt Required for Capital Corrective Action Actual Adequacy Purposes Regulations September 30, 2019 Amount Ratio Amount Ratio Amount Ratio Common Equity Tier 1(CET1) to risk-weighted assets Bank $ 96,495 10.98 % $ 39,547 4.5 % $ 57,123 6.5 % Consolidated 103,458 11.73 N/A N/A N/A N/A Tier 1 capital to risk-weighted assets Bank 96,495 10.98 52,729 6.0 70,305 8.0 Consolidated 103,458 11.73 N/A N/A N/A N/A Total capital to risk-weighted assets Bank 104,323 11.87 70,305 8.0 87,882 10.0 Consolidated 117,846 13.36 N/A N/A N/A N/A Tier 1 capital to average assets Bank 96,495 8.19 47,101 4.0 58,876 5.0 Consolidated 103,458 8.76 N/A N/A N/A N/A To be Well Capitalized Under Prompt Required for Capital Corrective Action Actual Adequacy Purposes Regulations December 31, 2018 Amount Ratio Amount Ratio Amount Ratio Common Equity Tier 1(CET1) to risk-weighted assets Bank $ 87,291 10.55 % $ 37,240 4.5 % $ 53,791 6.5 % Consolidated 94,335 11.35 N/A N/A N/A N/A Tier 1 capital to risk-weighted assets Bank 87,291 10.55 49,653 6.0 66,204 8.0 Consolidated 94,335 11.35 N/A N/A N/A N/A Total capital to risk-weighted assets Bank 94,906 11.47 66,204 8.0 82,755 10.0 Consolidated 108,510 13.06 N/A N/A N/A N/A Tier 1 capital to average assets Bank 87,291 8.63 40,459 4.0 50,574 5.0 Consolidated 94,335 9.28 N/A N/A N/A N/A |
ORGANIZATION AND SUMMARY OF S_3
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentration of Credit Risk (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Customer concentration | Loan portfolio | ||
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Concentration risk (as a percent) | 71.50% | 73.60% |
INVESTMENT SECURITIES - Amortiz
INVESTMENT SECURITIES - Amortized cost and fair value of securities available-for-sale (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 61,155 | $ 45,723 |
Gross Unrealized Gains | 481 | 11 |
Gross Unrealized Losses | (145) | (2,039) |
Fair Value | 61,491 | 43,695 |
U.S. Treasury debt | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 250 | 250 |
Gross Unrealized Gains | 5 | |
Fair Value | 255 | 250 |
Association (“GNMA”) mortgage-backed securities – residential | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 45,439 | 35,591 |
Gross Unrealized Gains | 389 | 8 |
Gross Unrealized Losses | (93) | (1,597) |
Fair Value | 45,735 | 34,002 |
Federal National Mortgage Association (“FNMA”) mortgage-backed securities – residential | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 3,326 | 4,076 |
Gross Unrealized Gains | 10 | 2 |
Gross Unrealized Losses | (27) | (208) |
Fair Value | 3,309 | 3,870 |
Securities issued by U.S. government sponsored entities and agencies | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 4,525 | |
Gross Unrealized Losses | (223) | |
Fair Value | 4,302 | |
Corporate collateralized mortgage obligations (”CMO”) and mortgage-backed securities (”MBS”) | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 12,140 | 1,281 |
Gross Unrealized Gains | 77 | 1 |
Gross Unrealized Losses | (25) | (11) |
Fair Value | $ 12,192 | $ 1,271 |
INVESTMENT SECURITIES - Amort_2
INVESTMENT SECURITIES - Amortized cost and estimated fair value of available-for-sale securities excluding SBIC (Details) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019USD ($)security | Dec. 31, 2018USD ($)security | |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 61,155 | $ 45,723 |
Fair Value | 61,491 | 43,695 |
Debt available for sale securities pledged as collateral | $ 5,900 | $ 5,400 |
Threshold Percentage Of Shareholders Equity Amount Held As Securities By One Issuer | 10.00% | 10.00% |
Unrealized loss | $ 145 | $ 2,039 |
Number of securities in continuous unrealized loss position for more than twelve months | security | 3 | |
Available for sale securities, excluding SBIC | ||
Debt Securities, Available-for-sale [Line Items] | ||
Due within one year through five years amortized cost | $ 250 | |
Due within one year through five years fair value | 255 | |
Mortgage-related securities, amortized cost | 60,905 | |
Mortgage-related securities, fair value | 61,236 | |
Amortized Cost | 61,155 | |
Fair Value | $ 61,491 | |
Number of securities in unrealized loss position | security | 10 | 33 |
INVESTMENT SECURITIES - Securit
INVESTMENT SECURITIES - Securities with unrealized losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Debt Securities, Available-for-sale [Line Items] | |||||
Less than 12 months, Fair Value | $ 9,434 | $ 9,434 | $ 1,782 | ||
Less than 12 months, Unrealized Losses | (30) | (30) | (12) | ||
More than 12 months, Fair Value | 7,321 | 7,321 | 40,276 | ||
More than 12 months, Unrealized Losses | (115) | (115) | (2,027) | ||
Total Fair Value | 16,755 | 16,755 | 42,058 | ||
Total Unrealized Losses | (145) | (145) | (2,039) | ||
Sales | 7,500 | $ 0 | 7,500 | $ 0 | |
Realized gains | 100 | 100 | |||
Association (“GNMA”) mortgage-backed securities – residential | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Less than 12 months, Fair Value | 1,439 | 1,439 | 201 | ||
Less than 12 months, Unrealized Losses | (5) | (5) | |||
More than 12 months, Fair Value | 4,584 | 4,584 | 32,696 | ||
More than 12 months, Unrealized Losses | (88) | (88) | (1,597) | ||
Total Fair Value | 6,023 | 6,023 | 32,897 | ||
Total Unrealized Losses | (93) | (93) | (1,597) | ||
Federal National Mortgage Association (“FNMA”) mortgage-backed securities – residential | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Less than 12 months, Fair Value | 436 | ||||
Less than 12 months, Unrealized Losses | (3) | ||||
More than 12 months, Fair Value | 2,737 | 2,737 | 3,215 | ||
More than 12 months, Unrealized Losses | (27) | (27) | (205) | ||
Total Fair Value | 2,737 | 2,737 | 3,651 | ||
Total Unrealized Losses | (27) | (27) | (208) | ||
Securities issued by U.S. government sponsored entities and agencies | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
More than 12 months, Fair Value | 4,302 | ||||
More than 12 months, Unrealized Losses | (223) | ||||
Total Fair Value | 4,302 | ||||
Total Unrealized Losses | (223) | ||||
Corporate collateralized mortgage obligations (”CMO”) and mortgage-backed securities (”MBS”) | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Less than 12 months, Fair Value | 7,995 | 7,995 | 1,145 | ||
Less than 12 months, Unrealized Losses | (25) | (25) | (9) | ||
More than 12 months, Fair Value | 63 | ||||
More than 12 months, Unrealized Losses | (2) | ||||
Total Fair Value | 7,995 | 7,995 | 1,208 | ||
Total Unrealized Losses | $ (25) | $ (25) | $ (11) |
LOANS AND THE ALLOWANCE FOR L_3
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Summary of loans (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans | $ 924,356 | $ 892,795 |
Deferred costs, net | 2,230 | 1,171 |
Allowance for loan losses | (7,675) | (7,451) |
Net loans | 918,911 | 886,515 |
Cash, Securities and Other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans | 146,622 | 114,165 |
Construction and Development | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans | 42,059 | 31,897 |
1-4 Family Residential | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans | 366,238 | 350,852 |
Non-Owner Occupied CRE | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans | 138,753 | 173,741 |
Owner Occupied CRE | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans | 119,497 | 108,480 |
Commercial and Industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans | $ 111,187 | $ 113,660 |
LOANS AND THE ALLOWANCE FOR L_4
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Aging analysis of recorded investments by class (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | $ 7,053 | $ 15,102 |
Total current | 917,303 | 877,693 |
Total Recorded Investment | 924,356 | 892,795 |
30-59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 5,840 | 898 |
90 or More Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 1,213 | 14,204 |
Cash, Securities and Other | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 339 | 11,583 |
Total current | 146,283 | 102,582 |
Total Recorded Investment | 146,622 | 114,165 |
Cash, Securities and Other | 30-59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 339 | 331 |
Cash, Securities and Other | 90 or More Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 11,252 | |
Construction and Development | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total current | 42,059 | 31,897 |
Total Recorded Investment | 42,059 | 31,897 |
1-4 Family Residential | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 1,213 | 1,217 |
Total current | 365,025 | 349,635 |
Total Recorded Investment | 366,238 | 350,852 |
1-4 Family Residential | 90 or More Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 1,213 | 1,217 |
Non-Owner Occupied CRE | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 902 | 567 |
Total current | 137,851 | 173,174 |
Total Recorded Investment | 138,753 | 173,741 |
Non-Owner Occupied CRE | 30-59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 902 | 567 |
Owner Occupied CRE | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total current | 119,497 | 108,480 |
Total Recorded Investment | 119,497 | 108,480 |
Commercial and Industrial | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 4,599 | 1,735 |
Total current | 106,588 | 111,925 |
Total Recorded Investment | 111,187 | 113,660 |
Commercial and Industrial | 30-59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | $ 4,599 | |
Commercial and Industrial | 90 or More Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | $ 1,735 |
LOANS AND THE ALLOWANCE FOR L_5
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Recorded investment in non-accrual loans by class (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-accrual loans | $ 6,299 | $ 12,987 |
Recorded investments | 6,100 | 13,000 |
Cash, Securities and Other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-accrual loans | 5,264 | 11,252 |
Commercial and Industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-accrual loans | $ 1,035 | $ 1,735 |
LOANS AND THE ALLOWANCE FOR L_6
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Summary of unpaid principal balance of loans classified as TDRs (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($)loan | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total Recorded Investment | $ 17,835 | $ 13,980 | |
Allowance for loan associated with TDR | (940) | (940) | |
Net recorded investment | $ 16,895 | 11,827 | $ 795 |
Additional funds to loans classified as TDRs | 1,000 | ||
Cash collateral received | 1,500 | ||
Number of contracts modified | loan | 2 | ||
Cash, Securities and Other | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total Recorded Investment | $ 11,252 | 5,264 | |
Allowance for loan associated with TDR | (247) | ||
1-4 Family Residential | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total Recorded Investment | 1,213 | ||
Commercial and Industrial | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total Recorded Investment | 6,583 | 7,503 | |
Allowance for loan associated with TDR | (940) | (693) | (1,040) |
Accrual Loans | Commercial and Industrial | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Loans classified as TDRs | 6,468 | ||
Total Recorded Investment | 4,848 | ||
Loans on nonaccrual status | Cash, Securities and Other | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Loans classified as TDRs | 5,017 | ||
Total Recorded Investment | 11,252 | ||
Loans on nonaccrual status | Commercial and Industrial | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Loans classified as TDRs | $ 1,035 | ||
Total Recorded Investment | $ 1,735 | $ 1,835 |
LOANS AND THE ALLOWANCE FOR L_7
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Recorded investment in impaired loans (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Total Recorded Investment With Allowance | $ 1,282 | $ 1,282 | $ 1,735 | ||
Total Recorded Investment With No Allowance | 12,698 | 12,698 | 16,100 | ||
Impaired Financing Receivable, Recorded Investment, Total | 13,980 | 13,980 | 17,835 | ||
Unpaid Contractual Principal Balance with a valuation Allowance | 1,282 | 1,282 | 1,735 | ||
Unpaid Contractual Principal Balance with no related valuation Allowance | 12,698 | 12,698 | 16,100 | ||
Impaired Financing Receivable, Unpaid Principal Balance, Total | 13,980 | 13,980 | 17,835 | ||
Allowance for Loan Losses | 940 | 940 | 940 | ||
Average Recorded Investment with Allowance | 1,220 | $ 1,835 | 1,495 | $ 1,835 | |
Average Recorded Investment with No Allowance | 12,233 | 11,277 | 14,764 | 11,388 | |
Average Recorded Investment | 13,453 | 13,112 | 16,259 | 13,223 | |
Interest Income Recognized with No Allowance | 164 | 403 | |||
Interest Income Recognized | 164 | 403 | |||
Commercial and Industrial | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Total Recorded Investment With Allowance | 1,035 | 1,035 | 1,735 | ||
Total Recorded Investment With No Allowance | 6,468 | 6,468 | 4,848 | ||
Impaired Financing Receivable, Recorded Investment, Total | 7,503 | 7,503 | 6,583 | ||
Unpaid Contractual Principal Balance with a valuation Allowance | 1,035 | 1,035 | 1,735 | ||
Unpaid Contractual Principal Balance with no related valuation Allowance | 6,468 | 6,468 | 4,848 | ||
Impaired Financing Receivable, Unpaid Principal Balance, Total | 7,503 | 7,503 | 6,583 | ||
Allowance for Loan Losses | 693 | 1,040 | 693 | 1,040 | 940 |
Average Recorded Investment with Allowance | 1,035 | 1,835 | 1,310 | 1,835 | |
Average Recorded Investment with No Allowance | 5,958 | 5,463 | |||
Average Recorded Investment | 6,993 | 1,835 | 6,773 | 1,835 | |
Interest Income Recognized with No Allowance | 138 | 326 | |||
Interest Income Recognized | 138 | 326 | |||
Cash, Securities and Other | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Total Recorded Investment With Allowance | 247 | 247 | |||
Total Recorded Investment With No Allowance | 5,017 | 5,017 | 11,252 | ||
Impaired Financing Receivable, Recorded Investment, Total | 5,264 | 5,264 | 11,252 | ||
Unpaid Contractual Principal Balance with a valuation Allowance | 247 | 247 | |||
Unpaid Contractual Principal Balance with no related valuation Allowance | 5,017 | 5,017 | 11,252 | ||
Impaired Financing Receivable, Unpaid Principal Balance, Total | 5,264 | 5,264 | $ 11,252 | ||
Allowance for Loan Losses | 247 | 247 | |||
Average Recorded Investment with Allowance | 185 | 185 | |||
Average Recorded Investment with No Allowance | 5,062 | 11,277 | 8,088 | 11,388 | |
Average Recorded Investment | 5,247 | $ 11,277 | 8,273 | $ 11,388 | |
1-4 Family Residential | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Total Recorded Investment With No Allowance | 1,213 | 1,213 | |||
Impaired Financing Receivable, Recorded Investment, Total | 1,213 | 1,213 | |||
Unpaid Contractual Principal Balance with no related valuation Allowance | 1,213 | 1,213 | |||
Impaired Financing Receivable, Unpaid Principal Balance, Total | 1,213 | 1,213 | |||
Average Recorded Investment with No Allowance | 1,213 | 1,213 | |||
Average Recorded Investment | 1,213 | 1,213 | |||
Interest Income Recognized with No Allowance | 26 | 77 | |||
Interest Income Recognized | $ 26 | $ 77 |
LOANS AND THE ALLOWANCE FOR L_8
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Allowance for loan losses by portfolio (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | $ 7,575 | $ 7,100 | $ 7,451 | $ 7,287 | |
Provision for (recovery of) credit losses | 100 | 18 | 216 | (169) | |
Recoveries | 8 | ||||
Ending balance | 7,675 | 7,118 | 7,675 | 7,118 | |
Individually evaluated | 940 | 940 | $ 6,511 | ||
Collectively evaluated | 6,735 | 6,735 | 940 | ||
Loans individually evaluated | 13,980 | 13,980 | 17,835 | ||
Loans collectively evaluated | 910,376 | 910,376 | 874,960 | ||
Total Recorded Investment | 924,356 | 924,356 | 892,795 | ||
Cash, Securities and Other | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | 1,049 | 934 | 764 | 1,066 | |
Provision for (recovery of) credit losses | 258 | (94) | 535 | (226) | |
Recoveries | 8 | ||||
Ending balance | 1,307 | 840 | 1,307 | 840 | |
Individually evaluated | 247 | 247 | 764 | ||
Collectively evaluated | 1,060 | 1,060 | |||
Loans individually evaluated | 5,264 | 5,264 | 11,252 | ||
Loans collectively evaluated | 141,358 | 141,358 | 102,913 | ||
Total Recorded Investment | 146,622 | 146,622 | 114,165 | ||
Construction and Development | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | 290 | 227 | 232 | 202 | |
Provision for (recovery of) credit losses | 18 | 12 | 76 | 37 | |
Ending balance | 308 | 239 | 308 | 239 | |
Individually evaluated | 232 | ||||
Collectively evaluated | 308 | 308 | |||
Loans collectively evaluated | 42,059 | 42,059 | 31,897 | ||
Total Recorded Investment | 42,059 | 42,059 | 31,897 | ||
1-4 Family Residential | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | 2,650 | 1,957 | 2,552 | 2,283 | |
Provision for (recovery of) credit losses | 27 | 132 | 125 | (194) | |
Ending balance | 2,677 | 2,089 | 2,677 | 2,089 | |
Individually evaluated | 2,552 | ||||
Collectively evaluated | 2,677 | 2,677 | |||
Loans individually evaluated | 1,213 | 1,213 | |||
Loans collectively evaluated | 365,025 | 365,025 | 350,852 | ||
Total Recorded Investment | 366,238 | 366,238 | 350,852 | ||
Non-Owner Occupied CRE | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | 1,086 | 1,199 | 1,264 | 1,433 | |
Provision for (recovery of) credit losses | (68) | 11 | (246) | (223) | |
Ending balance | 1,018 | 1,210 | 1,018 | 1,210 | |
Individually evaluated | 1,264 | ||||
Collectively evaluated | 1,018 | 1,018 | |||
Loans collectively evaluated | 138,753 | 138,753 | 173,741 | ||
Total Recorded Investment | 138,753 | 138,753 | 173,741 | ||
Owner Occupied CRE | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | 800 | 626 | 789 | 751 | |
Provision for (recovery of) credit losses | 76 | (22) | 87 | (147) | |
Ending balance | 876 | 604 | 876 | 604 | |
Individually evaluated | 789 | ||||
Collectively evaluated | 876 | 876 | |||
Loans collectively evaluated | 119,497 | 119,497 | 108,480 | ||
Total Recorded Investment | 119,497 | 119,497 | 108,480 | ||
Commercial and Industrial | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | 1,700 | 2,157 | 1,850 | 1,552 | |
Provision for (recovery of) credit losses | (211) | (21) | (361) | 584 | |
Ending balance | 1,489 | $ 2,136 | 1,489 | $ 2,136 | |
Individually evaluated | 693 | 693 | 910 | ||
Collectively evaluated | 796 | 796 | 940 | ||
Loans individually evaluated | 7,503 | 7,503 | 6,583 | ||
Loans collectively evaluated | 103,684 | 103,684 | 107,077 | ||
Total Recorded Investment | $ 111,187 | $ 111,187 | $ 113,660 |
LOANS AND THE ALLOWANCE FOR L_9
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Recorded investment in company's loans (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | $ 924,356 | $ 892,795 |
Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 894,897 | 859,018 |
Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 1,171 | 8,117 |
Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 28,288 | 25,660 |
Doubtful | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 0 | 0 |
Cash, Securities and Other | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 146,622 | 114,165 |
Cash, Securities and Other | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 141,358 | 102,913 |
Cash, Securities and Other | Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 5,264 | 11,252 |
Construction and Development | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 42,059 | 31,897 |
Construction and Development | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 42,059 | 31,897 |
1-4 Family Residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 366,238 | 350,852 |
1-4 Family Residential | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 359,030 | 349,635 |
1-4 Family Residential | Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 7,208 | 1,217 |
Non-Owner Occupied CRE | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 138,753 | 173,741 |
Non-Owner Occupied CRE | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 137,582 | 165,164 |
Non-Owner Occupied CRE | Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 1,171 | 8,117 |
Non-Owner Occupied CRE | Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 460 | |
Owner Occupied CRE | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 119,497 | 108,480 |
Owner Occupied CRE | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 119,497 | 108,480 |
Commercial and Industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 111,187 | 113,660 |
Commercial and Industrial | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | 95,371 | 100,929 |
Commercial and Industrial | Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total loans | $ 15,816 | $ 12,731 |
GOODWILL - Changes in the carry
GOODWILL - Changes in the carrying amount of goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Goodwill [Roll Forward] | |
Balance at beginning of period | $ 24,811 |
Impairment | (1,572) |
Reclass of goodwill held for sale | (3,553) |
Balance at end of period | 19,686 |
Wealth Management | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 15,994 |
Balance at end of period | 15,994 |
Capital Management | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 8,817 |
Impairment | (1,572) |
Reclass of goodwill held for sale | (3,553) |
Balance at end of period | $ 3,692 |
LEASES - Leases Balance Sheets
LEASES - Leases Balance Sheets Location (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 |
LEASES | ||
Operating lease right-of-use asset | $ 10,959 | $ 12,900 |
Financial position | us-gaap:OtherAssets | |
Operating lease liability | $ 14,284 | $ 16,600 |
Financial position | us-gaap:OtherLiabilities | |
Weighted-Average Remaining Lease Term - Operating leases | 5 years 29 days | |
Weighted-Average Discount Rate - Operating leases | 3.70% |
LEASES - Leases Costs (Details)
LEASES - Leases Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
LEASES | ||
Operating lease cost | $ 810 | $ 2,382 |
Variable lease cost | 395 | 1,168 |
Sublease income | (99) | (298) |
Lease costs, net | $ 1,106 | $ 3,252 |
LEASES - Lease Maturity (Detail
LEASES - Lease Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 |
LEASES | ||
September 30, 2020 | $ 3,601 | |
September 30, 2021 | 2,941 | |
September 30, 2022 | 2,683 | |
September 30, 2023 | 2,462 | |
September 30, 2024 | 2,241 | |
Thereafter | 1,768 | |
Total future minimum lease payments | 15,696 | |
Less: Imputed interest | (1,412) | |
Present value of net future minimum lease payments | $ 14,284 | $ 16,600 |
LEASES - Payments Due Maturitie
LEASES - Payments Due Maturities (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Future minimum lease payments | |
2019 | $ 3,570 |
2020 | 3,374 |
2021 | 2,815 |
2022 | 2,675 |
2023 | 2,358 |
Thereafter | 3,446 |
Operating Leases, Future Minimum Payments Due, Total | $ 18,238 |
DEPOSITS (Details)
DEPOSITS (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
DEPOSITS | ||
Money market deposit accounts | $ 620,434 | $ 489,506 |
Time deposits | 170,457 | 178,743 |
Negotiable order of withdrawal accounts | 83,022 | 64,853 |
Savings accounts | 3,456 | 1,800 |
Total interest bearing deposits | 877,369 | 734,902 |
Aggregate time deposits of $250,000 or greater | 68,328 | 83,550 |
Overdrafts balances classified As loans | $ 300 | $ 300 |
BORROWINGS (Details)
BORROWINGS (Details) | 9 Months Ended | |
Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) | |
BORROWINGS | ||
Number of unsecured federal funds lines of credit | 3 | |
Federal Funds Lines of Credit One | ||
BORROWINGS | ||
Maximum borrowing capacity | $ 10,000,000 | |
Amount outstanding | 0 | $ 0 |
Federal Funds Lines of Credit Two | ||
BORROWINGS | ||
Maximum borrowing capacity | 19,000,000 | |
Amount outstanding | 0 | 0 |
Federal Funds Line of Credit Three | ||
BORROWINGS | ||
Maximum borrowing capacity | 25,000,000 | |
Amount outstanding | 0 | 0 |
FHLB Topeka | ||
BORROWINGS | ||
Amount of collateral pledged | 536,900,000 | 475,400,000 |
Available balance | 366,200,000 | |
Borrowings from FHLB | $ 10,000,000 | 15,000,000 |
August 2, 2019 | ||
BORROWINGS | ||
Interest rate | 2.65% | |
Borrowings from FHLB | 5,000,000 | |
August 26, 2020 | ||
BORROWINGS | ||
Interest rate | 1.94% | |
Borrowings from FHLB | $ 10,000,000 | $ 10,000,000 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Unused lines of credit-Fixed | ||
COMMITMENTS AND CONTINGENCIES | ||
Other commitment | $ 35,724 | $ 33,571 |
Standby letters of credit-Fixed | ||
COMMITMENTS AND CONTINGENCIES | ||
Other commitment | 65 | 40 |
Commitments to make loans to sell-Fixed | ||
COMMITMENTS AND CONTINGENCIES | ||
Other commitment | 81,158 | 17,207 |
Unused lines of credit-Variable | ||
COMMITMENTS AND CONTINGENCIES | ||
Other commitment | 245,642 | 271,580 |
Standby letters of credit-Variable | ||
COMMITMENTS AND CONTINGENCIES | ||
Other commitment | 23,499 | $ 23,508 |
Commitments to make loans-Variable | ||
COMMITMENTS AND CONTINGENCIES | ||
Other commitment | $ 10,000 |
SHAREHOLDERS EQUITY - Common St
SHAREHOLDERS EQUITY - Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 14, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Class of Stock [Line Items] | ||||||
Common stock par value | $ 0 | $ 0 | $ 0 | |||
Issuance of common stock, net of issuance costs | $ 32,541 | $ 34,450 | ||||
Common stock issuance costs | $ 4,411 | |||||
Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Common stock par value | $ 0 | $ 0 | ||||
Authorized share repurchase | 300,000 | |||||
Number of votes per each share | one | |||||
Effective term of program | 1 year | |||||
Issuance of common stock (in shares) | 0 | |||||
Number of shares repurchased | 582 | |||||
Repurchase price | $ 14 | $ 14 | ||||
Balance t be repurchased | 299,418 | 299,418 | ||||
Common Stock | Time Vesting Units | ||||||
Class of Stock [Line Items] | ||||||
Issuance of common stock (in shares) | 16,969 | 16,969 | ||||
Common Stock | Private Placement | ||||||
Class of Stock [Line Items] | ||||||
Issuance of common stock (in shares) | 67,242 | |||||
Issuance of common stock, net of issuance costs | $ 1,900 | |||||
Common stock issuance costs | $ 100 |
SHAREHOLDERS EQUITY - Stock bas
SHAREHOLDERS EQUITY - Stock based compensation - Restricted Stock Awards (Details) - Restricted Stock Awards - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted-average grant date fair value (in dollars per share) | $ 28.50 | $ 28.50 | ||
Recognized compensation expense | $ 0.5 | $ 0.1 | $ 0.7 | $ 0.2 |
Unrecognized compensation expense | $ 1.9 | $ 1.9 | ||
Number of stock awards vested | 33,070 | 33,070 | ||
Unrecognized compensation expense recognition period (in years) | 3 years |
SHAREHOLDERS EQUITY - Stock b_2
SHAREHOLDERS EQUITY - Stock based compensation - Stock Options (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Forfeited or expired (in shares) | (42,750) | |||
Stock-based compensation expense | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.4 |
Unrecognized stock-based compensation expense | $ 0.3 | $ 0.3 | ||
Cost is expected to be recognized over a weighted-average period | 9 months 18 days | |||
Plan 2016 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares available for issuance | 648,414 | 648,414 | ||
2008 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Amount of consideration paid to the company upon plan modification | $ 0 |
SHAREHOLDERS EQUITY - Stock b_3
SHAREHOLDERS EQUITY - Stock based compensation - Stock Options Activity (Details) - Stock Options - $ / shares | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding at beginning of year (in shares) | 465,947 | |
Forfeited or expired (in shares) | (42,750) | |
Outstanding at end of period (in shares) | 423,197 | |
Options fully vested / exercisable at end of period (in shares) | 380,216 | 402,872 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ 28.84 | |
Forfeited or expired (in dollars per share) | 27.72 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | 28.95 | |
Options fully vested / exercisable at September 30, 2019 | $ 29.34 | |
Weighted Average Remaining Contractual Term | ||
Outstanding at end of year | 3 years 9 months 18 days | |
Options fully vested / exercisable at September 30, 2019 | 3 years 6 months | |
Aggregate Intrinsic Value | ||
Exercise price low range | $ 20 | |
Exercise price high range | $ 40 | |
Expiry period | 10 years |
SHAREHOLDERS EQUITY - Stock b_4
SHAREHOLDERS EQUITY - Stock based compensation - Share Awards (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Stock surrendered (in shares) | 7,835 | 6,313 |
Stock surrendered to cover employee withholding taxes | $ 0.1 | $ 0.2 |
Time Vesting Units | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Outstanding at beginning of year | 184,369 | |
Granted (in shares) | 71,127 | |
Vested (in shares) | (23,281) | |
Forfeited (in shares) | (22,824) | |
Outstanding at end of year | 209,391 | |
Stock issued (in shares) | 15,446 | 16,969 |
Financial Performance Units | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Outstanding at beginning of year | 15,932 | |
Granted (in shares) | 59,536 | |
Forfeited (in shares) | (6,597) | |
Outstanding at end of year | 68,871 | |
Market Performance Units | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Outstanding at beginning of year | 17,258 | |
Forfeited (in shares) | (1,933) | |
Outstanding at end of year | 15,325 |
SHAREHOLDERS EQUITY - Stock b_5
SHAREHOLDERS EQUITY - Stock based compensation - Time Vesting Units (Details) - Time Vesting Units - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Service period (in years) | 5 years | |||
Weighted average grant date fair value | $ 13.80 | |||
Granted (in shares) | 71,127 | |||
Stock-based compensation expense | $ 0.3 | $ 0.1 | $ 0.7 | $ 0.7 |
Unrecognized compensation expense | $ 3.7 | $ 3.7 | ||
Unrecognized compensation expense recognition period (in years) | 2 years 1 month 6 days | |||
Third and fifth anniversaries | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Service period (in years) | 5 years | |||
Vesting Percentage | 50.00% | |||
Granted (in shares) | 3,779 | |||
Anniversary of grant date | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting Percentage | 20.00% | |||
Granted (in shares) | 67,348 |
SHAREHOLDERS EQUITY - Stock b_6
SHAREHOLDERS EQUITY - Stock based compensation - Financial Performance Units (Details) - USD ($) $ in Millions | May 01, 2019 | Sep. 30, 2019 | Sep. 30, 2019 |
Financial Performance Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | 59,536 | ||
Financial Performance Units Granted Prior to 2019 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Service period (in years) | 2 years | ||
Percent of awards accruing at maximum threshold | 50.00% | ||
Remainder threshold awards | 50.00% | 50.00% | |
Maximum percentage of shares can be issued | 150.00% | ||
Maximum number of shares can be issued | 20,800 | 20,800 | |
Unrecognized compensation expense | $ 0.2 | $ 0.2 | |
Unrecognized compensation expense recognition period (in years) | 2 years 3 months 18 days | ||
Financial Performance Units Granted Prior to 2019 | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Financial performance threshold percentage | 150.00% | ||
Financial Performance Units Granted Prior to 2019 | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Financial performance threshold percentage | 0.00% | ||
Financial Performance Units Granted in 2019 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Service period (in years) | 2 years | ||
Granted (in shares) | 59,536 | ||
Maximum percentage of shares can be issued | 150.00% | ||
Maximum number of shares can be issued | 82,500 | 82,500 | |
Stock-based compensation expense | $ 0.1 | ||
Unrecognized compensation expense | $ 0.7 | $ 0.7 | |
Unrecognized compensation expense recognition period (in years) | 4 years 3 months 18 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 5 years | ||
Financial Performance Units Granted in 2019 | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Financial performance threshold percentage | 150.00% | ||
Financial Performance Units Granted in 2019 | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Financial performance threshold percentage | 0.00% |
SHAREHOLDERS EQUITY - Stock b_7
SHAREHOLDERS EQUITY - Stock based compensation - Market Performance Units (Details) - Market Performance Units $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense | $ 0.4 |
Unrecognized compensation expense recognition period (in years) | 2 years 9 months |
EARNINGS PER COMMON SHARE (Deta
EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Numerator: | ||||
Net income | $ 2,406 | $ 1,689 | $ 5,437 | $ 3,923 |
Dividends on preferred stock | (255) | (1,378) | ||
Net income available for common shareholders | $ 2,406 | $ 1,434 | $ 5,437 | $ 2,545 |
Denominator: | ||||
Basic weighted average shares | 7,890,794 | 7,373,770 | 7,882,221 | 6,321,511 |
Earnings per common share - basic | $ 0.30 | $ 0.19 | $ 0.69 | $ 0.40 |
Numerator: | ||||
Net income | $ 2,406 | $ 1,689 | $ 5,437 | $ 3,923 |
Dividends on preferred stock | (255) | (1,378) | ||
Net income available for common shareholders | $ 2,406 | $ 1,434 | $ 5,437 | $ 2,545 |
Denominator: | ||||
Basic weighted average shares | 7,890,794 | 7,373,770 | 7,882,221 | 6,321,511 |
Diluted effect of common stock equivalents: | ||||
Total diluted effect of common stock equivalents | 24,000 | 15,075 | 18,340 | 50,740 |
Diluted weighted average shares | 7,914,794 | 7,388,845 | 7,900,561 | 6,372,251 |
Earnings per common share - diluted | $ 0.30 | $ 0.19 | $ 0.69 | $ 0.40 |
Stock Options | ||||
Diluted effect of common stock equivalents: | ||||
Diluted effect of common stock equivalents | 20,860 | |||
Time Vesting Units | ||||
Diluted effect of common stock equivalents: | ||||
Diluted effect of common stock equivalents | 10,702 | 4,942 | 14,841 | |
Financial Performance Units | ||||
Diluted effect of common stock equivalents: | ||||
Diluted effect of common stock equivalents | 123 | 41 | 6,505 | |
Market Performance Units | ||||
Diluted effect of common stock equivalents: | ||||
Diluted effect of common stock equivalents | 13,175 | 15,075 | 13,357 | 5,025 |
Restricted Stock Awards | ||||
Diluted effect of common stock equivalents: | ||||
Diluted effect of common stock equivalents | 3,509 |
EARNINGS PER COMMON SHARE - Ant
EARNINGS PER COMMON SHARE - Anti-dilutive Securities (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
EARNINGS (LOSS) PER COMMON SHARE | ||||
Total potentially dilutive securities | 670,714 | 697,084 | 732,226 | 474,461 |
Stock Options | ||||
EARNINGS (LOSS) PER COMMON SHARE | ||||
Total potentially dilutive securities | 423,197 | 467,947 | 438,364 | 296,949 |
Time Vesting Units | ||||
EARNINGS (LOSS) PER COMMON SHARE | ||||
Total potentially dilutive securities | 130,821 | 168,962 | 163,141 | 157,454 |
Financial Performance Units | ||||
EARNINGS (LOSS) PER COMMON SHARE | ||||
Total potentially dilutive securities | 55,028 | 16,345 | 47,008 | 5,448 |
Restricted Stock Awards | ||||
EARNINGS (LOSS) PER COMMON SHARE | ||||
Total potentially dilutive securities | 61,668 | 43,830 | 83,713 | 14,610 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
INCOME TAXES | ||||
Income tax provision | $ 780 | $ 543 | $ 1,865 | $ 1,247 |
Effective income tax rate | 24.50% | 24.30% | 25.50% | 24.10% |
RELATED-PARTY TRANSACTIONS (Det
RELATED-PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Summary of related party loan activity | |||
Balance, beginning of period | $ 2,659 | $ 14,077 | $ 14,077 |
Funded loans | 8,295 | 1,466 | |
Payments collected | (6,146) | (9,386) | |
Changes in related parties | (3,498) | ||
Balance, end of period | 4,808 | 2,659 | |
Deposits from related parties | 27,600 | $ 36,700 | |
Office lease expense | $ 100 | $ 100 |
FAIR VALUE - General (Details)
FAIR VALUE - General (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
FAIR VALUE | ||
Fair value, assets, level 1 to level 2 transfers, amount | $ 0 | $ 0 |
Fair value, assets, level 2 to level 1 transfers, amount | 0 | 0 |
Fair value, liabilities, level 1 to level 2 transfers, amount | 0 | 0 |
Fair value, liabilities, level 2 to level 1 transfers, amount | 0 | 0 |
Transfer to level 3, assets, amount | 0 | 0 |
Transfer from level 3, assets, amount | 0 | 0 |
Transfer to level 3, liabilities, amount | 0 | |
Transfer from level 3, liabilities, amount | 0 | 0 |
Fair value, equity, level 1 to level 2 transfers, amount | 0 | 0 |
Fair value, equity, level 2 to level 1 transfers, amount | $ 0 | $ 0 |
FAIR VALUE - Summary of assets
FAIR VALUE - Summary of assets measured at fair value on recurring basis (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Summary of assets measured on a recurring and nonrecurring basis | ||
Total securities available-for-sale | $ 61,491 | $ 43,695 |
U.S. Treasury debt | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Total securities available-for-sale | 255 | 250 |
Securities issued by U.S. government sponsored entities and agencies | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Total securities available-for-sale | 4,302 | |
Recurring | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Total securities available-for-sale | 61,491 | 43,695 |
Equity securities not available-for-sale | 718 | 693 |
Recurring | U.S. Treasury debt | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Total securities available-for-sale | 255 | 250 |
Recurring | Securities issued by U.S. government sponsored entities and agencies | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Total securities available-for-sale | 4,302 | |
Recurring | Corporate collateralized mortgage obligations and mortgage-backed securities | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Total securities available-for-sale | 12,192 | 1,271 |
Recurring | Interest rate lock and forward delivery commitments | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Derivative asset, Fair value | 2,148 | 890 |
Recurring | GNMA | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Total securities available-for-sale | 45,735 | 34,002 |
Recurring | FNMA | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Total securities available-for-sale | 3,309 | 3,870 |
Level 1 | Recurring | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Total securities available-for-sale | 255 | 250 |
Equity securities not available-for-sale | 718 | 693 |
Level 1 | Recurring | U.S. Treasury debt | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Total securities available-for-sale | 255 | 250 |
Level 2 | Recurring | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Total securities available-for-sale | 61,236 | 43,445 |
Level 2 | Recurring | Securities issued by U.S. government sponsored entities and agencies | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Total securities available-for-sale | 4,302 | |
Level 2 | Recurring | Corporate collateralized mortgage obligations and mortgage-backed securities | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Total securities available-for-sale | 12,192 | 1,271 |
Level 2 | Recurring | Interest rate lock and forward delivery commitments | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Derivative asset, Fair value | 2,148 | 890 |
Level 2 | Recurring | GNMA | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Total securities available-for-sale | 45,735 | 34,002 |
Level 2 | Recurring | FNMA | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Total securities available-for-sale | $ 3,309 | $ 3,870 |
FAIR VALUE - Summary of asset_2
FAIR VALUE - Summary of assets measured at fair value on Non recurring basis (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 |
Summary of assets measured on a recurring and nonrecurring basis | |||
Other real estate owned | $ 658 | $ 658 | |
Impaired loans | 11,827 | 16,895 | $ 795 |
Other real estate owned, gross | 2,400 | ||
Other real estate owned valuation allowance | 1,700 | ||
Impaired loans carrying value | 1,282 | 1,735 | |
Allowance for loans | 7,675 | 7,451 | |
Level 3 | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Impaired loans carrying value | 1,300 | 1,700 | |
Allowance for loans | 900 | 900 | |
Commercial properties | Nonrecurring | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Other real estate owned | 658 | 658 | |
Commercial properties | Level 3 | Nonrecurring | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Other real estate owned | 658 | 658 | |
Commercial and Industrial | Nonrecurring | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Impaired loans | 342 | 795 | |
Commercial and Industrial | Level 3 | Nonrecurring | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Impaired loans | $ 342 | $ 795 |
FAIR VALUE - Summary of carryin
FAIR VALUE - Summary of carrying amounts and estimated fair values for financial instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Summary of carrying amounts and estimated fair values for financial instruments | ||||
Cash and cash equivalents | $ 146,176 | $ 73,357 | $ 70,418 | $ 9,502 |
Securities available-for-sale | 61,491 | 43,695 | ||
Loans, net | 918,911 | 886,515 | ||
Mortgage loans held for sale | 69,231 | 14,832 | ||
Accrued interest receivable | 2,968 | 2,844 | ||
Other assets | 17,549 | 3,724 | ||
Deposits | 1,108,904 | 937,758 | ||
FHLB Topeka Borrowings – fixed rate | 10,000 | 15,000 | ||
Subordinated notes | 6,560 | 6,560 | ||
Accrued interest payable | 356 | 231 | ||
Carrying Amount | ||||
Summary of carrying amounts and estimated fair values for financial instruments | ||||
Cash and cash equivalents | 146,176 | 73,357 | ||
Securities available-for-sale | 61,491 | 43,695 | ||
Loans, net | 918,911 | 886,515 | ||
Mortgage loans held for sale | 69,231 | 14,832 | ||
Accrued interest receivable | 2,968 | 2,844 | ||
Other assets | 718 | 693 | ||
Deposits | 1,108,904 | 937,758 | ||
FHLB Topeka Borrowings – fixed rate | 10,000 | 15,000 | ||
Accrued interest payable | 356 | 231 | ||
2016 Subordinated notes – fixed-to-floating rate | Carrying Amount | ||||
Summary of carrying amounts and estimated fair values for financial instruments | ||||
Subordinated notes | 6,560 | 6,560 | ||
Level 1 | Estimated Fair Value | ||||
Summary of carrying amounts and estimated fair values for financial instruments | ||||
Cash and cash equivalents | 146,176 | 73,357 | ||
Securities available-for-sale | 255 | 250 | ||
Other assets | 718 | 693 | ||
Level 2 | Estimated Fair Value | ||||
Summary of carrying amounts and estimated fair values for financial instruments | ||||
Securities available-for-sale | 61,236 | 43,445 | ||
Mortgage loans held for sale | 69,231 | 14,832 | ||
Accrued interest receivable | 2,968 | 2,844 | ||
Deposits | 1,111,853 | 940,039 | ||
FHLB Topeka Borrowings – fixed rate | 9,983 | 14,833 | ||
Accrued interest payable | 356 | 231 | ||
Level 3 | Estimated Fair Value | ||||
Summary of carrying amounts and estimated fair values for financial instruments | ||||
Loans, net | 899,750 | 868,828 | ||
Level 3 | 2016 Subordinated notes – fixed-to-floating rate | Estimated Fair Value | ||||
Summary of carrying amounts and estimated fair values for financial instruments | ||||
Subordinated notes | $ 6,110 | $ 6,434 |
ASSETS AND LIABILITIES CLASSI_3
ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
ASSETS | |
Assets in disposal groups held for sale | $ 3,553 |
LIABILITIES | |
Liabilities in disposal groups held for sale | 111 |
Goodwill impairment | 1,572 |
Disposal Group, Held-for-sale, Not Discontinued Operations | |
ASSETS | |
Goodwill | 3,553 |
Assets in disposal groups held for sale | 3,553 |
LIABILITIES | |
Other liabilities | 111 |
Liabilities in disposal groups held for sale | 111 |
Capital Management | |
ASSETS | |
Assets in disposal groups held for sale | 3,553 |
LIABILITIES | |
Goodwill impairment | $ 1,572 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Income Statement | |||||
Total interest income | $ 11,473 | $ 9,940 | $ 33,698 | $ 28,451 | |
Total interest expense | 3,533 | 2,152 | 9,827 | 5,726 | |
Provision for (recovery of) credit losses | 100 | 18 | 216 | (169) | |
Net-interest income | 7,840 | 7,770 | 23,655 | 22,894 | |
Non-interest income | 8,788 | 6,638 | 24,348 | 20,822 | |
Total income | 16,628 | 14,408 | 48,003 | 43,716 | |
Depreciation and amortization expense | 351 | 557 | 1,347 | 1,707 | |
All other non-interest expense | 13,091 | 11,619 | 39,354 | 36,839 | |
Income (loss) before income tax | 3,186 | 2,232 | 7,302 | 5,170 | |
Segment reporting | |||||
Goodwill | 19,686 | 24,811 | 19,686 | 24,811 | $ 24,811 |
Assets held for sale | 3,553 | 3,553 | |||
Total assets | 1,271,925 | 1,051,527 | 1,271,925 | 1,051,527 | 1,084,324 |
Goodwill impairment | 1,572 | ||||
Wealth Management | |||||
Income Statement | |||||
Total interest income | 11,473 | 9,940 | 33,698 | 28,451 | |
Total interest expense | 3,533 | 2,152 | 9,827 | 5,726 | |
Provision for (recovery of) credit losses | 100 | 18 | 216 | (169) | |
Net-interest income | 7,840 | 7,770 | 23,655 | 22,894 | |
Non-interest income | 4,714 | 4,613 | 13,956 | 14,457 | |
Total income | 12,554 | 12,383 | 37,611 | 37,351 | |
Depreciation and amortization expense | 274 | 323 | 902 | 963 | |
All other non-interest expense | 10,434 | 9,675 | 30,935 | 29,839 | |
Income (loss) before income tax | 1,846 | 2,385 | 5,774 | 6,549 | |
Segment reporting | |||||
Goodwill | 15,994 | 15,994 | 15,994 | 15,994 | 15,994 |
Total assets | 1,195,340 | 1,022,436 | 1,195,340 | 1,022,436 | |
Capital Management | |||||
Income Statement | |||||
Non-interest income | 776 | 850 | 2,339 | 2,556 | |
Total income | 776 | 850 | 2,339 | 2,556 | |
Depreciation and amortization expense | 22 | 130 | 248 | 393 | |
All other non-interest expense | 701 | 606 | 3,709 | 2,882 | |
Income (loss) before income tax | 53 | 114 | (1,618) | (719) | |
Segment reporting | |||||
Goodwill | 3,692 | 8,817 | 3,692 | 8,817 | $ 8,817 |
Assets held for sale | 3,553 | 3,553 | |||
Total assets | 8,528 | 9,853 | 8,528 | 9,853 | |
Goodwill impairment | 1,572 | ||||
Mortgage | |||||
Income Statement | |||||
Non-interest income | 3,298 | 1,175 | 8,053 | 3,809 | |
Total income | 3,298 | 1,175 | 8,053 | 3,809 | |
Depreciation and amortization expense | 55 | 104 | 197 | 351 | |
All other non-interest expense | 1,956 | 1,338 | 4,710 | 4,118 | |
Income (loss) before income tax | 1,287 | (267) | 3,146 | (660) | |
Segment reporting | |||||
Total assets | $ 68,057 | $ 19,238 | $ 68,057 | $ 19,238 |
REGULATORY CAPITAL MATTERS (Det
REGULATORY CAPITAL MATTERS (Details) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019USD ($)item | Dec. 31, 2019 | Dec. 31, 2018USD ($) | |
REGULATORY CAPITAL MATTERS | |||
Capital conservation buffer | 0.625% | ||
Common Equity Tier 1 capital ratio including capital conservation buffer (as a percent) | 7.00% | ||
Tier 1 capital ratio including capital conservation buffer (as a percent) | 8.50% | ||
Total capital ratio including capital conservation buffer (as a percent0 | 10.50% | ||
Number of conditions or events to be performed | item | 0 | ||
Common Equity Tier 1 (CET 1) to risk-weighted assets | |||
Actual Amount | $ 103,458 | $ 94,335 | |
Actual Ratio (as a percent) | 11.73% | 11.35% | |
Tier 1 capital to risk-weighted assets | |||
Actual Amount | $ 103,458 | $ 94,335 | |
Actual Ratio (as a percent) | 11.73% | 11.35% | |
Total capital to risk-weighted assets | |||
Actual Amount | $ 117,846 | $ 108,510 | |
Actual Ratio (as a percent) | 13.36% | 13.06% | |
Tier 1 capital to average assets | |||
Actual Amount | $ 103,458 | $ 94,335 | |
Actual Ratio (as a percent) | 8.76% | 9.28% | |
Bank | |||
Common Equity Tier 1 (CET 1) to risk-weighted assets | |||
Actual Amount | $ 96,495 | $ 87,291 | |
Actual Ratio (as a percent) | 10.98% | 10.55% | |
Required for Capital Adequacy Purposes Amount | $ 39,547 | $ 37,240 | |
Required for Capital Adequacy Purposes Ratio (as a percent) | 4.50% | 4.50% | |
To be Well Capitalized Under Prompt Corrective Action Regulations Amount | $ 57,123 | $ 53,791 | |
To be Well Capitalized Under Prompt Corrective Action Regulations Ratio (as a percent) | 6.50% | 6.50% | |
Tier 1 capital to risk-weighted assets | |||
Actual Amount | $ 96,495 | $ 87,291 | |
Actual Ratio (as a percent) | 10.98% | 10.55% | |
Required for Capital Adequacy Purposes Amount | $ 52,729 | $ 49,653 | |
Required for Capital Adequacy Purposes Amount (as a percent) | 6.00% | 6.00% | |
To be Well Capitalized Under Prompt Corrective Action Regulations Amount | $ 70,305 | $ 66,204 | |
To be Well Capitalized Under Prompt Corrective Action Regulations Ratio (as a percent) | 8.00% | 8.00% | |
Total capital to risk-weighted assets | |||
Actual Amount | $ 104,323 | $ 94,906 | |
Actual Ratio (as a percent) | 11.87% | 11.47% | |
Required for Capital Adequacy Purposes Amount | $ 70,305 | $ 66,204 | |
Required for Capital Adequacy Purposes Ratio (as a percent) | 8.00% | 8.00% | |
To be Well Capitalized Under Prompt Corrective Action Regulations Amount | $ 87,882 | $ 82,755 | |
To be Well Capitalized Under Prompt Corrective Action Regulations Ratio (as a percent) | 10.00% | 10.00% | |
Tier 1 capital to average assets | |||
Actual Amount | $ 96,495 | $ 87,291 | |
Actual Ratio (as a percent) | 8.19% | 8.63% | |
Required for Capital Adequacy Purposes Amount | $ 47,101 | $ 40,459 | |
Required for Capital Adequacy Purposes Ratio (as a percent) | 4.00% | 4.00% | |
To be Well Capitalized Under Prompt Corrective Action Regulations Amount | $ 58,876 | $ 50,574 | |
Tier One Leverage Capital Required to be Well Capitalized to Average Assets | 5.00% | 5.00% | |
Forecast | |||
REGULATORY CAPITAL MATTERS | |||
Capital conservation buffer | 2.50% | ||
Common Equity Tier 1 (CET 1) to risk-weighted assets | |||
Required for Capital Adequacy Purposes Ratio (as a percent) | 7.00% | ||
Tier 1 capital to risk-weighted assets | |||
Required for Capital Adequacy Purposes Amount (as a percent) | 8.50% | ||
Total capital to risk-weighted assets | |||
Required for Capital Adequacy Purposes Ratio (as a percent) | 10.50% |