Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 30, 2020 | |
Document And Entity Information Abstract | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-38595 | |
Entity Registrant Name | First Western Financial Inc | |
Entity Incorporation, State or Country Code | CO | |
Entity Tax Identification Number | 37-1442266 | |
Entity Address, Address Line One | 1900 16th Street, Suite 1200 | |
Entity Address, City or Town | Denver | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80202 | |
City Area Code | 303 | |
Local Phone Number | 531.8100 | |
Title of 12(b) Security | Common Stock, no par value | |
Trading Symbol | MYFW | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | 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 | 7,951,749 | |
Entity Central Index Key | 0001327607 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Cash and cash equivalents: | ||
Cash and due from banks | $ 2,867 | $ 4,180 |
Interest-bearing deposits in other financial institutions | 247,491 | 74,458 |
Total cash and cash equivalents | 250,358 | 78,638 |
Available-for-sale securities, at fair value | 40,654 | 58,903 |
Correspondent bank stock, at cost | 1,295 | 585 |
Mortgage loans held for sale | 89,872 | 48,312 |
Loans, net of allowance of $11,845 and $7,875 | 1,494,231 | 990,132 |
Premises and equipment, net | 5,116 | 5,218 |
Accrued interest receivable | 6,730 | 3,048 |
Accounts receivable | 4,821 | 5,238 |
Other receivables | 1,497 | 1,006 |
Other real estate owned, net | 558 | 658 |
Goodwill | 24,191 | 19,686 |
Other intangible assets, net | 72 | 28 |
Deferred tax assets, net | 6,405 | 5,047 |
Company-owned life insurance | 15,359 | 15,086 |
Other assets | 28,738 | 16,544 |
Assets held for sale | 3,000 | 3,553 |
Total assets | 1,972,897 | 1,251,682 |
Deposits: | ||
Noninterest-bearing | 472,963 | 240,068 |
Interest-bearing | 1,090,709 | 846,716 |
Total deposits | 1,563,672 | 1,086,784 |
Borrowings: | ||
Federal Home Loan Bank Topeka and Federal Reserve borrowings | 222,075 | 10,000 |
Subordinated notes | 14,447 | 6,560 |
Accrued interest payable | 347 | 299 |
Other liabilities | 22,639 | 20,244 |
Liabilities held for sale | 141 | 117 |
Total liabilities | 1,823,321 | 1,124,004 |
SHAREHOLDERS' EQUITY | ||
Preferred stock - no par value; 10,000,000 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; 90,000,000 shares authorized; 7,951,749 and 7,940,168 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively | ||
Additional paid-in capital | 144,048 | 142,797 |
Retained earnings (accumulated deficit) | 4,705 | (14,955) |
Accumulated other comprehensive income (loss) | 823 | (164) |
Total shareholders' equity | 149,576 | 127,678 |
Total liabilities and shareholders' equity | $ 1,972,897 | $ 1,251,682 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Allowance for loans | $ 11,845 | $ 7,875 |
Preferred Stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0 | $ 0 |
Common Stock, shares authorized | 90,000,000 | 90,000,000 |
Common Stock, shares issued | 7,951,749 | 7,940,168 |
Common Stock, shares outstanding | 7,951,749 | 7,940,168 |
Convertible Preferred Stock | ||
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 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Interest and dividend income: | ||||
Loans, including fees | $ 14,138 | $ 10,672 | $ 37,342 | $ 31,490 |
Investment securities | 173 | 312 | 692 | 954 |
Federal funds sold and other | 99 | 489 | 358 | 1,254 |
Total interest and dividend income | 14,410 | 11,473 | 38,392 | 33,698 |
Interest expense: | ||||
Deposits | 1,067 | 3,363 | 4,779 | 9,268 |
Other borrowed funds | 425 | 170 | 968 | 559 |
Total interest expense | 1,492 | 3,533 | 5,747 | 9,827 |
Net interest income | 12,918 | 7,940 | 32,645 | 23,871 |
Less: provision for loan losses | 1,496 | 100 | 3,987 | 216 |
Net interest income, after provision for loan losses | 11,422 | 7,840 | 28,658 | 23,655 |
Non-interest income: | ||||
Trust and investment management fees | 4,814 | 4,824 | 14,154 | 14,186 |
Net gain on mortgage loans | 12,304 | 3,291 | 24,958 | 8,009 |
Bank fees | 340 | 283 | 929 | 912 |
Risk management and insurance fees | 483 | 176 | 912 | 838 |
Income on company-owned life insurance | 91 | 95 | 273 | 284 |
Net gain on sale of securities | 119 | 119 | ||
Total non-interest income | 18,032 | 8,788 | 41,226 | 24,348 |
Total income before non-interest expense | 29,454 | 16,628 | 69,884 | 48,003 |
Non-interest expense: | ||||
Salaries and employee benefits | 10,212 | 8,504 | 25,384 | 23,821 |
Occupancy and equipment | 1,619 | 1,388 | 4,574 | 4,193 |
Professional services | 1,288 | 745 | 3,542 | 2,557 |
Technology and information systems | 1,032 | 961 | 2,994 | 3,046 |
Data processing | 1,038 | 854 | 2,922 | 2,282 |
Marketing | 395 | 272 | 1,063 | 991 |
Amortization of other intangible assets | 4 | 52 | 44 | 366 |
Goodwill impairment | 1,572 | |||
Net loss on assets held for sale | 553 | (1,600) | ||
Provision on other real estate owned | 100 | 100 | ||
Other | 944 | 666 | 2,747 | 1,873 |
Total non-interest expense | 16,632 | 13,442 | 43,923 | 40,701 |
Income before income taxes | 12,822 | 3,186 | 25,961 | 7,302 |
Income tax expense | 3,192 | 780 | 6,301 | 1,865 |
Net income available to common shareholders | $ 9,630 | $ 2,406 | $ 19,660 | $ 5,437 |
Earnings per common share: | ||||
Basic | $ 1.22 | $ 0.30 | $ 2.49 | $ 0.69 |
Diluted | $ 1.20 | $ 0.30 | $ 2.47 | $ 0.69 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 9,630 | $ 2,406 | $ 19,660 | $ 5,437 |
Other comprehensive income items: | ||||
Net change in unrealized gains on available-for-sale securities | (28) | 321 | 1,305 | 2,364 |
Income tax effect | 7 | (83) | (318) | (611) |
Total other comprehensive income (loss) items | (21) | 238 | 987 | 1,753 |
Comprehensive income | $ 9,609 | $ 2,644 | $ 20,647 | $ 7,190 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (loss) | Total |
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 | |||
Settlement of share awards | (110) | (110) | |||
Settlement of share awards (in shares) | 15,446 | ||||
Adoption of ASU 2018-02 | 235 | (235) | 235 | ||
Other comprehensive income, net of tax | 1,753 | 1,753 | |||
Share repurchase | (8) | (8) | |||
Share repurchase (in shares) | (582) | ||||
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 Dec. 31, 2018 | 141,359 | (23,199) | (1,285) | 116,875 | |
Balance at Beginning (in shares) at Dec. 31, 2018 | 7,968,420 | ||||
Balance at Ending at Dec. 31, 2019 | 142,797 | (14,955) | (164) | 127,678 | |
Balance at Ending (in shares) at Dec. 31, 2019 | 7,940,168 | ||||
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 | |||
Other comprehensive income, 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 | ||||
Balance at Beginning at Dec. 31, 2019 | 142,797 | (14,955) | (164) | 127,678 | |
Balance at Beginning (in shares) at Dec. 31, 2019 | 7,940,168 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 19,660 | 19,660 | |||
Settlement of share awards | (258) | (258) | |||
Settlement of share awards (in shares) | 34,260 | ||||
Other comprehensive income, net of tax | 987 | 987 | |||
Share repurchase | (370) | (370) | |||
Share repurchase (in shares) | (22,679) | ||||
Stock-based compensation | 1,879 | 1,879 | |||
Balance at Ending at Sep. 30, 2020 | 144,048 | 4,705 | 823 | 149,576 | |
Balance at Ending (in shares) at Sep. 30, 2020 | 7,951,749 | ||||
Balance at Beginning at Jun. 30, 2020 | 143,498 | (4,925) | 844 | 139,417 | |
Balance at Beginning (in shares) at Jun. 30, 2020 | 7,939,024 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net income | 9,630 | 9,630 | |||
Settlement of share awards | (88) | (88) | |||
Settlement of share awards (in shares) | 12,725 | ||||
Other comprehensive income, net of tax | (21) | (21) | |||
Stock-based compensation | 638 | 638 | |||
Balance at Ending at Sep. 30, 2020 | $ 144,048 | $ 4,705 | $ 823 | $ 149,576 | |
Balance at Ending (in shares) at Sep. 30, 2020 | 7,951,749 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities | ||
Net income | $ 19,660 | $ 5,437 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 826 | 1,363 |
Deferred income tax expense | (1,699) | (727) |
Stock-based compensation | 1,879 | 1,785 |
Provision for loan losses | 3,987 | 216 |
Net amortization of investment securities | 346 | 118 |
Stock dividends received on correspondent bank stock | (12) | (25) |
Increase in cash surrender value of company-owned life insurance | (273) | (284) |
Net gain on mortgage loans | (24,958) | (8,009) |
Gain on sales of securities | (119) | |
Origination of mortgage loans held for sale | (917,524) | (442,790) |
Proceeds from mortgage loans | 889,208 | 393,886 |
Proceeds from sale of securities | (119) | |
Loss on assets held for sale | 553 | (1,600) |
Loss on impairment of goodwill | 1,572 | |
Provision on other real estate owned | 100 | |
Net changes in operating assets and liabilities: | ||
Accounts receivable | 492 | (468) |
Accrued interest receivable and other assets | (5,531) | (81) |
Accrued interest payable and other liabilities | 3,394 | 1,847 |
Net cash used in operating activities | (29,552) | (46,279) |
Activity in available-for-sale securities: | ||
Maturities, prepayments, and calls | 20,890 | 6,202 |
Sales | 7,506 | |
Purchases | (2,000) | (29,750) |
Purchases of correspondent bank stock | (698) | (1,237) |
Redemption of correspondent bank stock | 3,168 | |
Purchases of premises and equipment | (708) | (380) |
Proceeds from sale of premises and equipment | 10 | |
Net cash paid on acquisitions (Note 2) | (61,316) | |
Loan and note receivable originations and principal collections, net | (388,048) | (32,439) |
Net cash used in investing activities | (431,870) | (46,930) |
Cash flows from financing activities | ||
Net change in deposits | 413,808 | 171,146 |
Proceeds from subordinated notes | 8,000 | |
Settlement of restricted stock | (258) | (110) |
Recognition of capitalized subordinated notes issuance costs | (113) | |
Repurchase of common stock | (370) | (8) |
Payments To Federal Reserve borrowings | (238) | |
Proceeds from Federal Reserve borrowings | 204,313 | |
Payments to Federal Home Loan Bank Topeka borrowings | (27,000) | (72,346) |
Proceeds from Federal Home Loan Bank Topeka borrowings | 35,000 | 67,346 |
Net cash provided by financing activities | 633,142 | 166,028 |
Net change in cash and cash equivalents | 171,720 | 72,819 |
Cash and cash equivalents, beginning of year | 78,638 | 73,357 |
Cash and cash equivalents, end of period | 250,358 | 146,176 |
Supplemental cash flow information: | ||
Interest paid on deposits and borrowed funds | 5,699 | 9,702 |
Income tax payment, net of refunds received | 6,417 | 1,562 |
Cash paid for amounts included in the measurement of lease liabilities | 4,267 | 4,091 |
Supplemental noncash disclosures: | ||
Adoption of ASU 2018-02 - Reclassification of stranded tax effects | 235 | |
Change in unrealized gain | 1,305 | 2,364 |
Lease right-of-use-asset obtained in exchange for lease liabilities | 649 | 16,580 |
Reclass of held for sale assets, net of liabilities | $ 10 | $ 3,442 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2020 | |
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 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 clients 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, 2019 condensed consolidated balance sheet has been derived from the audited financial statements for the year ended December 31, 2019. 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, 2020 are not necessarily indicative of results that may be expected for the full year ending December 31, 2020. 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, 2019 as filed with the SEC. Consolidation On May 15, 2020, the Company completed a branch purchase and assumption transaction (“Branch Acquisition”) with Simmons Bank (“Simmons”). Management concluded that the acquisition represented a business combination, which is accounted for using the acquisition method, with the results of operations included in the Company’s consolidated financial statements as of the acquisition date. For additional information, see Note 2. Use of Estimates The Company could experience a material adverse effect on its business as a result of the impact of the COVID-19 pandemic, and the resulting governmental actions to curtail its spread. It is at least reasonably possible that information which was available at the date of the financial statements will change in the near term due to the COVID-19 pandemic and that the effect of the change would be material to the financial statements. The extent to which the COVID-19 pandemic will impact our estimates and assumptions is highly uncertain. Concentration of Risk Revenue Recognition Transition of LIBOR to an Alternative Reference Rate Certain of the Company’s assets and liabilities are indexed to LIBOR, with exposure extending past December 31, 2021. The Company is currently evaluating and planning for the eventual replacement of the LIBOR benchmark interest rate, including the possibility of SOFR as the dominant replacement. In general, the transition away from LIBOR may result in increased market risk, credit risk, operational risk and business risk for the Company. The Company has developed a LIBOR transition plan, which addresses governance, risk management, legal, operational, systems and operations, fallback language, and other aspects of planning. COVID-19 and CARES Act The CARES Act created the Paycheck Protection Program (“PPP”), which is administered by the Small Business Administration (“SBA”). The PPP is intended to provide loans to small businesses to pay their employees, rent, mortgage interest and utilities. The loans may be forgiven conditioned upon the client providing payroll documentation evidencing their compliant use of funds and otherwise complying with the terms of the program. The Bank is an approved SBA lender and supported the community and clients by originating PPP loans during the nine months ended September 30, 2020. PPP loans are classified in the Cash, Securities and Other portion of the loan portfolio. See Note 4 for further discussion on our PPP loans. As a result of the COVID-19 pandemic, a loan modification program was designed and implemented to assist our clients experiencing financial stress resulting from the economic impacts caused by the global pandemic. The Company offered loan extensions, temporary payment moratoriums, and financial covenant waivers for commercial and consumer borrowers impacted by the pandemic and had a risk rating of “pass” and had not been delinquent in making interest or principal payment by more than 30 days during the last two years. The CARES Act provides banks optional, temporary relief from accounting for certain loan modifications as troubled debt restructurings (‘TDR”). The modifications must be related to the adverse effects of COVID-19, and certain other criteria are required to be met in order to apply the relief. Interagency guidance from Federal Reserve and the Federal Deposit Insurance Corporation (“FDIC”) confirmed with the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief, are not to be considered a TDR. We believe our loan modification program meets that definition and have not classified any of these modifications as a TDR at September 30, 2020. See Note 4 for further discussion on our loan modification program. The Company is a participant in the Federal Reserve’s Main Street Lending Program (“MSLP”) to support lending to small and medium-sized for profit businesses and nonprofit organizations that were in sound financial condition before the onset of the COVID-19 pandemic. The Company may sell a 95% participation in a new MSLP loan to the Main Street Special Purpose Vehicle (“SPV”) at par value. The Company must retain 5% of the MSLP loan until (i) it matures or (ii) neither the Main Street SPV nor a Governmental Assignee holds an interest in MSLP Loan in any capacity, whichever comes first. See Note 4 for further discussion on our participation in the program. Reclassifications Recently adopted accounting pronouncements In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement—Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820) (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements by requiring that Level 3 fair value disclosures include the range and weighted average of significant unobservable inputs used to develop those fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 was effective for the Company on January 1, 2020 and did not have a material impact on the Company’s financial statement disclosures. In April 2020, the FASB Reference Rate Reform (Topic 848): ASU 2020-04"), ASU 2020-04 is intended to provide relief for companies preparing for discontinuation of interest rates based on LIBOR. The ASU provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or other reference rates expected to be discontinued. ASU 2020-04 also provides for a one-time sale and/or transfer to AFS or trading to be made for HTM debt securities that both reference an eligible reference rate and were classified as HTM before January 1, 2020. ASU 2020-04 was effective for all entities as of March 12, 2020 and through December 31, 2022. Companies can apply the ASU as of the beginning of the interim period that includes March 12, 2020 or any date thereafter. The guidance requires companies to apply the guidance prospectively to contract modifications and hedging relationships while the one-time election to sell and/or transfer debt securities classified as HTM may be made any time after March 12, 2020. ASU 2020-04 Recently issued accounting pronouncements, not yet adopted 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 was set to be effective for most public companies on January 1, 2020. However, at the October 16, 2019 FASB meeting, the FASB voted unanimously to delay the effective date of CECL adoption for smaller reporting companies (“SRCs”) to January 1, 2023. During the three months ended September 30, 2020, 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, client 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. The Company has started the process of selecting the methodologies to be used for each segment of its loan portfolio and started preliminarily testing to determine the impact of each methodology. 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. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ever, ASU 2019-10 amended the mandatory effective date for ASU 2014-07 to January 1, 2023 for SRC’s, |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2020 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 2 - ACQUISITIONS On February 10, 2020, the Company entered into a branch purchase and assumption agreement with Simmons Bank, a subsidiary of Simmons First National Corporation, to acquire all of the Simmons’ Colorado locations, including three branches and one loan production office located in Denver, as well as certain deposits, loans and other assets. The transaction closed on May 15, 2020 with an aggregate purchase price of $61.6 million, including a deposit premium of 6.06%. During the third quarter 2020, the Company closed two of the branches and the loan production office Goodwill of $4.5 million was recognized in the transaction and represents expected synergies and cost savings resulting from combining the expanded footprint and expertise of the associates. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the May 15, 2020 transaction with Simmons, and reflects all adjustments made to the fair value of the opening balance sheet through September 30, 2020 (in thousands): May 15, Fair value of consideration transferred 2020 Cash consideration $ 61,599 Total fair value of consideration transferred 61,599 Assets acquired Cash and due from banks 283 Loans, net 119,552 Core deposit intangible (1) 53 Accrued income and other assets 382 Total assets acquired 120,270 Liabilities assumed Deposits 63,080 Accrued expenses and other liabilities 96 Total liabilities assumed 63,176 Net assets acquired 57,094 Goodwill recognized $ 4,505 ______________________________________ (1) The fair value of net assets acquired includes fair value adjustments to loans as of the acquisition date. The fair value adjustments were determined using discounted expected cash flows. Loans had a fair value of $119.6 million and a contractual balance of $120.6 million as of May 15, 2020. The discount on the loans acquired in this transaction due to anticipated credit loss, as well as considerations for market interest rates, totaled $1.1 million, representing 0.9% of their contractual balances. No allowance for loan losses related to acquired loans was brought over as a result of the Branch Acquisition. Loans acquired included short-term modifications made on a good faith basis by Simmons, in response to COVID-19. All of the modification were given additional review prior to the closing of the purchase and management determined that loans were performing prior to modification and were not considered impaired at purchase. There were no loans acquired that were considered to be purchased credit impaired (“PCI”) loans. The composition of the acquired loan portfolio as of May 15, 2020 is detailed in the table below (in thousands): May 15, 2020 Cash, Securities and Other $ 13,457 Construction and Development 40,407 1-4 Family Residential 7,252 Non-Owner Occupied Commercial Real Estate ("CRE") 545 Owner Occupied CRE 321 Commercial and Industrial 58,660 Total gross loans $ 120,642 The Company incurred $0.1 million in expenses related to the acquisition during the three months ended September 30, 2020. Acquisition expenses, including professional fees, are included in the total noninterest expense line item in the condensed consolidated statement of income. |
INVESTMENT SECURITIES
INVESTMENT SECURITIES | 9 Months Ended |
Sep. 30, 2020 | |
INVESTMENT SECURITIES | |
INVESTMENT SECURITIES | NOTE 3 - 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, 2020 and December 31, 2019 (in thousands): Gross Gross Amortized Unrealized Unrealized Fair September 30, 2020 Cost Gains Losses Value Investment securities available-for-sale: U.S. Treasury debt $ 250 $ 6 $ — $ 256 Corporate bonds 2,000 48 2,048 Government National Mortgage Association ("GNMA") mortgage-backed securities – residential 28,844 944 — 29,788 Federal National Mortgage Association ("FNMA") mortgage-backed securities – residential 2,626 90 — 2,716 Corporate collateralized mortgage obligations ("CMO") and mortgage-backed securities ("MBS") 5,826 93 (73) 5,846 Total securities available-for-sale $ 39,546 $ 1,181 $ (73) $ 40,654 Gross Gross Amortized Unrealized Unrealized Fair December 31, 2019 Cost Gains Losses Value Investment securities available-for-sale: U.S. Treasury debt $ 250 $ 4 $ — $ 254 GNMA mortgage-backed securities – residential 45,490 157 (335) 45,312 FNMA mortgage-backed securities – residential 2,935 11 (29) 2,917 Corporate CMO and MBS 10,425 40 (45) 10,420 Total securities available-for-sale $ 59,100 $ 212 $ (409) $ 58,903 At September 30, 2020, 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, 2020 Cost Value Due after one year through five years $ 250 $ 256 Due after ten years 2,000 2,048 Securities (agency and CMO) 37,296 38,350 Total $ 39,546 $ 40,654 In 2014, the Company began investing in a small business investment company (“SBIC”) fund administered by the Small Business Administration. During the nine months ended September 30, 2020 and the year ended December 31, 2019, the Company invested $0.5 million and $0.4 million, respectively, in SBIC. At September 30, 2020, the Company held a balance of $2.1 million with SBIC which is included in other assets in the accompanying consolidated balance sheets. The Company may be obligated to invest up to an additional $0.9 million in future SBIC investments. At September 30, 2020 and December 31, 2019, securities with carrying values totaling $4.2 million and $5.5 million, respectively, were pledged to secure various public deposits and credit facilities of the Company. At September 30, 2020 and December 31, 2019, 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, 2020 and December 31, 2019, seven securities and twenty-six securities, respectively, were in an unrealized loss position, with unrealized losses totaling $0.1 million and $0.4 million, respectively. Two of the securities in an unrealized loss position at September 30, 2020 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, 2020. The following table summarizes securities with unrealized losses at September 30, 2020 and December 31, 2019, 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, 2020 Value Losses Value Losses Value Losses Corporate CMO and MBS 1,553 (54) 590 (19) 2,143 (73) Total $ 1,553 $ (54) $ 590 $ (19) $ 2,143 $ (73) Less than 12 Months 12 Months or Longer Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2019 Value Losses Value Losses Value Losses GNMA mortgage-backed securities - residential $ 28,203 $ (193) $ 4,450 $ (142) $ 32,653 $ (335) FNMA mortgage-backed securities - residential — — 2,347 (29) 2,347 (29) Corporate CMO and MBS 7,780 (45) — — 7,780 (45) Total $ 35,983 $ (238) $ 6,797 $ (171) $ 42,780 $ (409) The Company did not sell any securities during the three and nine months ended September 30, 2020. 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. |
LOANS AND THE ALLOWANCE FOR LOA
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | 9 Months Ended |
Sep. 30, 2020 | |
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | |
LOANS AND THE ALLOWANCE FOR LOAN LOSSES | NOTE 4 - 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, 2020 2019 Cash, Securities and Other (1) $ 371,481 $ 146,701 Construction and Development 105,717 28,120 1-4 Family Residential 446,959 400,134 Non-Owner Occupied CRE 243,564 165,179 Owner Occupied CRE 154,138 127,968 Commercial and Industrial 185,625 128,457 Total loans held for investment 1,507,484 996,559 Deferred costs (fees) and unamortized premiums/(unaccreted discounts), net (1,408) 1,448 Allowance for loan losses (11,845) (7,875) Loans, net $ 1,494,231 $ 990,132 ______________________________________ (1) As of September 30, 2020, total loans held for investment include $124.7 million of performing loans purchased as part of the Branch Acquisition. See Note 2 – Acquisitions for more information. The CARES Act created the PPP, which is administered by the SBA. The PPP is intended to provide loans to small businesses to pay their employees, rent, mortgage interest and utilities. The loans may be forgiven conditioned upon the client providing payroll documentation evidencing their compliant use of funds and otherwise complying with the terms of the program. The Bank is an approved SBA lender and at September 30, 2020 the Cash, Securities and Other portion of the loan portfolio included $206.1 million of PPP loans, or 55.5% of the total category. The Company is a participant in the Federal Reserve’s MSLP to support lending to small and medium-sized for profit businesses and nonprofit organizations that were in sound financial condition before the onset of the COVID-19 pandemic. As of September 30, 2020, the Company’s Commercial and Industrial loans included one MSLP loan with the net carrying amount of $2.4 million. Loan Modifications As a result of the COVID-19 pandemic, a loan modification program was designed and implemented to assist our clients experiencing financial stress resulting from the economic impacts caused by the global pandemic. The Company was offering loan extensions, temporary payment moratoriums, and financial covenant waivers for commercial and consumer borrowers impacted by the pandemic who have a pass risk rating and have not been delinquent over 30 days on payments in the last two years. As of September 30, 2020, the Company’s loans include forty-four modified loans, including acquired loans, across multiple industries in the amount of $66.7 million. The following presents loan modifications as a result of COVID-19 as of September 30, 2020 (dollars in thousands): Total Loans # of Modified Loans Outstanding Balance of Modified Loans % of Total Loan Balance Modified Cash, Securities and Other $ 371,481 1 $ 1,496 0.40 % Construction and Development 105,717 — — — 1-4 Family Residential 446,959 6 4,441 0.99 Non-Owner Occupied CRE 243,564 22 38,229 15.70 Owner Occupied CRE 154,138 10 17,524 11.37 Commercial and Industrial 185,625 5 5,048 2.72 Total Loans $ 1,507,484 44 $ 66,738 4.43 % The CARES Act provides banks optional, temporary relief from accounting for certain loan modifications as a TDR. The modifications must be related to the adverse effects of COVID-19, and certain other criteria are required to be met in order to apply the relief. Interagency guidance from Federal Reserve and the FDIC confirmed with the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief, are not to be considered TDRs. We believe our loan modification program meets that definition. In accordance with that guidance, the Company is recognizing interest income on all loans modified for temporary payment moratoriums, primarily for a period of 180 days or less. All loans modified in response to COVID-19 are classified as performing and pass rated as of September 30, 2020. These loans are included in the allowance for loan loss general reserve in accordance with ASC 450-20. Management has increased our loan level reviews and portfolio monitoring to address the changing environment. The Company continues to meet regularly with clients who could be more highly impacted by the recent COVID-19 pandemic. These are borrowers in accommodations, transportation and restaurant industries, we believe may be more impacted by the pandemic, for instance those loans where there may be a greater than 50% probability of a downgrade, covenant violation or 20% reduction in collateral position. The portion of our credit exposure to the highest risk industries impacted by COVID-19, such as accommodations, transportation and restaurants, is less than 3.0% of our loan portfolio. Management believes the diversity of the loan portfolio is prudent and remains consistent with the credit culture and goals of the Bank. Interest accrued during the modification term on modified loans is deferred to the end of the loan term. As of September 30, 2020, no allowance for loan loss was deemed necessary on the accrued interest balances related to loan modifications. The following presents, by class, an aging analysis of the recorded investments (excluding accrued interest receivable, deferred costs (fees) and unamortized premiums/ (unaccreted discounts) which are not material) in loans past due as of September 30, 2020 and December 31, 2019 (in thousands): 30-59 60-89 90 or Total Total Days Days More Days Loans Recorded September 30, 2020 Past Due Past Due Past Due Past Due Current Investment Cash, Securities and Other $ 30 $ — $ 66 $ 96 $ 371,385 $ 371,481 Construction and Development — — — — 105,717 105,717 1-4 Family Residential 4,883 1,197 — 6,080 440,879 446,959 Non-Owner Occupied CRE 1,022 — — 1,022 242,542 243,564 Owner Occupied CRE — — — — 154,138 154,138 Commercial and Industrial 522 — 3,679 4,201 181,424 185,625 Total $ 6,457 $ 1,197 $ 3,745 $ 11,399 $ 1,496,085 $ 1,507,484 30-59 60-89 90 or Total Total Days Days More Days Loans Recorded December 31, 2019 Past Due Past Due Past Due Past Due Current Investment Cash, Securities and Other $ 525 $ — $ — $ 525 $ 146,176 $ 146,701 Construction and Development — — — — 28,120 28,120 1-4 Family Residential 5,688 — — 5,688 394,446 400,134 Non-Owner Occupied CRE — — — — 165,179 165,179 Owner Occupied CRE — — — — 127,968 127,968 Commercial and Industrial — 3,110 907 4,017 124,440 128,457 Total $ 6,213 $ 3,110 $ 907 $ 10,230 $ 986,329 $ 996,559 At September 30, 2020 and December 31, 2019, the Company did not have any loans which were more than 90 days delinquent and accruing interest. Non-Accrual Loans and Troubled Debt Restructurings The following presents the recorded investment in non-accrual loans by class as of the dates noted (in thousands): September 30, December 31, 2020 2019 Cash, Securities and Other $ 66 $ 2,803 Commercial and Industrial 3,679 4,412 Total $ 3,745 $ 7,215 Non-accrual loans classified as TDR accounted for $3.7 million of the recorded investment at September 30, 2020 and $7.2 million at December 31, 2019, 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, 2020 2019 Accruing Commercial and Industrial $ 6,136 $ 5,055 Non-accrual Cash, Securities, and Other 64 2,803 Commercial and Industrial 3,679 4,412 Allowance for loan losses associated with TDR (1,421) (833) Net recorded investment $ 8,458 $ 11,437 The Company extended additional principal allowed under the commitment to a Commercial and Industrial borrower for operational needs, subsequent to the loan being classified as a TDR, in the amounts of $1.3 million and $0.2 million at September 30, 2020 and December 31, 2019, respectively. The majority owner for this borrower provided $1.5 million of pledged cash as collateral in 2019 which is still held by the Company, in exchange for this additional funding. The Company did not modify any loans into TDR status during the three months ended September 30, 2020. The Company modified one loan into a TDR during the nine months ended September 30, 2020. The Borrower was having difficulty making payments in accordance with the original contract terms. The Company restructured the loan including receiving a large paydown and extended the maturity and lowered the interest rate as a result of the Borrower’s financial difficulties. The loan has paid off in full as of September 30, 2020. The Company modified one borrower relationship with two loans into a TDR for the year ended December 31, 2019. The borrower, who has loans that are classified as Commercial and Industrial, was not making payments in accordance with the original contract terms. The modification included an extension of the maturity date that the Company would not have otherwise considered as a result of the Borrower’s difficulties. The extension of maturity was for a period of approximately nine months. These two loans are currently on non-accrual and the borrower was not making payments as agreed for the three and nine months ended September 30, 2020. 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, 2020 December 31, 2019 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: Cash, Securities, and Other $ 2 $ 2 $ 2 $ — $ — $ — Commercial and Industrial 3,419 3,419 1,421 4,412 4,412 833 Total $ 3,421 $ 3,421 $ 1,423 $ 4,412 $ 4,412 $ 833 Impaired loans with no related valuation allowance: Cash, Securities, and Other $ 64 $ 64 $ — $ 2,803 $ 2,803 $ — Commercial and Industrial 6,396 6,396 — 5,055 5,055 — Total $ 6,460 $ 6,460 $ — $ 7,858 $ 7,858 $ — Total impaired loans: Cash, Securities, and Other $ 66 $ 66 $ 2 $ 2,803 $ 2,803 $ — Commercial and Industrial 9,815 9,815 1,421 9,467 9,467 833 Total $ 9,881 $ 9,881 $ 1,423 $ 12,270 $ 12,270 $ 833 The recorded investment in loans in the previous tables excludes accrued interest, deferred costs (fees) and unamortized premiums/ (unaccreted discounts) 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, 2020 and 2019 are included in the table below (in thousands): Three Months Ended September 30, 2020 2019 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized Impaired loans with a valuation allowance: Cash, Securities, and Other $ 1 $ — $ 185 $ — Commercial and Industrial 3,427 — 1,035 — Total $ 3,428 $ — $ 1,220 $ — Impaired loans with no related valuation allowance: Cash, Securities, and Other $ 779 $ — $ 5,062 $ — Commercial and Industrial 6,462 85 5,958 138 1-4 Family Residential — — 1,213 26 Total $ 7,241 $ 85 $ 12,233 $ 164 Total impaired loans: Cash, Securities, and Other $ 780 $ — $ 5,247 $ — Commercial and Industrial 9,889 85 6,993 138 1-4 Family Residential — — 1,213 26 Total $ 10,669 $ 85 $ 13,453 $ 164 The average balance of impaired loans and interest income recognized on impaired loans during the nine months ended September 30, 2020 and 2019 are included in the table below (in thousands): Nine Months Ended September 30, 2020 2019 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized Impaired loans with a valuation allowance: Cash, Securities, and Other $ 1 $ — $ 185 $ — Commercial and Industrial 3,462 — 1,310 — Total $ 3,463 $ — $ 1,495 $ — Impaired loans with no related valuation allowance: Cash, Securities, and Other $ 1,463 $ — S 8,088 S — Commercial and Industrial 6,088 250 5,463 326 1-4 Family Residential — — 1,213 77 Total $ 7,551 $ 250 $ 14,764 $ 403 Total impaired loans: Cash, Securities, and Other $ 1,464 $ — $ 8,273 $ — Commercial and Industrial 9,550 250 6,773 326 1-4 Family Residential — — 1,213 77 Total $ 11,014 $ 250 $ 16,259 $ 403 Allowance for Loan Losses The provision for loan losses for the nine months ended September 30, 2020 was $4.0 million compared to $0.2 million for the same period in 2019, primarily reflecting an increase based on the additional variability surrounding the COVID-19 loan modifications made during the prior quarter and increased economic uncertainty along with strong loan growth. 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, 2020 Beginning balance $ 2,425 $ 484 $ 2,708 $ 1,483 $ 760 $ 2,494 $ 10,354 Provision for (recovery of) loan losses 192 249 392 207 309 147 1,496 Charge-offs (6) — — — — — (6) Recoveries 1 — — — — — 1 Ending balance $ 2,612 $ 733 $ 3,100 $ 1,690 $ 1,069 $ 2,641 $ 11,845 Changes in allowance for loan losses for the nine months ended September 30, 2020 Beginning balance $ 1,058 $ 200 $ 2,850 $ 1,176 $ 911 $ 1,680 $ 7,875 Provision for (recovery of) loan losses 1,571 533 250 514 158 961 3,987 Charge-offs (30) — — — — — (30) Recoveries 13 — — — — — 13 Ending balance $ 2,612 $ 733 $ 3,100 $ 1,690 $ 1,069 $ 2,641 $ 11,845 Allowance for loan losses at September 30, 2020 allocated to loans evaluated for impairment: Individually $ 2 $ — $ — $ — $ — $ 1,421 $ 1,423 Collectively 2,610 733 3,100 1,690 1,069 1,220 10,422 Ending balance $ 2,612 $ 733 $ 3,100 $ 1,690 $ 1,069 $ 2,641 $ 11,845 Loans at September 30, 2020, evaluated for impairment: Individually $ 66 $ — $ — $ — $ — $ 9,815 $ 9,881 Collectively 371,415 105,717 446,959 243,564 154,138 175,810 1,497,603 Ending balance $ 371,481 $ 105,717 $ 446,959 $ 243,564 $ 154,138 $ 185,625 $ 1,507,484 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) loan 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) loan 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 December 31, 2019 allocated to loans evaluated for impairment: Individually $ — $ — $ — $ — $ — $ 833 $ 833 Collectively 1,058 200 2,850 1,176 911 847 7,042 Ending balance $ 1,058 $ 200 $ 2,850 $ 1,176 $ 911 $ 1,680 $ 7,875 Loans at December 31, 2019, evaluated for impairment: Individually $ 2,803 $ — $ — $ — $ — $ 9,467 $ 12,270 Collectively 143,898 28,120 400,134 165,179 127,968 118,990 984,289 Ending balance $ 146,701 $ 28,120 $ 400,134 $ 165,179 $ 127,968 $ 128,457 $ 996,559 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 by 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 Bank 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, 2020 and December 31, 2019 (in thousands): Special September 30, 2020 Pass Mention Substandard Total Cash, Securities and Other $ 371,415 $ — $ 66 $ 371,481 Construction and Development 105,717 — — 105,717 1-4 Family Residential 442,076 — 4,883 446,959 Non-Owner Occupied CRE 232,010 11,554 — 243,564 Owner Occupied CRE 153,656 482 — 154,138 Commercial and Industrial 173,061 — 12,564 185,625 Total $ 1,477,935 $ 12,036 $ 17,513 $ 1,507,484 Special December 31, 2019 Pass Mention Substandard Total Cash, Securities and Other $ 143,898 $ — $ 2,803 $ 146,701 Construction and Development 28,120 — — 28,120 1-4 Family Residential 395,224 — 4,910 400,134 Non-Owner Occupied CRE 164,021 1,158 — 165,179 Owner Occupied CRE 127,968 — — 127,968 Commercial and Industrial 114,241 — 14,216 128,457 Total $ 973,472 $ 1,158 $ 21,929 $ 996,559 The Company had no loans graded doubtful as of September 30, 2020 and December 31, 2019. |
GOODWILL
GOODWILL | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill. | |
Goodwill | NOTE 5 - GOODWILL Changes in the carrying amount of goodwill were as follows (in thousands): Wealth Management Capital Management Consolidated Wealth Management Capital Management Consolidated September 30, 2020 December 31, 2019 Beginning balance $ 15,994 $ 3,692 $ 19,686 $ 15,994 $ 8,817 $ 24,811 Impairment — — — — (1,572) (1,572) Reclass to held for sale — — — — (3,553) (3,553) Acquisition activity 4,505 — 4,505 — — — Ending balance $ 20,499 $ 3,692 $ 24,191 $ 15,994 $ 3,692 $ 19,686 During the nine months ended September 30, 2020, the Company recorded $4.5 million of goodwill as a result of the Branch Acquisition on May 15, 2020. For additional information on goodwill and other intangible related to the acquisition, see Note 2 – Acquisitions. In 2019, an interim goodwill analysis resulted in the recognition of a goodwill impairment loss of $1.6 million in the Capital Management segment. Additionally, the Capital Management goodwill was allocated based on the relative fair value, and $3.6 million was reclassified to assets held for sale in 2019. As of September 30, 2020, the remaining value of goodwill in the Capital Management segment was $3.7 million. For changes related to the portion of goodwill reclassified to assets held for sale, see Note 15 – Assets and Other Liabilities Classified as Held for Sale. Goodwill is tested annually for impairment on October 31 or earlier upon the occurrence of certain events. The Company performed a qualitative assessment of significant events and circumstances as of September 30, 2020 including reporting units historical and current results, assumptions regarding future performance, overall economic factors, including COVID-19, and macroeconomic developments, to determine the existence of potential indicators of impairment and assess if it is more likely than not that the fair value of reporting units are less than their carrying value. The qualitative assessment indicated that it was more likely than not that the carrying value of the reporting unit exceeded its fair value. Therefore, the Company proceeded to complete the two-step impairment test. Step 1 of the goodwill impairment analysis includes the determination of the carrying value of the reporting unit, including the existing goodwill, and estimating the fair value of the reporting unit. If the carrying amount of a reporting unit exceeds its fair value, we are required to perform the second step to the impairment test. Our Step 1 goodwill impairment analysis as of September 30, 2020 indicated that the Step 2 analysis was unnecessary. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2020 | |
LEASES | |
LEASES | NOTE 6 - 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, on the adoption date. 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 contained portions that were subleased these terms ended during the third quarter 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, (in thousands). September 30, December 31, 2020 2019 Lease Right-of-Use Assets Classification Operating lease right-of-use assets Other assets $ 9,000 $ 10,308 Lease Liabilities Classification Operating lease liabilities Other liabilities $ 11,731 $ 13,480 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, December 31, 2020 2019 Weighted-Average Remaining Lease Term Operating leases 4.41 years 4.91 years Weighted-Average Discount Rate Operating leases 3.65 % 3.71 % 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, (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Lease Costs Operating lease cost $ 786 $ 810 $ 2,401 $ 2,382 Variable lease cost 557 395 1,516 1,168 Sublease income (33) (99) (232) (298) Lease costs, net $ 1,310 $ 1,106 $ 3,685 $ 3,252 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, 2020: Twelve months Ended Operating Leases September 30, 2021 $ 3,082 September 30, 2022 2,804 September 30, 2023 2,586 September 30, 2024 2,369 September 30, 2025 1,835 Thereafter 26 Total future minimum lease payments $ 12,702 Less: Imputed interest (971) Present value of net future minimum lease payments $ 11,731 |
DEPOSITS
DEPOSITS | 9 Months Ended |
Sep. 30, 2020 | |
DEPOSITS | |
DEPOSITS | NOTE 7 - DEPOSITS The following presents the Company’s interest-bearing deposits at the dates noted (in thousands): September 30, December 31, 2020 2019 Money market deposit accounts $ 805,634 $ 615,575 Time deposits 177,391 134,913 Negotiable order of withdrawal accounts 101,708 91,921 Savings accounts 5,976 4,307 Total interest-bearing deposits $ 1,090,709 $ 846,716 Aggregate time deposits of $250,000 or greater $ 67,496 $ 61,596 Deposits acquired through acquisitions during the year ended 2020 totaled $63.1 million. See Note 2 – Acquisitions for more information. Overdraft balances classified as loans totaled an immaterial amount at September 30, 2020 and December 31, 2019. |
BORROWINGS
BORROWINGS | 9 Months Ended |
Sep. 30, 2020 | |
BORROWINGS | |
BORROWINGS | NOTE 8 - BORROWINGS The Bank has executed a blanket pledge and security agreement with the Federal Home Loan Bank of Topeka (“FHLB”) that requires certain loans and securities be pledged as collateral for any outstanding borrowings under the agreement. The collateral pledged as of September 30, 2020 and December 31, 2019 amounted to $612.1 million and $515.5 million, respectively. Based on this collateral and the Company’s holdings of FHLB stock, the Company was eligible to borrow an additional $401.9 million at September 30, 2020. 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 % 2020 2019 August 26, 2020 1.94 — 10,000 October 23, 2020 (1) — 3,000 — April 22, 2022 0.37 5,000 — May 5, 2023 0.76 10,000 — Total $ 18,000 $ 10,000 ________________________________________ (1) To bolster the effectiveness of the SBA’s PPP, the Federal Reserve is supplying liquidity to participating financial institutions through term financing collateralized by PPP loans to small businesses. The Paycheck Protection Program Liquidity Facility (“PPPLF”) extends credit to eligible financial institutions that originate PPP loans, taking the loans as collateral at face value. As of September 30, 2020 the Company is utilizing $204.1 million under the PPPLF program which is included in the Federal Home Loan Bank Topeka and Federal Reserve borrowings line of the condensed consolidated balance sheets. 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, 2020 and December 31, 2019, there were no amounts outstanding on any of the federal funds lines. As of September 30, 2020 and 2019, subordinated notes (the "2016 Sub Notes") issued to various investors totaled $6.6 million. The 2016 Sub Notes accrue interest at a rate of 7.25% per annum until December 31, 2021, at which time the rate will adjust each quarter to the then current 90 day London Interbank Offered Rate ("LIBOR") plus 587 basis points, mature on December 31, 2026, are redeemable at the option of the Company after January 1, 2022, and pay interest quarterly. 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 17 – Regulatory Capital Matters). As of September 30, 2020 and December 31, 2019, the Company was in compliance with the covenant requirements. The Company had a Restated Revolving Credit Note (the "Credit Note") with a correspondent lending partner which matured on June 30, 2020 and was renewed under a new Business Loan Agreement and associated Promissory Note (the “Note”) dated June 30, 2020. The Note is secured by stock of the Bank and bears interest at the one month ICE Benchmark Administration (ICE) LIBOR plus 2.5%. As of September 30, 2020 and December 31, 2019, there were no amounts outstanding and the borrowing capacity associated with each facility was $5.0 million. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 9 - 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 clients. 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 loan 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, 2020 December 31, 2019 Fixed Rate Variable Rate Fixed Rate Variable Rate Unused lines of credit $ 74,726 $ 327,326 $ 32,896 $ 290,653 Standby letters of credit 1,754 17,324 1,759 24,197 Commitments to make loans to sell 419,035 — 47,354 — Commitments to make loans $ 23,496 $ 33,691 $ — $ — Unused lines of credit are agreements to lend to a client 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 client. 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 clients. 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 client’s obligation 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 clients. 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 client, 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 client, 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 is, from time to time, 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, after consulting with our 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. Without admitting or denying the SEC’s findings, FWCM agreed on July 16, 2020 to settle claims that FWCM failed reasonably to supervise its investment adviser representatives who purchased securities sold in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), for advisory clients when the clients were not qualified institutional buyers in a Rule 144A transaction, and to adopt and implement written policies and procedures reasonably designed to prevent violations of the Investment Advisers Act of 1940 and the rules thereunder by the adviser and its supervised persons. FWCM paid a previously accrued fine of $0.2 million to the SEC, and replaced the FWCM President and FWCM compliance team in place at that time. |
SHAREHOLDERS EQUITY
SHAREHOLDERS EQUITY | 9 Months Ended |
Sep. 30, 2020 | |
SHAREHOLDERS EQUITY | |
SHAREHOLDERS EQUITY | NOTE 10 - 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 authorized 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. During the year ended December 31, 2019, the Company repurchased 43,698 shares at an average price of $16.51. During the nine months ended September 30, 2020, the Company repurchased 22,679 shares at an average price of $16.50. The share repurchase program expired in June 2020 and therefore no shares were repurchased during the three months ended September 30, 2020. Restricted Stock Awards In 2017, the Company issued 105,264 shares of common stock ("Restricted Stock Awards") with a value of $3.0 million to the sole member of EMC Holdings, LLC ("EMC"), subject to forfeiture based on his continued employment with the Company. Half of the Restricted Stock Awards ($1.5 million or 52,632 shares) vests ratably over five-years. The remaining $1.5 million, or 52,632 shares, may be earned based on performance of the mortgage division of the Company. During the nine months ended September 30, 2020, the Company recognized compensation expense of $0.1 million, representing the remaining 14,114 shares, related to the performance based awards. During the year ended December 31, 2019, the Company recognized compensation expense of $0.6 million, representing 38,518 shares, related to the performance-based awards. The performance based awards fully vested in the second quarter 2020, no expenses were recognized in the three months ended September 30, 2020. As of September 30, 2020, the Restricted Stock Awards have a weighted-average grant date fair value of $28.50 per share. The Company recognized compensation expense of $0.1 million and $0.5 million for the three months ended September 30, 2020 and 2019, for the Restricted Stock Awards. During the nine months ended September 30, 2020 and 2019, the Company has recognized compensation expense of $0.3 million and $0.7 million for the Restricted Stock Awards, respectively. As of September 30, 2020, the Company has $ 0.6 Stock-Based Compensation Plans As of September 30, 2020, there were a total of 504,397 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, 2020 and 2019. During the three months ended September 30, 2020 and 2019, 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, 2020 and 2019, the Company recognized stock based compensation expense of $0.2 million and $0.2 million, respectively, associated with stock options. As of September 30, 2020, the Company has $0.1 The following summarizes activity for nonqualified stock options for the nine months ended September 30, 2020: : Weighted Weighted Average Number Average Remaining Aggregate of Exercise Contractual Intrinsic Options Price Term Value Outstanding at December 31, 2019 419,197 $ 29.02 Granted - - Exercised - - Forfeited or expired - - Outstanding at September 30, 2020 419,197 $ 29.02 2.9 (a) Options fully vested / exercisable at September 30, 2020 396,916 $ 29.20 2.7 (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, 2020 and December 31, 2019, there were 396,916 and 394,020 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, 2020, 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, 2020: Time Financial Market Vesting Performance Performance Units Units Units Outstanding at December 31, 2019 209,444 69,426 14,862 Granted 109,607 60,859 - Vested (54,112) - - Forfeited (1,888) (854) - Outstanding at September 30, 2020 263,051 129,431 14,862 During the three months ended September 30, 2020, the Company issued 12,725 shares of common stock upon the settlement of Time Vesting Units. The remaining 6,196 shares that vested during the period were surrendered with a combined market value at the date of settlement of $0.1 million to cover employee withholding taxes. During the nine months ended September 30, 2020 , the Company issued 34,260 shares of common stock upon the settlement of Time Vesting Units. The remaining 19,852 shares that vested during the period were surrendered with a combined market value at the dates of settlement of $0.3 million to cover employee withholding taxes. During the three and 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 that vested during the period were surrendered with a combined market value at the dates of settlement of $0.1 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 109,607 Time Vesting Units with a five-year service period during the nine months ended September 30, 2020, 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 2020 have a weighted-average grant-date fair value of $12.84 per Time Vesting Units. As of September 30, 2020, the Company has $3.8 million of unrecognized stock-based compensation expense is expected to be recognized over a weighted-average period of approximately 2.0 years. Financial Performance Units Granted Prior to May 1, 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. The end of the performance metrics period, December 31, 2019, resulted in accruing at 50% for h alf Financial Performance Units Granted from May 1, 2019 through April 30, 2020 The Company granted 1,866 Financial Performance Units during the nine months ended September 30, 2020. In 2019, the Company granted 62,569 Financial Performance Units to officers and other key associates. All Financial Performance Units granted Between May 1, 2019 and May 1, 2020, 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, 2020, the Company is accruing at the maximum threshold for the awards. The maximum number of shares that can be issued at 150% as of September 30, 2020 was approximately 86,200 shares. During the three months ended September 30, 2020 and 2019, the Company recognized $0.1 million of compensation expense, for Financial Performance Units. For the nine months ended September 30, 2020 and 2019, the Company recognized $0.2 million and $0.1 million, respectively. As of September 30, 2020, there was $0.6 million of unrecognized compensation expense related to the Financial Performance Units. As of September 30, 2020, the unrecognized stock-based compensation expense is expected to be recognized over a weighted-average period of 3.3 years. Financial Performance Units Granted from May 1, 2020 through September 30, 2020 The Company granted 699 and 58,993 Financial Performance Units during the three and nine months ended September 30, 2020. All Financial Performance Units granted on or after May 1, 2020, 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, 2022, 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, 2020, the Company is accruing at maximum threshold for the awards. The maximum number of shares that can be issued at 150% as of September 30, 2020 was approximately 87,900 shares. During the three and nine months ended September 30, 2020, the Company recognized $0.1 million of compensation expense for the Financial Performance Units. As of September 30, 2020, there was $0.7 million of unrecognized compensation expense related to the Financial Performance Units. As of September 30, 2020, 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 which ended on June 30, 2020, the Market Performance Units would have been determined to be earned and vest following the completion of a subsequent service period ending on June 30, 2022. The Company’s common stock did not trade at or above the required prices over the performance period, as a result no Market Performance Units are eligible to be earned. 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, 2020 and 2019, the Company recognized an immaterial amount of compensation expense for the Market Performance Units. As of September 30, 2020, 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 1.8 years. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 9 Months Ended |
Sep. 30, 2020 | |
EARNINGS PER COMMON SHARE | |
EARNINGS PER COMMON SHARE | NOTE 11 - 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, 2020 2019 2020 2019 Earnings per common share - Basic Numerator: Net income $ 9,630 $ 2,406 $ 19,660 $ 5,437 Dividends on preferred stock — — — — Net income available for common shareholders $ 9,630 $ 2,406 $ 19,660 $ 5,437 Denominator: Basic weighted average shares 7,911,871 7,890,794 7,888,675 7,882,221 Earnings per common share - basic $ 1.22 $ 0.30 $ 2.49 $ 0.69 Earnings per common share - Diluted Numerator: Net income $ 9,630 $ 2,406 $ 19,660 $ 5,437 Dividends on preferred stock — — — — Net income available for common shareholders $ 9,630 $ 2,406 $ 19,660 $ 5,437 Denominator: Basic weighted average shares 7,911,871 7,890,794 7,888,675 7,882,221 Diluted effect of common stock equivalents: Stock options — — — — Time Vesting Units 85,897 10,702 44,310 4,942 Financial Performance Units 7,786 123 16,176 41 Market Performance Units 13,453 13,175 13,347 13,357 Restricted Stock Awards — — — — Total diluted effect of common stock equivalents 107,136 24,000 73,833 18,340 Diluted weighted average shares 8,019,007 7,914,794 7,962,508 7,900,561 Earnings per common share - diluted $ 1.20 $ 0.30 $ 2.47 $ 0.69 Diluted earnings per share was computed without consideration to potentially dilutive instruments as their inclusion would have been anti-dilutive. As of September 30, 2020 and 2019, potentially dilutive securities excluded from the diluted earnings per share calculation are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Stock options 419,197 423,197 419,197 438,364 Time Vesting Units 82,600 130,821 87,304 163,141 Financial Performance Units 116,051 55,028 70,769 47,008 Restricted Stock Awards 21,054 61,668 41,517 83,713 Total potentially dilutive securities 638,902 670,714 618,787 732,226 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2020 | |
INCOME TAXES | |
INCOME TAXES | NOTE 12 - INCOME TAXES During the three and nine months ended September 30, 2020, the Company recorded an income tax provision of $3.2 million and $6.3 million, respectively, reflecting an effective tax rate of 24.9% and 24.3%, respectively. 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. |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2020 | |
RELATED-PARTY TRANSACTIONS | |
RELATED-PARTY TRANSACTIONS | NOTE 13 - RELATED-PARTY TRANSACTIONS The Bank extends credit under Regulation O to certain covered parties including Company directors, executive officers and their affiliates. At September 30, 2020 and December 31, 2019, there were no delinquent or non-performing loans to any executive officer or director of the Company. These covered parties, along with principal owners, management, immediate family of management or principal owners, a parent company and its subsidiaries, trusts for the benefits of employees, and other parties, may be considered related parties. The following presents a summary of related-party loan activity as of the dates noted (in thousands): September 30, 2020 December 31, 2019 Balance, beginning of year $ 5,675 $ 2,659 Funded loans 6,808 11,618 Payments collected (7,161) (8,602) Balance, end of year $ 5,322 $ 5,675 Deposits from related parties held by the Bank at September 30, 2020 and December 31, 2019 totaled $21.8 million and $28.5 million, respectively. The Company leases office spaces from entities controlled by one of the Company’s board members. During the nine months ended September 30, 2020 and 2019, the Company incurred expenses of $0.1 million. |
FAIR VALUE
FAIR VALUE | 9 Months Ended |
Sep. 30, 2020 | |
FAIR VALUE | |
FAIR VALUE | NOTE 14 - 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. The Company used the following methods and significant assumptions to estimate fair value: Investment Securities : Guarantee asset and liability : Interest Rate Lock Commitments (“IRLC”) and Forward Sale Commitments (“FSC”) : Derivative instruments are carried at fair value in the Company’s financial statements. Changes in the fair value of a derivative instrument are accounted for within the condensed consolidated statements of income. The following presents assets and liabilities measured on a recurring basis at September 30, 2020 and December 31, 2019 (in thousands): Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Reported September 30, 2020 (Level 1) (Level 2) (Level 3) Balance Investment securities available-for-sale: U.S. Treasury debt $ 256 $ — $ — $ 256 Corporate bonds — 2,048 — 2,048 GNMA mortgage-backed securities - residential — 29,788 — 29,788 FNMA mortgage-backed securities - residential — 2,716 — 2,716 Corporate CMO and MBS — 5,846 — 5,846 Total securities available-for-sale $ 256 $ 40,398 $ — $ 40,654 Equity securities $ 732 $ — $ — $ 732 Guarantee asset $ — $ — $ 245 $ 245 IRLC and FSC, net $ — $ — $ 11,622 $ 11,622 Guarantee liability $ — $ — $ 153 $ 153 Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Reported December 31, 2019 (Level 1) (Level 2) (Level 3) Balance Investment securities available-for-sale: U.S. Treasury debt $ 254 $ — $ — $ 254 GNMA mortgage-backed securities - residential — 45,312 — 45,312 FNMA mortgage-backed securities - residential — 2,917 — 2,917 Corporate CMO and MBS — 10,420 — 10,420 Total securities available-for-sale $ 254 $ 58,649 $ — $ 58,903 Equity securities $ 713 $ — $ — $ 713 IRLC and FSC, net $ — $ — $ 1,184 $ 1,184 The following presents a reconciliation for level 3 instruments measured at fair value on a recurring basis (in thousands): Three Months Ended September 30, 2020 Guarantee Asset IRLC and FSC, Net Guarantee Liability Beginning balance $ 222 $ 7,482 $ 191 Gains (losses) in net income, net 39 1,066 (38) Other settlements, net (1) (16) 3,074 — Ending balance $ 245 $ 11,622 $ 153 ______________________________________ (1) Nine Months Ended September 30, 2020 Guarantee Asset IRLC and FSC, Net Guarantee Liability Beginning balance $ — $ 1,184 $ — Sales 245 — 244 Gains (losses) in net income, net 55 1,713 (91) Other settlements, net (1) (55) 8,725 — Ending balance $ 245 $ 11,622 $ 153 ______________________________________ (1) Mutual funds 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, 2020 and December 31, 2019, the majority of the securities had 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, 2020, equity securities and guarantee assets have been recorded at fair value within the other assets line item and the guarantee liabilities have been recorded at fair value with the other liabilities line item in the condensed consolidated balance sheet. All changes are recorded in the other line item in the condensed consolidated statement of income. Other Real Estate Owned : Impaired Loans : 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, 2020 and December 31, 2019 (in thousands): Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Reported September 30, 2020 (Level 1) (Level 2) (Level 3) Balance Other real estate owned: Commercial properties $ — $ — $ 558 $ 558 Total impaired loans (1) Commercial and Industrial $ — $ — $ 1,998 $ 1,998 ______________________________________ (1) Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Reported December 31, 2019 (Level 1) (Level 2) (Level 3) Balance Other real estate owned: Commercial properties $ — $ — $ 658 $ 658 Total impaired loans: Commercial and Industrial $ — $ — $ 3,579 $ 3,579 The sales comparison approach was utilized for estimating the fair value of non-recurring assets. At September 30, 2020, other real estate owned decreased slightly from December 31, 2019 and had a carrying amount of $0.6 million, which is the cost basis of $2.4 million net of a valuation allowance of $1.8 million. At September 30, 2020, total impaired loans measured for impairment using the fair value of the collateral for collateral dependent loans had carrying values of $3.4 million with valuation allowances of $1.4 million and were classified as Level 3. As of December 31, 2019, impaired loans measured for impairment using the fair value of the collateral for collateral dependent loans had carrying values of $4.4 million with valuation allowances of $0.8 million and were classified as Level 3. Impaired loans accounted for specific reserves of $1.4 million and $0.8 million as of September 30, 2020 and December 31, 2019. The Bank charged off an immaterial amount during the nine months ended September 30, 2020 from the specific reserve. The Bank charged off $0.2 million during the year ended December 31, 2019 from the specific reserve. The following presents quantitative information about the significant unobservable inputs used in the fair value measurement of recurring and nonrecurring non-financial instruments categorized within Level 3 of the fair value hierarchy as of September 30, 2020 and December 31, 2019 (dollars in thousands): Quantitative Information about Level 3 Fair Value Measurements at September 30, 2020 Valuation Significant Range Fair Value Technique Unobservable Input (Weighted Average) Other real estate owned: Commercial properties 558 Sales contract Commission, cost to sell, closing costs 3% - 10% (7%) Total impaired loans (1) Commercial and Industrial 1,998 Sales comparison, Market approach - guideline transaction method Management discount for asset/property type 17% - 20% (20%) ______________________________________ (1) Quantitative Information about Level 3 Fair Value Measurements at December 31, 2019 Valuation Significant Range Fair Value Technique Unobservable Input (Weighted Average) Other real estate owned: Commercial properties $ 658 Appraisal value Discount rate 50% (50%) Commission and cost to sell 1% - 10% (7%) Total impaired loans: Commercial and Industrial $ 3,579 Sales comparison, Market approach - guideline transaction method Management discount for asset/property type 0% - 50% (23%) The following presents carrying amounts and estimated fair values for financial instruments as of September 30, 2020 and December 31, 2019 (in thousands): Carrying Fair Value Measurements Using: September 30, 2020 Amount Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 250,358 $ 250,358 $ — $ — Securities available-for-sale 40,654 256 40,398 — Loans, net 1,494,231 — — 1,493,863 Mortgage loans held for sale 89,872 — 89,872 — Accrued interest receivable 6,730 — 6,730 — Equity securities 732 732 — — IRLC and FSC, net 11,622 — — 11,622 Guarantee asset 245 — — 245 Liabilities: Deposits 1,563,672 — 1,565,555 — Borrowings: FHLB Topeka Borrowings – fixed rate 18,000 — 18,070 — Federal Reserve Borrowings – fixed rate 204,075 — 204,075 — Subordinated notes – fixed-to-floating rate 14,447 — — 14,997 Accrued interest payable 347 — 347 — Guarantee liability $ 153 $ — $ — $ 153 Carrying Fair Value Measurements Using: December 31, 2019 Amount Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 78,638 $ 78,638 $ — $ — Securities available-for-sale 58,903 254 58,649 — Loans, net 990,132 — — 974,142 Mortgage loans held for sale 48,312 — 48,312 — Accrued interest receivable 3,048 — 3,048 — Equity securities 713 713 — — IRLC and FSC, net 1,184 — — 1,184 Liabilities: Deposits 1,086,784 — 1,089,261 — Borrowings: FHLB Topeka Borrowings – fixed rate 10,000 — 10,003 — Subordinated notes – fixed-to-floating rate 6,560 — — 6,004 Accrued interest payable $ 299 $ — $ 299 $ — 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. Although management is not aware of any factors that would significantly affect the estimated fair values, such amounts have not been comprehensively revalued for purposes of these consolidated financial statements since the balance sheet dates. Therefore, current estimates of fair value may differ significantly from the amounts presented herein. The methods and assumptions, not previously presented, used to estimate fair values are described as follows. Cash and Cash Equivalents and Restricted Cash Loans, net Mortgage Loans Held for Sale Accrued Interest Receivable and Payable Deposits Borrowings: Variable Rate Borrowings Fixed Rate Borrowings |
ASSETS AND OTHER LIABILITIES CL
ASSETS AND OTHER LIABILITIES CLASSIFIED AS HELD FOR SALE | 9 Months Ended |
Sep. 30, 2020 | |
ASSETS AND OTHER LIABILITIES CLASSIFIED AS HELD FOR SALE | |
ASSETS AND OTHER LIABILITIES CLASSIFIED AS HELD FOR SALE | NOTE 15 – ASSETS AND OTHER LIABILITIES CLASSIFIED AS HELD FOR SALE In 2019, the Company committed to a plan to sell its Los Angeles-based fixed income portfolio management team and certain advisory and sub-advisory arrangements. Management is continuing to evaluate opportunities to divest the Los Angeles-based fixed income portfolio management team and, therefore, these assets and liabilities are classified as goodwill in a disposal group held for sale and are presented separately in the consolidated balance sheet. On September 18, 2020, 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, 2020, the sale was not yet completed. The Company performed a review of the fair value of assets held for sale as of the three months ended September 30, 2020 and determined that the value of the assets held for sale was reasonable and no adjustment was needed during the period. The Company recorded a loss on the assets held for sale of $0.6 million during the period ending March 31, 2020, the loss has been applied to reduce the carrying amount of the goodwill within the disposal group. Assets and other liabilities in disposal groups held for sale are as follows at the dates noted (in thousands): September 30, December 31, 2020 2019 Wealth Capital Wealth Capital Management Management Consolidated Management Management Consolidated ASSETS Goodwill $ — $ 3,000 $ 3,000 $ — $ 3,553 $ 3,553 Assets in disposal groups held for sale $ — $ 3,000 $ 3,000 $ — $ 3,553 $ 3,553 LIABILITIES Other liabilities $ — $ 141 $ 141 $ — $ 117 $ 117 Liabilities in disposal groups held for sale $ — $ 141 $ 141 $ — $ 117 $ 117 |
SEGMENT REPORTING
SEGMENT REPORTING | 9 Months Ended |
Sep. 30, 2020 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | NOTE 16 - 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 acting as the advisor of three owned, managed, and rated mutual funds. Capital Management products and services are financial in nature for which revenues are generally 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 ended September 30, 2020 and 2019 (in thousands): Three Months Ended September 30, 2020 Wealth Capital Mortgage Consolidated Income Statement Total interest income $ 14,410 $ — $ — $ 14,410 Total interest expense 1,492 — — 1,492 Provision for loan losses 1,496 — — 1,496 Net interest income, after provision for loan losses 11,422 — — 11,422 Non-interest income 4,810 899 12,323 18,032 Total income 16,232 899 12,323 29,454 Depreciation and amortization expense 252 8 14 274 All other non-interest expense 13,664 627 2,067 16,358 Income before income tax $ 2,316 $ 264 $ 10,242 $ 12,822 Goodwill $ 20,499 $ 3,692 $ — $ 24,191 Assets held for sale — 3,000 — 3,000 Total assets $ 1,859,390 $ 8,358 $ 105,149 $ 1,972,897 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, after provision for loan losses 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 Nine Months Ended September 30, 2020 Wealth Capital Mortgage Consolidated Income Statement Total interest income $ 38,392 $ — $ — $ 38,392 Total interest expense 5,747 — — 5,747 Provision for loan losses 3,987 — — 3,987 Net interest income, after provision for loan losses 28,658 — — 28,658 Non-interest income 13,710 2,492 25,024 41,226 Total income 42,368 2,492 25,024 69,884 Depreciation and amortization expense 718 52 56 826 All other non-interest expense 34,619 2,772 (1) 5,706 43,097 Income (loss) before income tax $ 7,031 $ (332) $ 19,262 $ 25,961 Goodwill $ 20,499 $ 3,692 $ — $ 24,191 Assets held for sale — 3,000 — 3,000 Total assets $ 1,859,390 $ 8,358 $ 105,149 $ 1,972,897 ______________________________________ (1) Includes loss on assets held for sale of $0.6 million and $0.2 million SEC penalty. 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, after provision for loan losses 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. (1) |
REGULATORY CAPITAL MATTERS
REGULATORY CAPITAL MATTERS | 9 Months Ended |
Sep. 30, 2020 | |
REGULATORY CAPITAL MATTERS | |
REGULATORY CAPITAL MATTERS | NOTE 17 - 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”) has been fully phased in. The net unrealized gain or loss on available-for-sale securities is not included in computing regulatory capital. During the nine months ended September 30, 2020, the Company made a $10.0 million capital injection into the Bank. Management believes as of September 30, 2020, 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, set forth in the following table. 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). The actual capital ratios of the Bank, along with the applicable regulatory capital requirements as of September 30, 2020, were calculated in accordance with the requirements of Basel III. The final rules of Basel III also established a “capital conservation buffer” of 2.5% above new regulatory minimum capital ratios, which are fully effective 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%. Banks are 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 establish a maximum percentage of eligible retained income that can be utilized for such activities. At September 30, 2020, 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, 2020 and December 31, 2019, the most recent filings with the 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. Management believes there are no conditions or events since September 30, 2020, that have changed the categorization of the Bank as well capitalized. Management believes the Bank met all capital adequacy requirements to which it was subject as of September 30, 2020 and December 31, 2019. The following presents the actual and required capital amounts and ratios as of September 30, 2020 and December 31, 2019 (in thousands): To be Well Capitalized Under Prompt Required for Capital Corrective Action Actual Adequacy Purposes (1) Regulations September 30, 2020 Amount Ratio Amount Ratio Amount Ratio Tier 1 capital to risk-weighted assets Bank $ 127,441 10.28 % $ 74,391 6.0 % $ 99,188 8.0 % Consolidated 122,987 9.88 N/A N/A N/A N/A Common Equity Tier 1(CET1) to risk-weighted assets Bank 127,441 10.28 55,793 4.5 80,591 6.5 Consolidated 122,987 9.88 N/A N/A N/A N/A Total capital to risk-weighted assets Bank 139,647 11.26 99,188 8.0 123,985 10.0 Consolidated 149,753 12.03 N/A N/A N/A N/A Tier 1 capital to average assets Bank 127,441 7.81 65,233 4.0 81,542 5.0 Consolidated $ 122,987 7.52 % $ N/A N/A % $ N/A N/A % ______________________________________ (1) Does not include capital conservation buffer. To be Well Capitalized Under Prompt Required for Capital Corrective Action Actual Adequacy Purposes (1) Regulations December 31, 2019 Amount Ratio Amount Ratio Amount Ratio Tier 1 capital to risk-weighted assets Bank $ 99,461 10.67 % $ 55,954 6.0 % $ 74,606 8.0 % Consolidated 105,821 11.31 N/A N/A N/A N/A Common Equity Tier 1(CET1) to risk-weighted assets Bank 99,461 10.67 41,966 4.5 60,617 6.5 Consolidated 105,821 11.31 N/A N/A N/A N/A Total capital to risk-weighted assets Bank 107,509 11.53 74,606 8.0 93,257 10.0 Consolidated 120,429 12.87 N/A N/A N/A N/A Tier 1 capital to average assets Bank 99,461 8.09 49,166 4.0 61,458 5.0 Consolidated $ 105,821 8.58 % $ N/A N/A % $ N/A N/A % ______________________________________ (1) Does not include capital conservation buffer. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2020 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 18 – SUBSEQUENT EVENTS On November 3, 2020, the Company announced that its Board of Directors had authorized a share repurchase program under which the Company may repurchase up to 400,000 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 authorized 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. ***** |
ORGANIZATION AND SUMMARY OF S_2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Business and Basis of Presentation | Business and Basis of Presentation 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 clients 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, 2019 condensed consolidated balance sheet has been derived from the audited financial statements for the year ended December 31, 2019. 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, 2020 are not necessarily indicative of results that may be expected for the full year ending December 31, 2020. 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, 2019 as filed with the SEC. |
Consolidation | Consolidation On May 15, 2020, the Company completed a branch purchase and assumption transaction (“Branch Acquisition”) with Simmons Bank (“Simmons”). Management concluded that the acquisition represented a business combination, which is accounted for using the acquisition method, with the results of operations included in the Company’s consolidated financial statements as of the acquisition date. For additional information, see Note 2. |
Use of Estimates | Use of Estimates The Company could experience a material adverse effect on its business as a result of the impact of the COVID-19 pandemic, and the resulting governmental actions to curtail its spread. It is at least reasonably possible that information which was available at the date of the financial statements will change in the near term due to the COVID-19 pandemic and that the effect of the change would be material to the financial statements. The extent to which the COVID-19 pandemic will impact our estimates and assumptions is highly uncertain. |
Concentration of Credit Risk | Concentration of Risk |
Revenue Recognition | Revenue Recognition |
Transition of LIBOR to an Alternative Reference Rate | Transition of LIBOR to an Alternative Reference Rate Certain of the Company’s assets and liabilities are indexed to LIBOR, with exposure extending past December 31, 2021. The Company is currently evaluating and planning for the eventual replacement of the LIBOR benchmark interest rate, including the possibility of SOFR as the dominant replacement. In general, the transition away from LIBOR may result in increased market risk, credit risk, operational risk and business risk for the Company. The Company has developed a LIBOR transition plan, which addresses governance, risk management, legal, operational, systems and operations, fallback language, and other aspects of planning. |
COVID-19 and CARES Act | COVID-19 and CARES Act The CARES Act created the Paycheck Protection Program (“PPP”), which is administered by the Small Business Administration (“SBA”). The PPP is intended to provide loans to small businesses to pay their employees, rent, mortgage interest and utilities. The loans may be forgiven conditioned upon the client providing payroll documentation evidencing their compliant use of funds and otherwise complying with the terms of the program. The Bank is an approved SBA lender and supported the community and clients by originating PPP loans during the nine months ended September 30, 2020. PPP loans are classified in the Cash, Securities and Other portion of the loan portfolio. See Note 4 for further discussion on our PPP loans. As a result of the COVID-19 pandemic, a loan modification program was designed and implemented to assist our clients experiencing financial stress resulting from the economic impacts caused by the global pandemic. The Company offered loan extensions, temporary payment moratoriums, and financial covenant waivers for commercial and consumer borrowers impacted by the pandemic and had a risk rating of “pass” and had not been delinquent in making interest or principal payment by more than 30 days during the last two years. The CARES Act provides banks optional, temporary relief from accounting for certain loan modifications as troubled debt restructurings (‘TDR”). The modifications must be related to the adverse effects of COVID-19, and certain other criteria are required to be met in order to apply the relief. Interagency guidance from Federal Reserve and the Federal Deposit Insurance Corporation (“FDIC”) confirmed with the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief, are not to be considered a TDR. We believe our loan modification program meets that definition and have not classified any of these modifications as a TDR at September 30, 2020. See Note 4 for further discussion on our loan modification program. The Company is a participant in the Federal Reserve’s Main Street Lending Program (“MSLP”) to support lending to small and medium-sized for profit businesses and nonprofit organizations that were in sound financial condition before the onset of the COVID-19 pandemic. The Company may sell a 95% participation in a new MSLP loan to the Main Street Special Purpose Vehicle (“SPV”) at par value. The Company must retain 5% of the MSLP loan until (i) it matures or (ii) neither the Main Street SPV nor a Governmental Assignee holds an interest in MSLP Loan in any capacity, whichever comes first. See Note 4 for further discussion on our participation in the program. |
Reclassifications | Reclassifications |
Recently adopted accounting pronouncements and Recently issued accounting pronouncements, not yet adopted | Recently adopted accounting pronouncements In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement—Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820) (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements by requiring that Level 3 fair value disclosures include the range and weighted average of significant unobservable inputs used to develop those fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 was effective for the Company on January 1, 2020 and did not have a material impact on the Company’s financial statement disclosures. In April 2020, the FASB Reference Rate Reform (Topic 848): ASU 2020-04"), ASU 2020-04 is intended to provide relief for companies preparing for discontinuation of interest rates based on LIBOR. The ASU provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or other reference rates expected to be discontinued. ASU 2020-04 also provides for a one-time sale and/or transfer to AFS or trading to be made for HTM debt securities that both reference an eligible reference rate and were classified as HTM before January 1, 2020. ASU 2020-04 was effective for all entities as of March 12, 2020 and through December 31, 2022. Companies can apply the ASU as of the beginning of the interim period that includes March 12, 2020 or any date thereafter. The guidance requires companies to apply the guidance prospectively to contract modifications and hedging relationships while the one-time election to sell and/or transfer debt securities classified as HTM may be made any time after March 12, 2020. ASU 2020-04 Recently issued accounting pronouncements, not yet adopted 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 was set to be effective for most public companies on January 1, 2020. However, at the October 16, 2019 FASB meeting, the FASB voted unanimously to delay the effective date of CECL adoption for smaller reporting companies (“SRCs”) to January 1, 2023. During the three months ended September 30, 2020, 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, client 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. The Company has started the process of selecting the methodologies to be used for each segment of its loan portfolio and started preliminarily testing to determine the impact of each methodology. 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. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ever, ASU 2019-10 amended the mandatory effective date for ASU 2014-07 to January 1, 2023 for SRC’s, |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
ACQUISITIONS | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the May 15, 2020 transaction with Simmons, and reflects all adjustments made to the fair value of the opening balance sheet through September 30, 2020 (in thousands): May 15, Fair value of consideration transferred 2020 Cash consideration $ 61,599 Total fair value of consideration transferred 61,599 Assets acquired Cash and due from banks 283 Loans, net 119,552 Core deposit intangible (1) 53 Accrued income and other assets 382 Total assets acquired 120,270 Liabilities assumed Deposits 63,080 Accrued expenses and other liabilities 96 Total liabilities assumed 63,176 Net assets acquired 57,094 Goodwill recognized $ 4,505 ______________________________________ (1) |
Schedule of composition of acquired loan portfolio | The composition of the acquired loan portfolio as of May 15, 2020 is detailed in the table below (in thousands): May 15, 2020 Cash, Securities and Other $ 13,457 Construction and Development 40,407 1-4 Family Residential 7,252 Non-Owner Occupied Commercial Real Estate ("CRE") 545 Owner Occupied CRE 321 Commercial and Industrial 58,660 Total gross loans $ 120,642 |
INVESTMENT SECURITIES (Tables)
INVESTMENT SECURITIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 and December 31, 2019 (in thousands): Gross Gross Amortized Unrealized Unrealized Fair September 30, 2020 Cost Gains Losses Value Investment securities available-for-sale: U.S. Treasury debt $ 250 $ 6 $ — $ 256 Corporate bonds 2,000 48 2,048 Government National Mortgage Association ("GNMA") mortgage-backed securities – residential 28,844 944 — 29,788 Federal National Mortgage Association ("FNMA") mortgage-backed securities – residential 2,626 90 — 2,716 Corporate collateralized mortgage obligations ("CMO") and mortgage-backed securities ("MBS") 5,826 93 (73) 5,846 Total securities available-for-sale $ 39,546 $ 1,181 $ (73) $ 40,654 Gross Gross Amortized Unrealized Unrealized Fair December 31, 2019 Cost Gains Losses Value Investment securities available-for-sale: U.S. Treasury debt $ 250 $ 4 $ — $ 254 GNMA mortgage-backed securities – residential 45,490 157 (335) 45,312 FNMA mortgage-backed securities – residential 2,935 11 (29) 2,917 Corporate CMO and MBS 10,425 40 (45) 10,420 Total securities available-for-sale $ 59,100 $ 212 $ (409) $ 58,903 |
Summary of the amortized cost and estimated fair value of available for sale securities, excluding SBIC with contractual maturity dates | Amortized Fair September 30, 2020 Cost Value Due after one year through five years $ 250 $ 256 Due after ten years 2,000 2,048 Securities (agency and CMO) 37,296 38,350 Total $ 39,546 $ 40,654 |
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, 2020 and December 31, 2019, 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, 2020 Value Losses Value Losses Value Losses Corporate CMO and MBS 1,553 (54) 590 (19) 2,143 (73) Total $ 1,553 $ (54) $ 590 $ (19) $ 2,143 $ (73) Less than 12 Months 12 Months or Longer Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2019 Value Losses Value Losses Value Losses GNMA mortgage-backed securities - residential $ 28,203 $ (193) $ 4,450 $ (142) $ 32,653 $ (335) FNMA mortgage-backed securities - residential — — 2,347 (29) 2,347 (29) Corporate CMO and MBS 7,780 (45) — — 7,780 (45) Total $ 35,983 $ (238) $ 6,797 $ (171) $ 42,780 $ (409) |
LOANS AND THE ALLOWANCE FOR L_2
LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 2019 Cash, Securities and Other (1) $ 371,481 $ 146,701 Construction and Development 105,717 28,120 1-4 Family Residential 446,959 400,134 Non-Owner Occupied CRE 243,564 165,179 Owner Occupied CRE 154,138 127,968 Commercial and Industrial 185,625 128,457 Total loans held for investment 1,507,484 996,559 Deferred costs (fees) and unamortized premiums/(unaccreted discounts), net (1,408) 1,448 Allowance for loan losses (11,845) (7,875) Loans, net $ 1,494,231 $ 990,132 ______________________________________ (1) |
Schedule of loan modifications | The following presents loan modifications as a result of COVID-19 as of September 30, 2020 (dollars in thousands): Total Loans # of Modified Loans Outstanding Balance of Modified Loans % of Total Loan Balance Modified Cash, Securities and Other $ 371,481 1 $ 1,496 0.40 % Construction and Development 105,717 — — — 1-4 Family Residential 446,959 6 4,441 0.99 Non-Owner Occupied CRE 243,564 22 38,229 15.70 Owner Occupied CRE 154,138 10 17,524 11.37 Commercial and Industrial 185,625 5 5,048 2.72 Total Loans $ 1,507,484 44 $ 66,738 4.43 % |
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 costs (fees) and unamortized premiums/ (unaccreted discounts) which are not material) in loans past due as of September 30, 2020 and December 31, 2019 (in thousands): 30-59 60-89 90 or Total Total Days Days More Days Loans Recorded September 30, 2020 Past Due Past Due Past Due Past Due Current Investment Cash, Securities and Other $ 30 $ — $ 66 $ 96 $ 371,385 $ 371,481 Construction and Development — — — — 105,717 105,717 1-4 Family Residential 4,883 1,197 — 6,080 440,879 446,959 Non-Owner Occupied CRE 1,022 — — 1,022 242,542 243,564 Owner Occupied CRE — — — — 154,138 154,138 Commercial and Industrial 522 — 3,679 4,201 181,424 185,625 Total $ 6,457 $ 1,197 $ 3,745 $ 11,399 $ 1,496,085 $ 1,507,484 30-59 60-89 90 or Total Total Days Days More Days Loans Recorded December 31, 2019 Past Due Past Due Past Due Past Due Current Investment Cash, Securities and Other $ 525 $ — $ — $ 525 $ 146,176 $ 146,701 Construction and Development — — — — 28,120 28,120 1-4 Family Residential 5,688 — — 5,688 394,446 400,134 Non-Owner Occupied CRE — — — — 165,179 165,179 Owner Occupied CRE — — — — 127,968 127,968 Commercial and Industrial — 3,110 907 4,017 124,440 128,457 Total $ 6,213 $ 3,110 $ 907 $ 10,230 $ 986,329 $ 996,559 |
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, 2020 2019 Cash, Securities and Other $ 66 $ 2,803 Commercial and Industrial 3,679 4,412 Total $ 3,745 $ 7,215 |
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, 2020 2019 Accruing Commercial and Industrial $ 6,136 $ 5,055 Non-accrual Cash, Securities, and Other 64 2,803 Commercial and Industrial 3,679 4,412 Allowance for loan losses associated with TDR (1,421) (833) Net recorded investment $ 8,458 $ 11,437 |
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, 2020 December 31, 2019 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: Cash, Securities, and Other $ 2 $ 2 $ 2 $ — $ — $ — Commercial and Industrial 3,419 3,419 1,421 4,412 4,412 833 Total $ 3,421 $ 3,421 $ 1,423 $ 4,412 $ 4,412 $ 833 Impaired loans with no related valuation allowance: Cash, Securities, and Other $ 64 $ 64 $ — $ 2,803 $ 2,803 $ — Commercial and Industrial 6,396 6,396 — 5,055 5,055 — Total $ 6,460 $ 6,460 $ — $ 7,858 $ 7,858 $ — Total impaired loans: Cash, Securities, and Other $ 66 $ 66 $ 2 $ 2,803 $ 2,803 $ — Commercial and Industrial 9,815 9,815 1,421 9,467 9,467 833 Total $ 9,881 $ 9,881 $ 1,423 $ 12,270 $ 12,270 $ 833 The recorded investment in loans in the previous tables excludes accrued interest, deferred costs (fees) and unamortized premiums/ (unaccreted discounts) 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, 2020 and 2019 are included in the table below (in thousands): Three Months Ended September 30, 2020 2019 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized Impaired loans with a valuation allowance: Cash, Securities, and Other $ 1 $ — $ 185 $ — Commercial and Industrial 3,427 — 1,035 — Total $ 3,428 $ — $ 1,220 $ — Impaired loans with no related valuation allowance: Cash, Securities, and Other $ 779 $ — $ 5,062 $ — Commercial and Industrial 6,462 85 5,958 138 1-4 Family Residential — — 1,213 26 Total $ 7,241 $ 85 $ 12,233 $ 164 Total impaired loans: Cash, Securities, and Other $ 780 $ — $ 5,247 $ — Commercial and Industrial 9,889 85 6,993 138 1-4 Family Residential — — 1,213 26 Total $ 10,669 $ 85 $ 13,453 $ 164 The average balance of impaired loans and interest income recognized on impaired loans during the nine months ended September 30, 2020 and 2019 are included in the table below (in thousands): Nine Months Ended September 30, 2020 2019 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized Impaired loans with a valuation allowance: Cash, Securities, and Other $ 1 $ — $ 185 $ — Commercial and Industrial 3,462 — 1,310 — Total $ 3,463 $ — $ 1,495 $ — Impaired loans with no related valuation allowance: Cash, Securities, and Other $ 1,463 $ — S 8,088 S — Commercial and Industrial 6,088 250 5,463 326 1-4 Family Residential — — 1,213 77 Total $ 7,551 $ 250 $ 14,764 $ 403 Total impaired loans: Cash, Securities, and Other $ 1,464 $ — $ 8,273 $ — Commercial and Industrial 9,550 250 6,773 326 1-4 Family Residential — — 1,213 77 Total $ 11,014 $ 250 $ 16,259 $ 403 |
Schedule of activity in the Company's allowance for loan losses by portfolio class | 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, 2020 Beginning balance $ 2,425 $ 484 $ 2,708 $ 1,483 $ 760 $ 2,494 $ 10,354 Provision for (recovery of) loan losses 192 249 392 207 309 147 1,496 Charge-offs (6) — — — — — (6) Recoveries 1 — — — — — 1 Ending balance $ 2,612 $ 733 $ 3,100 $ 1,690 $ 1,069 $ 2,641 $ 11,845 Changes in allowance for loan losses for the nine months ended September 30, 2020 Beginning balance $ 1,058 $ 200 $ 2,850 $ 1,176 $ 911 $ 1,680 $ 7,875 Provision for (recovery of) loan losses 1,571 533 250 514 158 961 3,987 Charge-offs (30) — — — — — (30) Recoveries 13 — — — — — 13 Ending balance $ 2,612 $ 733 $ 3,100 $ 1,690 $ 1,069 $ 2,641 $ 11,845 Allowance for loan losses at September 30, 2020 allocated to loans evaluated for impairment: Individually $ 2 $ — $ — $ — $ — $ 1,421 $ 1,423 Collectively 2,610 733 3,100 1,690 1,069 1,220 10,422 Ending balance $ 2,612 $ 733 $ 3,100 $ 1,690 $ 1,069 $ 2,641 $ 11,845 Loans at September 30, 2020, evaluated for impairment: Individually $ 66 $ — $ — $ — $ — $ 9,815 $ 9,881 Collectively 371,415 105,717 446,959 243,564 154,138 175,810 1,497,603 Ending balance $ 371,481 $ 105,717 $ 446,959 $ 243,564 $ 154,138 $ 185,625 $ 1,507,484 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) loan 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) loan 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 December 31, 2019 allocated to loans evaluated for impairment: Individually $ — $ — $ — $ — $ — $ 833 $ 833 Collectively 1,058 200 2,850 1,176 911 847 7,042 Ending balance $ 1,058 $ 200 $ 2,850 $ 1,176 $ 911 $ 1,680 $ 7,875 Loans at December 31, 2019, evaluated for impairment: Individually $ 2,803 $ — $ — $ — $ — $ 9,467 $ 12,270 Collectively 143,898 28,120 400,134 165,179 127,968 118,990 984,289 Ending balance $ 146,701 $ 28,120 $ 400,134 $ 165,179 $ 127,968 $ 128,457 $ 996,559 |
Summary of recorded investment in the Company's loans by class and by credit quality indicator | Special September 30, 2020 Pass Mention Substandard Total Cash, Securities and Other $ 371,415 $ — $ 66 $ 371,481 Construction and Development 105,717 — — 105,717 1-4 Family Residential 442,076 — 4,883 446,959 Non-Owner Occupied CRE 232,010 11,554 — 243,564 Owner Occupied CRE 153,656 482 — 154,138 Commercial and Industrial 173,061 — 12,564 185,625 Total $ 1,477,935 $ 12,036 $ 17,513 $ 1,507,484 Special December 31, 2019 Pass Mention Substandard Total Cash, Securities and Other $ 143,898 $ — $ 2,803 $ 146,701 Construction and Development 28,120 — — 28,120 1-4 Family Residential 395,224 — 4,910 400,134 Non-Owner Occupied CRE 164,021 1,158 — 165,179 Owner Occupied CRE 127,968 — — 127,968 Commercial and Industrial 114,241 — 14,216 128,457 Total $ 973,472 $ 1,158 $ 21,929 $ 996,559 |
GOODWILL (Tables)
GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill. | |
Schedule of changes in carrying amount of goodwill | Changes in the carrying amount of goodwill were as follows (in thousands): Wealth Management Capital Management Consolidated Wealth Management Capital Management Consolidated September 30, 2020 December 31, 2019 Beginning balance $ 15,994 $ 3,692 $ 19,686 $ 15,994 $ 8,817 $ 24,811 Impairment — — — — (1,572) (1,572) Reclass to held for sale — — — — (3,553) (3,553) Acquisition activity 4,505 — 4,505 — — — Ending balance $ 20,499 $ 3,692 $ 24,191 $ 15,994 $ 3,692 $ 19,686 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, (in thousands). September 30, December 31, 2020 2019 Lease Right-of-Use Assets Classification Operating lease right-of-use assets Other assets $ 9,000 $ 10,308 Lease Liabilities Classification Operating lease liabilities Other liabilities $ 11,731 $ 13,480 |
Schedule Of Weighted Average Lease Term And Discount Rate [Table Text Block] | September 30, December 31, 2020 2019 Weighted-Average Remaining Lease Term Operating leases 4.41 years 4.91 years Weighted-Average Discount Rate Operating leases 3.65 % 3.71 % |
Lease Costs | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Lease Costs Operating lease cost $ 786 $ 810 $ 2,401 $ 2,382 Variable lease cost 557 395 1,516 1,168 Sublease income (33) (99) (232) (298) Lease costs, net $ 1,310 $ 1,106 $ 3,685 $ 3,252 |
Schedule of Minimum Lease Payments Due | Twelve months Ended Operating Leases September 30, 2021 $ 3,082 September 30, 2022 2,804 September 30, 2023 2,586 September 30, 2024 2,369 September 30, 2025 1,835 Thereafter 26 Total future minimum lease payments $ 12,702 Less: Imputed interest (971) Present value of net future minimum lease payments $ 11,731 |
DEPOSITS (Tables)
DEPOSITS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 2019 Money market deposit accounts $ 805,634 $ 615,575 Time deposits 177,391 134,913 Negotiable order of withdrawal accounts 101,708 91,921 Savings accounts 5,976 4,307 Total interest-bearing deposits $ 1,090,709 $ 846,716 Aggregate time deposits of $250,000 or greater $ 67,496 $ 61,596 |
BORROWINGS (Tables)
BORROWINGS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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 % 2020 2019 August 26, 2020 1.94 — 10,000 October 23, 2020 (1) — 3,000 — April 22, 2022 0.37 5,000 — May 5, 2023 0.76 10,000 — Total $ 18,000 $ 10,000 ________________________________________ (1) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 December 31, 2019 Fixed Rate Variable Rate Fixed Rate Variable Rate Unused lines of credit $ 74,726 $ 327,326 $ 32,896 $ 290,653 Standby letters of credit 1,754 17,324 1,759 24,197 Commitments to make loans to sell 419,035 — 47,354 — Commitments to make loans $ 23,496 $ 33,691 $ — $ — |
SHAREHOLDERS EQUITY (Tables)
SHAREHOLDERS EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
SHAREHOLDERS EQUITY | |
Schedule of summarizes activity for nonqualified stock options | The following summarizes activity for nonqualified stock options for the nine months ended September 30, 2020: : Weighted Weighted Average Number Average Remaining Aggregate of Exercise Contractual Intrinsic Options Price Term Value Outstanding at December 31, 2019 419,197 $ 29.02 Granted - - Exercised - - Forfeited or expired - - Outstanding at September 30, 2020 419,197 $ 29.02 2.9 (a) Options fully vested / exercisable at September 30, 2020 396,916 $ 29.20 2.7 (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 December 31, 2019 209,444 69,426 14,862 Granted 109,607 60,859 - Vested (54,112) - - Forfeited (1,888) (854) - Outstanding at September 30, 2020 263,051 129,431 14,862 |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 2019 2020 2019 Earnings per common share - Basic Numerator: Net income $ 9,630 $ 2,406 $ 19,660 $ 5,437 Dividends on preferred stock — — — — Net income available for common shareholders $ 9,630 $ 2,406 $ 19,660 $ 5,437 Denominator: Basic weighted average shares 7,911,871 7,890,794 7,888,675 7,882,221 Earnings per common share - basic $ 1.22 $ 0.30 $ 2.49 $ 0.69 Earnings per common share - Diluted Numerator: Net income $ 9,630 $ 2,406 $ 19,660 $ 5,437 Dividends on preferred stock — — — — Net income available for common shareholders $ 9,630 $ 2,406 $ 19,660 $ 5,437 Denominator: Basic weighted average shares 7,911,871 7,890,794 7,888,675 7,882,221 Diluted effect of common stock equivalents: Stock options — — — — Time Vesting Units 85,897 10,702 44,310 4,942 Financial Performance Units 7,786 123 16,176 41 Market Performance Units 13,453 13,175 13,347 13,357 Restricted Stock Awards — — — — Total diluted effect of common stock equivalents 107,136 24,000 73,833 18,340 Diluted weighted average shares 8,019,007 7,914,794 7,962,508 7,900,561 Earnings per common share - diluted $ 1.20 $ 0.30 $ 2.47 $ 0.69 |
Schedule of Antidilutive securities | Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Stock options 419,197 423,197 419,197 438,364 Time Vesting Units 82,600 130,821 87,304 163,141 Financial Performance Units 116,051 55,028 70,769 47,008 Restricted Stock Awards 21,054 61,668 41,517 83,713 Total potentially dilutive securities 638,902 670,714 618,787 732,226 |
RELATED-PARTY TRANSACTIONS (Tab
RELATED-PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
RELATED-PARTY TRANSACTIONS | |
Summary of related-party loan activity | September 30, 2020 December 31, 2019 Balance, beginning of year $ 5,675 $ 2,659 Funded loans 6,808 11,618 Payments collected (7,161) (8,602) Balance, end of year $ 5,322 $ 5,675 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
FAIR VALUE | |
Schedule of fair value assets and liabilities measured on recurring basis | The following presents assets and liabilities measured on a recurring basis at September 30, 2020 and December 31, 2019 (in thousands): Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Reported September 30, 2020 (Level 1) (Level 2) (Level 3) Balance Investment securities available-for-sale: U.S. Treasury debt $ 256 $ — $ — $ 256 Corporate bonds — 2,048 — 2,048 GNMA mortgage-backed securities - residential — 29,788 — 29,788 FNMA mortgage-backed securities - residential — 2,716 — 2,716 Corporate CMO and MBS — 5,846 — 5,846 Total securities available-for-sale $ 256 $ 40,398 $ — $ 40,654 Equity securities $ 732 $ — $ — $ 732 Guarantee asset $ — $ — $ 245 $ 245 IRLC and FSC, net $ — $ — $ 11,622 $ 11,622 Guarantee liability $ — $ — $ 153 $ 153 Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Reported December 31, 2019 (Level 1) (Level 2) (Level 3) Balance Investment securities available-for-sale: U.S. Treasury debt $ 254 $ — $ — $ 254 GNMA mortgage-backed securities - residential — 45,312 — 45,312 FNMA mortgage-backed securities - residential — 2,917 — 2,917 Corporate CMO and MBS — 10,420 — 10,420 Total securities available-for-sale $ 254 $ 58,649 $ — $ 58,903 Equity securities $ 713 $ — $ — $ 713 IRLC and FSC, net $ — $ — $ 1,184 $ 1,184 |
Summary of assets and liability for level 3 instruments measured at fair value on recurring basis | The following presents a reconciliation for level 3 instruments measured at fair value on a recurring basis (in thousands): Three Months Ended September 30, 2020 Guarantee Asset IRLC and FSC, Net Guarantee Liability Beginning balance $ 222 $ 7,482 $ 191 Gains (losses) in net income, net 39 1,066 (38) Other settlements, net (1) (16) 3,074 — Ending balance $ 245 $ 11,622 $ 153 ______________________________________ (1) Nine Months Ended September 30, 2020 Guarantee Asset IRLC and FSC, Net Guarantee Liability Beginning balance $ — $ 1,184 $ — Sales 245 — 244 Gains (losses) in net income, net 55 1,713 (91) Other settlements, net (1) (55) 8,725 — Ending balance $ 245 $ 11,622 $ 153 ______________________________________ (1) |
Summary of assets measured at fair value on nonrecurring basis | The following presents assets measured on a nonrecurring basis as of September 30, 2020 and December 31, 2019 (in thousands): Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Reported September 30, 2020 (Level 1) (Level 2) (Level 3) Balance Other real estate owned: Commercial properties $ — $ — $ 558 $ 558 Total impaired loans (1) Commercial and Industrial $ — $ — $ 1,998 $ 1,998 ______________________________________ (1) Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Reported December 31, 2019 (Level 1) (Level 2) (Level 3) Balance Other real estate owned: Commercial properties $ — $ — $ 658 $ 658 Total impaired loans: Commercial and Industrial $ — $ — $ 3,579 $ 3,579 |
Summary of assets and liabilities measured at fair value on a recurring or nonrecurring, the significant unobservable inputs | The following presents quantitative information about the significant unobservable inputs used in the fair value measurement of recurring and nonrecurring non-financial instruments categorized within Level 3 of the fair value hierarchy as of September 30, 2020 and December 31, 2019 (dollars in thousands): Quantitative Information about Level 3 Fair Value Measurements at September 30, 2020 Valuation Significant Range Fair Value Technique Unobservable Input (Weighted Average) Other real estate owned: Commercial properties 558 Sales contract Commission, cost to sell, closing costs 3% - 10% (7%) Total impaired loans (1) Commercial and Industrial 1,998 Sales comparison, Market approach - guideline transaction method Management discount for asset/property type 17% - 20% (20%) ______________________________________ (1) Quantitative Information about Level 3 Fair Value Measurements at December 31, 2019 Valuation Significant Range Fair Value Technique Unobservable Input (Weighted Average) Other real estate owned: Commercial properties $ 658 Appraisal value Discount rate 50% (50%) Commission and cost to sell 1% - 10% (7%) Total impaired loans: Commercial and Industrial $ 3,579 Sales comparison, Market approach - guideline transaction method Management discount for asset/property type 0% - 50% (23%) |
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, 2020 and December 31, 2019 (in thousands): Carrying Fair Value Measurements Using: September 30, 2020 Amount Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 250,358 $ 250,358 $ — $ — Securities available-for-sale 40,654 256 40,398 — Loans, net 1,494,231 — — 1,493,863 Mortgage loans held for sale 89,872 — 89,872 — Accrued interest receivable 6,730 — 6,730 — Equity securities 732 732 — — IRLC and FSC, net 11,622 — — 11,622 Guarantee asset 245 — — 245 Liabilities: Deposits 1,563,672 — 1,565,555 — Borrowings: FHLB Topeka Borrowings – fixed rate 18,000 — 18,070 — Federal Reserve Borrowings – fixed rate 204,075 — 204,075 — Subordinated notes – fixed-to-floating rate 14,447 — — 14,997 Accrued interest payable 347 — 347 — Guarantee liability $ 153 $ — $ — $ 153 Carrying Fair Value Measurements Using: December 31, 2019 Amount Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 78,638 $ 78,638 $ — $ — Securities available-for-sale 58,903 254 58,649 — Loans, net 990,132 — — 974,142 Mortgage loans held for sale 48,312 — 48,312 — Accrued interest receivable 3,048 — 3,048 — Equity securities 713 713 — — IRLC and FSC, net 1,184 — — 1,184 Liabilities: Deposits 1,086,784 — 1,089,261 — Borrowings: FHLB Topeka Borrowings – fixed rate 10,000 — 10,003 — Subordinated notes – fixed-to-floating rate 6,560 — — 6,004 Accrued interest payable $ 299 $ — $ 299 $ — |
ASSETS AND OTHER LIABILITIES _2
ASSETS AND OTHER LIABILITIES CLASSIFIED AS HELD FOR SALE (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
ASSETS AND OTHER LIABILITIES CLASSIFIED AS HELD FOR SALE | |
Schedule of assets and liabilities in disposal groups held for sale | Assets and other liabilities in disposal groups held for sale are as follows at the dates noted (in thousands): September 30, December 31, 2020 2019 Wealth Capital Wealth Capital Management Management Consolidated Management Management Consolidated ASSETS Goodwill $ — $ 3,000 $ 3,000 $ — $ 3,553 $ 3,553 Assets in disposal groups held for sale $ — $ 3,000 $ 3,000 $ — $ 3,553 $ 3,553 LIABILITIES Other liabilities $ — $ 141 $ 141 $ — $ 117 $ 117 Liabilities in disposal groups held for sale $ — $ 141 $ 141 $ — $ 117 $ 117 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
SEGMENT REPORTING | |
Schedule of segment data | 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 ended September 30, 2020 and 2019 (in thousands): Three Months Ended September 30, 2020 Wealth Capital Mortgage Consolidated Income Statement Total interest income $ 14,410 $ — $ — $ 14,410 Total interest expense 1,492 — — 1,492 Provision for loan losses 1,496 — — 1,496 Net interest income, after provision for loan losses 11,422 — — 11,422 Non-interest income 4,810 899 12,323 18,032 Total income 16,232 899 12,323 29,454 Depreciation and amortization expense 252 8 14 274 All other non-interest expense 13,664 627 2,067 16,358 Income before income tax $ 2,316 $ 264 $ 10,242 $ 12,822 Goodwill $ 20,499 $ 3,692 $ — $ 24,191 Assets held for sale — 3,000 — 3,000 Total assets $ 1,859,390 $ 8,358 $ 105,149 $ 1,972,897 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, after provision for loan losses 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 Nine Months Ended September 30, 2020 Wealth Capital Mortgage Consolidated Income Statement Total interest income $ 38,392 $ — $ — $ 38,392 Total interest expense 5,747 — — 5,747 Provision for loan losses 3,987 — — 3,987 Net interest income, after provision for loan losses 28,658 — — 28,658 Non-interest income 13,710 2,492 25,024 41,226 Total income 42,368 2,492 25,024 69,884 Depreciation and amortization expense 718 52 56 826 All other non-interest expense 34,619 2,772 (1) 5,706 43,097 Income (loss) before income tax $ 7,031 $ (332) $ 19,262 $ 25,961 Goodwill $ 20,499 $ 3,692 $ — $ 24,191 Assets held for sale — 3,000 — 3,000 Total assets $ 1,859,390 $ 8,358 $ 105,149 $ 1,972,897 ______________________________________ (1) Includes loss on assets held for sale of $0.6 million and $0.2 million SEC penalty. 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, after provision for loan losses 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. (1) |
REGULATORY CAPITAL MATTERS (Tab
REGULATORY CAPITAL MATTERS (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020 and December 31, 2019 (in thousands): To be Well Capitalized Under Prompt Required for Capital Corrective Action Actual Adequacy Purposes (1) Regulations September 30, 2020 Amount Ratio Amount Ratio Amount Ratio Tier 1 capital to risk-weighted assets Bank $ 127,441 10.28 % $ 74,391 6.0 % $ 99,188 8.0 % Consolidated 122,987 9.88 N/A N/A N/A N/A Common Equity Tier 1(CET1) to risk-weighted assets Bank 127,441 10.28 55,793 4.5 80,591 6.5 Consolidated 122,987 9.88 N/A N/A N/A N/A Total capital to risk-weighted assets Bank 139,647 11.26 99,188 8.0 123,985 10.0 Consolidated 149,753 12.03 N/A N/A N/A N/A Tier 1 capital to average assets Bank 127,441 7.81 65,233 4.0 81,542 5.0 Consolidated $ 122,987 7.52 % $ N/A N/A % $ N/A N/A % ______________________________________ (1) Does not include capital conservation buffer. To be Well Capitalized Under Prompt Required for Capital Corrective Action Actual Adequacy Purposes (1) Regulations December 31, 2019 Amount Ratio Amount Ratio Amount Ratio Tier 1 capital to risk-weighted assets Bank $ 99,461 10.67 % $ 55,954 6.0 % $ 74,606 8.0 % Consolidated 105,821 11.31 N/A N/A N/A N/A Common Equity Tier 1(CET1) to risk-weighted assets Bank 99,461 10.67 41,966 4.5 60,617 6.5 Consolidated 105,821 11.31 N/A N/A N/A N/A Total capital to risk-weighted assets Bank 107,509 11.53 74,606 8.0 93,257 10.0 Consolidated 120,429 12.87 N/A N/A N/A N/A Tier 1 capital to average assets Bank 99,461 8.09 49,166 4.0 61,458 5.0 Consolidated $ 105,821 8.58 % $ N/A N/A % $ N/A N/A % ______________________________________ (1) Does not include capital conservation buffer. |
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, 2020 | Dec. 31, 2019 | |
Customer concentration | Loan portfolio | ||
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Concentration risk (as a percent) | 62.80% | 71.70% |
ACQUISITIONS (Details)
ACQUISITIONS (Details) $ in Thousands | May 15, 2020USD ($)item | Sep. 30, 2020USD ($)item | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
Business Acquisition [Line Items] | |||||
Goodwill | $ 24,191 | $ 19,686 | $ 19,686 | $ 24,811 | |
Simmons Bank | |||||
Business Acquisition [Line Items] | |||||
Number of branches acquired | item | 3 | ||||
Number of branches closed | item | 2 | ||||
Loan production offices acquired | item | 1 | ||||
Loan production offices closed | item | 1 | ||||
Purchase consideration | $ 61,599 | ||||
Deposit premium | 6.06% | ||||
Goodwill | $ 4,505 | ||||
Loans, net | 119,552 | ||||
Contractual balance | 120,600 | ||||
Discount on loans | $ 1,100 | ||||
Discount on loans (in percent) | 0.90% | ||||
Allowance for Loan and Lease Losses, Loans Acquired | $ 0 |
ACQUISITIONS - Fair Value (Deta
ACQUISITIONS - Fair Value (Details) - USD ($) $ in Thousands | May 15, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Liabilities assumed | |||||
Goodwill | $ 24,191 | $ 19,686 | $ 19,686 | $ 24,811 | |
Total gross loans | 1,507,484 | 996,559 | |||
Cash, Securities and Other | |||||
Liabilities assumed | |||||
Total gross loans | 371,481 | 146,701 | |||
Construction and Development | |||||
Liabilities assumed | |||||
Total gross loans | 105,717 | 28,120 | |||
1-4 Family Residential | |||||
Liabilities assumed | |||||
Total gross loans | 446,959 | 400,134 | |||
Non-Owner Occupied CRE | |||||
Liabilities assumed | |||||
Total gross loans | 243,564 | 165,179 | |||
Owner Occupied CRE | |||||
Liabilities assumed | |||||
Total gross loans | 154,138 | 127,968 | |||
Commercial and Industrial | |||||
Liabilities assumed | |||||
Total gross loans | 185,625 | $ 128,457 | |||
Simmons Bank | |||||
Business Acquisition [Line Items] | |||||
Cash consideration | $ 61,599 | ||||
Total fair value of consideration transferred | 61,599 | ||||
Assets acquired | |||||
Cash and due from banks | 283 | ||||
Loans, net | 119,552 | ||||
Core deposit intangible | 53 | ||||
Accrued income and other assets | 382 | ||||
Total assets acquired | 120,270 | ||||
Liabilities assumed | |||||
Deposits | 63,080 | 63,100 | |||
Accrued expenses and other liabilities | 96 | ||||
Total liabilities assumed | 63,176 | ||||
Net assets acquired | 57,094 | ||||
Goodwill | 4,505 | ||||
Total gross loans | 120,642 | 124,700 | |||
Acquisition cost | $ 100 | ||||
Simmons Bank | Cash, Securities and Other | |||||
Liabilities assumed | |||||
Total gross loans | 13,457 | ||||
Simmons Bank | Construction and Development | |||||
Liabilities assumed | |||||
Total gross loans | 40,407 | ||||
Simmons Bank | 1-4 Family Residential | |||||
Liabilities assumed | |||||
Total gross loans | 7,252 | ||||
Simmons Bank | Non-Owner Occupied CRE | |||||
Liabilities assumed | |||||
Total gross loans | 545 | ||||
Simmons Bank | Owner Occupied CRE | |||||
Liabilities assumed | |||||
Total gross loans | 321 | ||||
Simmons Bank | Commercial and Industrial | |||||
Liabilities assumed | |||||
Total gross loans | $ 58,660 | ||||
Core deposit | Simmons Bank | |||||
Liabilities assumed | |||||
Estimated life | 10 years |
INVESTMENT SECURITIES - Amortiz
INVESTMENT SECURITIES - Amortized cost and fair value of securities available-for-sale (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 39,546 | $ 59,100 |
Gross Unrealized Gains | 1,181 | 212 |
Gross Unrealized Losses | (73) | (409) |
Fair Value | 40,654 | 58,903 |
U.S. Treasury debt | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 250 | 250 |
Gross Unrealized Gains | 6 | 4 |
Fair Value | 256 | 254 |
Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 2,000 | |
Gross Unrealized Gains | 48 | |
Fair Value | 2,048 | |
Association ("GNMA") mortgage-backed securities - residential | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 28,844 | 45,490 |
Gross Unrealized Gains | 944 | 157 |
Gross Unrealized Losses | (335) | |
Fair Value | 29,788 | 45,312 |
Federal National Mortgage Association ("FNMA") mortgage-backed securities - residential | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 2,626 | 2,935 |
Gross Unrealized Gains | 90 | 11 |
Gross Unrealized Losses | (29) | |
Fair Value | 2,716 | 2,917 |
Corporate collateralized mortgage obligations ("CMO") and mortgage-backed securities ("MBS") | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 5,826 | 10,425 |
Gross Unrealized Gains | 93 | 40 |
Gross Unrealized Losses | (73) | (45) |
Fair Value | 5,846 | 10,420 |
Small Business Investment Company | ||
Debt Securities, Available-for-sale [Line Items] | ||
Payments to Acquire Investments | 500 | $ 400 |
Contractual Obligation | 900 | |
Other Assets [Member] | Small Business Investment Company | ||
Debt Securities, Available-for-sale [Line Items] | ||
Balance with SBIC included in other assets | $ 2,100 |
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, 2020USD ($)security | Dec. 31, 2019USD ($)security | |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 39,546 | $ 59,100 |
Fair Value | 40,654 | 58,903 |
Debt available for sale securities pledged as collateral | $ 4,200 | $ 5,500 |
Threshold Percentage Of Shareholders Equity Amount Held As Securities By One Issuer | 10.00% | 10.00% |
Unrealized loss | $ 73 | $ 409 |
Available for sale securities, excluding SBIC | ||
Debt Securities, Available-for-sale [Line Items] | ||
Due within one year through five years amortized cost | 250 | |
Due after ten years, amortized cost | 2,000 | |
Due within one year through five years fair value | 256 | |
Due after ten years, fair value | 2,048 | |
Mortgage-related securities, amortized cost | 37,296 | |
Mortgage-related securities, fair value | 38,350 | |
Amortized Cost | 39,546 | |
Fair Value | $ 40,654 | |
Number of securities in unrealized loss position | security | 7 | 26 |
Number of securities in continuous unrealized loss position for more than twelve months | security | 2 |
INVESTMENT SECURITIES - Securit
INVESTMENT SECURITIES - Securities with unrealized losses (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2020 | Dec. 31, 2019 | |
Debt Securities, Available-for-sale [Line Items] | |||
Less than 12 months, Fair Value | $ 1,553 | $ 35,983 | |
Less than 12 months, Unrealized Losses | (54) | (238) | |
12 months or Longer, Fair Value | 590 | 6,797 | |
12 months or Longer, Unrealized Losses | (19) | (171) | |
Total Fair Value | 2,143 | 42,780 | |
Total Unrealized Losses | (73) | (409) | |
Sales | $ 7,506 | ||
Association ("GNMA") mortgage-backed securities - residential | |||
Debt Securities, Available-for-sale [Line Items] | |||
Less than 12 months, Fair Value | 28,203 | ||
Less than 12 months, Unrealized Losses | (193) | ||
12 months or Longer, Fair Value | 4,450 | ||
12 months or Longer, Unrealized Losses | (142) | ||
Total Fair Value | 32,653 | ||
Total Unrealized Losses | (335) | ||
Federal National Mortgage Association ("FNMA") mortgage-backed securities - residential | |||
Debt Securities, Available-for-sale [Line Items] | |||
12 months or Longer, Fair Value | 2,347 | ||
12 months or Longer, Unrealized Losses | (29) | ||
Total Fair Value | 2,347 | ||
Total Unrealized Losses | (29) | ||
Securities issued by U.S. government sponsored entities and agencies | |||
Debt Securities, Available-for-sale [Line Items] | |||
Sales | 7,500 | ||
Realized gains | $ 100 | ||
Corporate collateralized mortgage obligations ("CMO") and mortgage-backed securities ("MBS") | |||
Debt Securities, Available-for-sale [Line Items] | |||
Less than 12 months, Fair Value | 1,553 | 7,780 | |
Less than 12 months, Unrealized Losses | (54) | (45) | |
12 months or Longer, Fair Value | 590 | ||
12 months or Longer, Unrealized Losses | (19) | ||
Total Fair Value | 2,143 | 7,780 | |
Total Unrealized Losses | $ (73) | $ (45) |
LOANS AND THE ALLOWANCE FOR L_3
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Summary of loans (Details) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020USD ($)loan | May 15, 2020USD ($) | Dec. 31, 2019USD ($) | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total gross loans | $ 1,507,484 | $ 996,559 | |
Deferred costs, net | (1,408) | 1,448 | |
Allowance for loan losses | (11,845) | (7,875) | |
Net loans | 1,494,231 | 990,132 | |
Loans, net | 1,494,231 | 990,132 | |
Simmons Bank | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total gross loans | 124,700 | $ 120,642 | |
Cash, Securities and Other | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total gross loans | 371,481 | 146,701 | |
Cash, Securities and Other | Simmons Bank | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total gross loans | 13,457 | ||
Construction and Development | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total gross loans | 105,717 | 28,120 | |
Construction and Development | Simmons Bank | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total gross loans | 40,407 | ||
1-4 Family Residential | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total gross loans | 446,959 | 400,134 | |
1-4 Family Residential | Simmons Bank | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total gross loans | 7,252 | ||
Non-Owner Occupied CRE | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total gross loans | 243,564 | 165,179 | |
Non-Owner Occupied CRE | Simmons Bank | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total gross loans | 545 | ||
Owner Occupied CRE | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total gross loans | 154,138 | 127,968 | |
Owner Occupied CRE | Simmons Bank | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total gross loans | 321 | ||
Commercial and Industrial | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total gross loans | 185,625 | $ 128,457 | |
Commercial and Industrial | Simmons Bank | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total gross loans | $ 58,660 | ||
Paycheck Protection Program Loan [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total gross loans | 206,100 | ||
Paycheck Protection Program Loan [Member] | Cash, Securities and Other | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total gross loans | $ 206,100 | ||
Percent of Loans on Total Loan Segment | 55.50% | ||
COVID-19 [Member] | MSLP loan | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Net loans | $ 2,400 | ||
Loans, net | $ 2,400 | ||
Number of loans | loan | 1 |
LOANS AND THE ALLOWANCE FOR L_4
LOANS AND THE ALLOWANCE FOR LOAN LOSSES -Loan Modifications (Details) | 9 Months Ended | |
Sep. 30, 2020USD ($)loan | Dec. 31, 2019USD ($) | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Outstanding Balance of Modified Loans | $ 66,738,000 | |
Total gross loans | $ 1,507,484,000 | $ 996,559,000 |
# of Loans Modified | loan | 44 | |
% of Total Loan Balance Modified | 4.43% | |
Percentage of probability | 50.00% | |
Percentage of reduction in collateral position | 20.00% | |
Portion of loan portfolio exposed to high risk industries impacted by Covid-19 | $ 3 | |
COVID-19 [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Delinquent over period | 30 days | |
Payments Period | 2 years | |
Loans modified for temporary payment | 180 days | |
Cash, Securities and Other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Outstanding Balance of Modified Loans | $ 1,496,000 | |
Total gross loans | $ 371,481,000 | 146,701,000 |
# of Loans Modified | loan | 1 | |
% of Total Loan Balance Modified | 0.40% | |
Construction and Development | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total gross loans | $ 105,717,000 | 28,120,000 |
1-4 Family Residential | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Outstanding Balance of Modified Loans | 4,441,000 | |
Total gross loans | $ 446,959,000 | 400,134,000 |
# of Loans Modified | loan | 6 | |
% of Total Loan Balance Modified | 0.99% | |
Non-Owner Occupied CRE | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Outstanding Balance of Modified Loans | $ 38,229,000 | |
Total gross loans | $ 243,564,000 | 165,179,000 |
# of Loans Modified | loan | 22 | |
% of Total Loan Balance Modified | 15.70% | |
Owner Occupied CRE | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Outstanding Balance of Modified Loans | $ 17,524,000 | |
Total gross loans | $ 154,138,000 | 127,968,000 |
# of Loans Modified | loan | 10 | |
% of Total Loan Balance Modified | 11.37% | |
Commercial and Industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Outstanding Balance of Modified Loans | $ 5,048,000 | |
Total gross loans | $ 185,625,000 | $ 128,457,000 |
# of Loans Modified | loan | 5 | |
% of Total Loan Balance Modified | 2.72% |
LOANS AND THE ALLOWANCE FOR L_5
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Aging analysis of recorded investments by class (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | $ 11,399 | $ 10,230 |
Total current | 1,496,085 | 986,329 |
Total Recorded Investment | 1,507,484 | 996,559 |
90 days past due and accruing interest | 0 | 0 |
30-59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 6,457 | 6,213 |
60-89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 1,197 | 3,110 |
90 or More Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 3,745 | 907 |
Cash, Securities and Other | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 96 | 525 |
Total current | 371,385 | 146,176 |
Total Recorded Investment | 371,481 | 146,701 |
Cash, Securities and Other | 30-59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 30 | 525 |
Cash, Securities and Other | 90 or More Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 66 | |
Construction and Development | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total current | 105,717 | 28,120 |
Total Recorded Investment | 105,717 | 28,120 |
1-4 Family Residential | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 6,080 | 5,688 |
Total current | 440,879 | 394,446 |
Total Recorded Investment | 446,959 | 400,134 |
1-4 Family Residential | 30-59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 4,883 | 5,688 |
1-4 Family Residential | 60-89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 1,197 | |
Non-Owner Occupied CRE | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 1,022 | |
Total current | 242,542 | 165,179 |
Total Recorded Investment | 243,564 | 165,179 |
Non-Owner Occupied CRE | 30-59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 1,022 | |
Owner Occupied CRE | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total current | 154,138 | 127,968 |
Total Recorded Investment | 154,138 | 127,968 |
Commercial and Industrial | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 4,201 | 4,017 |
Total current | 181,424 | 124,440 |
Total Recorded Investment | 185,625 | 128,457 |
Commercial and Industrial | 30-59 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 522 | |
Commercial and Industrial | 60-89 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | 3,110 | |
Commercial and Industrial | 90 or More Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total past due | $ 3,679 | $ 907 |
LOANS AND THE ALLOWANCE FOR L_6
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Recorded investment in non-accrual loans by class (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-accrual loans | $ 3,745 | $ 7,215 |
Recorded investments | 3,700 | 7,200 |
Cash, Securities and Other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-accrual loans | 66 | 2,803 |
Commercial and Industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Non-accrual loans | $ 3,679 | $ 4,412 |
LOANS AND THE ALLOWANCE FOR L_7
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Summary of unpaid principal balance of loans classified as TDRs (Details) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020USD ($)loan | Dec. 31, 2019USD ($)loan | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Recorded Investment | $ 9,881 | $ 12,270 |
Allowance for loan associated with TDR | (1,423) | (833) |
Net recorded investment | 8,458 | 11,437 |
Additional funds to loans classified as TDRs | 1,300 | $ 200 |
Cash collateral received | $ 1,500 | |
Number of contracts modified | loan | 1 | 2 |
Cash, Securities and Other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Recorded Investment | $ 66 | $ 2,803 |
Allowance for loan associated with TDR | (2) | |
Commercial and Industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Recorded Investment | 9,815 | 9,467 |
Allowance for loan associated with TDR | (1,421) | (833) |
Accrual Loans | Commercial and Industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Recorded Investment | 6,136 | 5,055 |
Loans on nonaccrual status | Cash, Securities and Other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Recorded Investment | 64 | 2,803 |
Loans on nonaccrual status | Commercial and Industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total Recorded Investment | $ 3,679 | $ 4,412 |
LOANS AND THE ALLOWANCE FOR L_8
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Recorded investment in impaired loans (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Total Recorded Investment With Allowance | $ 3,421 | $ 3,421 | $ 4,412 | ||
Total Recorded Investment With No Allowance | 6,460 | 6,460 | 7,858 | ||
Total Recorded Investment | 9,881 | 9,881 | 12,270 | ||
Unpaid Contractual Principal Balance with a valuation Allowance | 3,421 | 3,421 | 4,412 | ||
Unpaid Contractual Principal Balance with no related valuation Allowance | 6,460 | 6,460 | 7,858 | ||
Unpaid Contractual Principal Balance | 9,881 | 9,881 | 12,270 | ||
Allowance for Loan Losses | 1,423 | 1,423 | 833 | ||
Average Recorded Investment with Allowance | 3,428 | $ 1,220 | 3,463 | $ 1,495 | |
Average Recorded Investment with No Allowance | 7,241 | 12,233 | 7,551 | 14,764 | |
Average Recorded Investment | 10,669 | 13,453 | 11,014 | 16,259 | |
Interest Income Recognized with No Allowance | 85 | 164 | 250 | 403 | |
Interest Income Recognized | 85 | 164 | 250 | 403 | |
Commercial and Industrial | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Total Recorded Investment With Allowance | 3,419 | 3,419 | 4,412 | ||
Total Recorded Investment With No Allowance | 6,396 | 6,396 | 5,055 | ||
Total Recorded Investment | 9,815 | 9,815 | 9,467 | ||
Unpaid Contractual Principal Balance with a valuation Allowance | 3,419 | 3,419 | 4,412 | ||
Unpaid Contractual Principal Balance with no related valuation Allowance | 6,396 | 6,396 | 5,055 | ||
Unpaid Contractual Principal Balance | 9,815 | 9,815 | 9,467 | ||
Allowance for Loan Losses | 1,421 | 1,421 | 833 | ||
Average Recorded Investment with Allowance | 3,427 | 1,035 | 3,462 | 1,310 | |
Average Recorded Investment with No Allowance | 6,462 | 5,958 | 6,088 | 5,463 | |
Average Recorded Investment | 9,889 | 6,993 | 9,550 | 6,773 | |
Interest Income Recognized with No Allowance | 85 | 138 | 250 | 326 | |
Interest Income Recognized | 85 | 138 | 250 | 326 | |
Cash, Securities and Other | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Total Recorded Investment With Allowance | 2 | 2 | |||
Total Recorded Investment With No Allowance | 64 | 64 | 2,803 | ||
Total Recorded Investment | 66 | 66 | 2,803 | ||
Unpaid Contractual Principal Balance with a valuation Allowance | 2 | 2 | |||
Unpaid Contractual Principal Balance with no related valuation Allowance | 64 | 64 | 2,803 | ||
Unpaid Contractual Principal Balance | 66 | 66 | $ 2,803 | ||
Allowance for Loan Losses | 2 | 2 | |||
Average Recorded Investment with Allowance | 1 | 185 | 1 | 185 | |
Average Recorded Investment with No Allowance | 779 | 5,062 | 1,463 | 8,088 | |
Average Recorded Investment | $ 780 | 5,247 | $ 1,464 | 8,273 | |
1-4 Family Residential | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
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_9
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Allowance for loan losses by portfolio (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | $ 10,354 | $ 7,575 | $ 7,875 | $ 7,451 | $ 7,451 |
Provision for (recovery of) credit losses | 1,496 | 100 | 3,987 | 216 | |
Charge-offs | (6) | (30) | |||
Recoveries | 1 | 13 | 8 | ||
Ending balance | 11,845 | 7,675 | 11,845 | 7,675 | 7,875 |
Individually evaluated | 1,423 | 1,423 | 833 | ||
Collectively evaluated | 10,422 | 10,422 | 7,042 | ||
Loans individually evaluated | 9,881 | 9,881 | 12,270 | ||
Loans collectively evaluated | 1,497,603 | 1,497,603 | 984,289 | ||
Total Recorded Investment | 1,507,484 | 1,507,484 | 996,559 | ||
Provision for loan losses | 4,000 | 200 | |||
Cash, Securities and Other | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | 2,425 | 1,049 | 1,058 | 764 | 764 |
Provision for (recovery of) credit losses | 192 | 258 | 1,571 | 535 | |
Charge-offs | (6) | (30) | |||
Recoveries | 1 | 13 | 8 | ||
Ending balance | 2,612 | 1,307 | 2,612 | 1,307 | 1,058 |
Individually evaluated | 2 | 2 | |||
Collectively evaluated | 2,610 | 2,610 | 1,058 | ||
Loans individually evaluated | 66 | 66 | 2,803 | ||
Loans collectively evaluated | 371,415 | 371,415 | 143,898 | ||
Total Recorded Investment | 371,481 | 371,481 | 146,701 | ||
Construction and Development | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | 484 | 290 | 200 | 232 | 232 |
Provision for (recovery of) credit losses | 249 | 18 | 533 | 76 | |
Ending balance | 733 | 308 | 733 | 308 | 200 |
Collectively evaluated | 733 | 733 | 200 | ||
Loans collectively evaluated | 105,717 | 105,717 | 28,120 | ||
Total Recorded Investment | 105,717 | 105,717 | 28,120 | ||
1-4 Family Residential | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | 2,708 | 2,650 | 2,850 | 2,552 | 2,552 |
Provision for (recovery of) credit losses | 392 | 27 | 250 | 125 | |
Ending balance | 3,100 | 2,677 | 3,100 | 2,677 | 2,850 |
Collectively evaluated | 3,100 | 3,100 | 2,850 | ||
Loans collectively evaluated | 446,959 | 446,959 | 400,134 | ||
Total Recorded Investment | 446,959 | 446,959 | 400,134 | ||
Non-Owner Occupied CRE | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | 1,483 | 1,086 | 1,176 | 1,264 | 1,264 |
Provision for (recovery of) credit losses | 207 | (68) | 514 | (246) | |
Ending balance | 1,690 | 1,018 | 1,690 | 1,018 | 1,176 |
Collectively evaluated | 1,690 | 1,690 | 1,176 | ||
Loans collectively evaluated | 243,564 | 243,564 | 165,179 | ||
Total Recorded Investment | 243,564 | 243,564 | 165,179 | ||
Owner Occupied CRE | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | 760 | 800 | 911 | 789 | 789 |
Provision for (recovery of) credit losses | 309 | 76 | 158 | 87 | |
Ending balance | 1,069 | 876 | 1,069 | 876 | 911 |
Collectively evaluated | 1,069 | 1,069 | 911 | ||
Loans collectively evaluated | 154,138 | 154,138 | 127,968 | ||
Total Recorded Investment | 154,138 | 154,138 | 127,968 | ||
Commercial and Industrial | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | 2,494 | 1,700 | 1,680 | 1,850 | 1,850 |
Provision for (recovery of) credit losses | 147 | (211) | 961 | (361) | |
Ending balance | 2,641 | $ 1,489 | 2,641 | $ 1,489 | 1,680 |
Individually evaluated | 1,421 | 1,421 | 833 | ||
Collectively evaluated | 1,220 | 1,220 | 847 | ||
Loans individually evaluated | 9,815 | 9,815 | 9,467 | ||
Loans collectively evaluated | 175,810 | 175,810 | 118,990 | ||
Total Recorded Investment | $ 185,625 | $ 185,625 | $ 128,457 |
LOANS AND THE ALLOWANCE FOR _10
LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Recorded investment in company's loans (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | $ 1,507,484 | $ 996,559 |
Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 1,477,935 | 973,472 |
Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 12,036 | 1,158 |
Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 17,513 | 21,929 |
Doubtful | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 0 | 0 |
Cash, Securities and Other | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 371,481 | 146,701 |
Cash, Securities and Other | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 371,415 | 143,898 |
Cash, Securities and Other | Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 66 | 2,803 |
Construction and Development | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 105,717 | 28,120 |
Construction and Development | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 105,717 | 28,120 |
1-4 Family Residential | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 446,959 | 400,134 |
1-4 Family Residential | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 442,076 | 395,224 |
1-4 Family Residential | Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 4,883 | 4,910 |
Non-Owner Occupied CRE | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 243,564 | 165,179 |
Non-Owner Occupied CRE | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 232,010 | 164,021 |
Non-Owner Occupied CRE | Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 11,554 | 1,158 |
Owner Occupied CRE | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 154,138 | 127,968 |
Owner Occupied CRE | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 153,656 | 127,968 |
Owner Occupied CRE | Special Mention | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 482 | |
Commercial and Industrial | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 185,625 | 128,457 |
Commercial and Industrial | Pass | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | 173,061 | 114,241 |
Commercial and Industrial | Substandard | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total gross loans | $ 12,564 | $ 14,216 |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Goodwill [Roll Forward] | ||||
Beginning balance | $ 19,686 | $ 24,811 | $ 24,811 | |
Impairment | (1,572) | (1,572) | ||
Reclass to held or sale | (3,553) | |||
Acquisition activity | 4,505 | |||
Ending balance | $ 24,191 | 24,191 | 19,686 | 19,686 |
Change in goodwill | 4,500 | |||
Wealth Management | ||||
Goodwill [Roll Forward] | ||||
Beginning balance | 15,994 | 15,994 | 15,994 | |
Acquisition activity | 4,505 | |||
Ending balance | 20,499 | 20,499 | 15,994 | 15,994 |
Capital Management | ||||
Goodwill [Roll Forward] | ||||
Beginning balance | 3,692 | 8,817 | 8,817 | |
Impairment | (1,572) | |||
Reclass to held or sale | (3,553) | |||
Ending balance | $ 3,692 | $ 3,692 | $ 3,692 | $ 3,692 |
LEASES - Leases Balance Sheets
LEASES - Leases Balance Sheets Location (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Jan. 01, 2019 |
Operating lease right-of-use asset | $ 9,000 | $ 10,308 | |
Operating lease liability | $ 11,731 | $ 13,480 | |
Weighted-Average Remaining Lease Term - Operating leases | 4 years 4 months 28 days | 4 years 10 months 28 days | |
Weighted-Average Discount Rate - Operating leases | 3.65% | 3.71% | |
ASU 2016-02 | |||
Operating lease right-of-use asset | $ 12,900 | ||
Operating lease liability | $ 16,600 |
LEASES - Leases Costs (Details)
LEASES - Leases Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
LEASES | ||||
Operating lease cost | $ 786 | $ 810 | $ 2,401 | $ 2,382 |
Variable lease cost | 557 | 395 | 1,516 | 1,168 |
Sublease income | (33) | (99) | (232) | (298) |
Lease costs, net | $ 1,310 | $ 1,106 | $ 3,685 | $ 3,252 |
LEASES - Lease Maturity (Detail
LEASES - Lease Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
LEASES | ||
September 30, 2021 | $ 3,082 | |
September 30, 2022 | 2,804 | |
September 30, 2023 | 2,586 | |
September 30, 2024 | 2,369 | |
September 30, 2025 | 1,835 | |
Thereafter | 26 | |
Total future minimum lease payments | 12,702 | |
Less: Imputed interest | (971) | |
Present value of net future minimum lease payments | $ 11,731 | $ 13,480 |
DEPOSITS (Details)
DEPOSITS (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | May 15, 2020 | Dec. 31, 2019 |
Time Deposits [Line Items] | |||
Money market deposit accounts | $ 805,634 | $ 615,575 | |
Time deposits | 177,391 | 134,913 | |
Negotiable order of withdrawal accounts | 101,708 | 91,921 | |
Savings accounts | 5,976 | 4,307 | |
Total interest bearing deposits | 1,090,709 | 846,716 | |
Aggregate time deposits of $250,000 or greater | 67,496 | $ 61,596 | |
Simmons Bank | |||
Time Deposits [Line Items] | |||
Deposits acquired via acquisitions | $ 63,100 | $ 63,080 |
BORROWINGS (Details)
BORROWINGS (Details) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020USD ($) | Sep. 30, 2019 | Dec. 31, 2019USD ($) | Mar. 17, 2020USD ($) | |
BORROWINGS | ||||
Borrowings from FHLB | $ 18,000,000 | $ 10,000,000 | ||
Number of unsecured federal funds lines of credit | 3 | 3 | ||
Total gross loans | $ 1,507,484,000 | $ 996,559,000 | ||
Federal Funds Lines of Credit One | ||||
BORROWINGS | ||||
Maximum borrowing capacity | 10,000,000 | 10,000,000 | ||
Amount outstanding | 0 | 0 | ||
Federal Funds Lines of Credit Two | ||||
BORROWINGS | ||||
Maximum borrowing capacity | 19,000,000 | 19,000,000 | ||
Amount outstanding | 0 | 0 | ||
Federal Funds Line of Credit Three | ||||
BORROWINGS | ||||
Maximum borrowing capacity | 25,000,000 | 25,000,000 | ||
Amount outstanding | 0 | 0 | ||
Subordinated Notes 2016 [Member] | ||||
BORROWINGS | ||||
Face amount | $ 6,600,000 | 6,600,000 | ||
interest rate (as a percent) | 7.25% | 7.25% | ||
Subordinated Notes 2016 [Member] | 90 Day London Interbank Offered Rate [Member] | ||||
BORROWINGS | ||||
Basis spread (as a percent) | 587.00% | |||
Subordinated Notes 2020 | ||||
BORROWINGS | ||||
Face amount | $ 8,000,000 | |||
interest rate (as a percent) | 5.125% | |||
Issuance costs | $ 100,000 | |||
Net balance | $ 7,900,000 | |||
Subordinated Notes 2020 | 90 Day London Interbank Offered Rate [Member] | ||||
BORROWINGS | ||||
Basis spread (as a percent) | 450.00% | |||
Credit Note [Member] | ||||
BORROWINGS | ||||
Amount outstanding | $ 0 | 0 | ||
Face amount | $ 5,000,000 | 5,000,000 | ||
interest rate (as a percent) | 2.50% | |||
Paycheck Protection Program Loan [Member] | ||||
BORROWINGS | ||||
Total gross loans | $ 204,100,000 | |||
FHLB Topeka | ||||
BORROWINGS | ||||
Amount of collateral pledged | 612,100,000 | 515,500,000 | ||
Available balance | $ 401,900,000 | |||
August 26, 2020 | ||||
BORROWINGS | ||||
Interest rate | 1.94% | |||
Borrowings from FHLB | $ 10,000,000 | |||
October 23, 2020 | ||||
BORROWINGS | ||||
Borrowings from FHLB | $ 3,000,000 | |||
April 22, 2022 | ||||
BORROWINGS | ||||
Interest rate | 0.37% | |||
Borrowings from FHLB | $ 5,000,000 | |||
May 5, 2023 | ||||
BORROWINGS | ||||
Interest rate | 0.76% | |||
Borrowings from FHLB | $ 10,000,000 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | Jul. 16, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
First Western Capital Management Company [Member] | |||
COMMITMENTS AND CONTINGENCIES | |||
Legally accrued | $ 200 | ||
Unused lines of credit-Fixed | |||
COMMITMENTS AND CONTINGENCIES | |||
Other commitment | $ 74,726 | $ 32,896 | |
Standby letters of credit-Fixed | |||
COMMITMENTS AND CONTINGENCIES | |||
Other commitment | 1,754 | 1,759 | |
Commitments to make loans to sell-Fixed | |||
COMMITMENTS AND CONTINGENCIES | |||
Other commitment | 419,035 | 47,354 | |
Commitments to make loans-Fixed | |||
COMMITMENTS AND CONTINGENCIES | |||
Other commitment | 23,496 | ||
Unused lines of credit-Variable | |||
COMMITMENTS AND CONTINGENCIES | |||
Other commitment | 327,326 | 290,653 | |
Standby letters of credit-Variable | |||
COMMITMENTS AND CONTINGENCIES | |||
Other commitment | 17,324 | $ 24,197 | |
Commitments to make loans-Variable | |||
COMMITMENTS AND CONTINGENCIES | |||
Other commitment | $ 33,691 |
SHAREHOLDERS EQUITY - Common St
SHAREHOLDERS EQUITY - Common Stock (Details) - $ / shares | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | Jun. 14, 2019 | |
Class of Stock [Line Items] | ||||
Common stock par value | $ 0 | $ 0 | $ 0 | |
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 | |||
Number of shares repurchased | 0 | 22,679 | 43,698 | |
Shares repurchased average price per share | $ 16.50 | $ 16.51 |
SHAREHOLDERS EQUITY - Stock bas
SHAREHOLDERS EQUITY - Stock based compensation - Restricted Stock Awards (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Unrecognized compensation expense | $ 0.6 | $ 0.6 | ||||
Restricted Stock Awards | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares issued | 105,264 | |||||
Value of shares issued | $ 3 | |||||
Weighted-average grant date fair value (in dollars per share) | $ 28.50 | $ 28.50 | ||||
Recognized compensation expense | $ 0.1 | $ 0.5 | $ 0.3 | $ 0.7 | ||
Unrecognized compensation expense | 0.6 | $ 0.6 | ||||
Unrecognized compensation expense recognition period (in years) | 1 year 6 months | |||||
Employee service period | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares issued | 52,632 | |||||
Value of shares issued | $ 1.5 | |||||
Vesting period (in years) | 5 years | |||||
Performance of mortgage division | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares issued | 52,632 | |||||
Value of shares issued | $ 1.5 | |||||
Recognized compensation expense | $ 0 | $ 0.1 | $ 0.6 | |||
Shares non-vested | 14,114 | 14,114 | 38,518 | |||
Number of stock awards vested | 30,088 | |||||
Financial Performance Units Granted From May 1, 2019 Through April 30, 2020 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Recognized compensation expense | $ 0.2 | 0.1 | ||||
Unrecognized compensation expense recognition period (in years) | 3 years 3 months 18 days | |||||
Financial Performance Units Granted From May 1, 2019 Through April 30, 2020 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Recognized compensation expense | $ 0.1 | 0.1 | ||||
Stock options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Recognized compensation expense | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.2 |
SHAREHOLDERS EQUITY - Stock b_2
SHAREHOLDERS EQUITY - Stock based compensation - Stock Options (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.2 |
Unrecognized stock-based compensation expense | $ 0.1 | $ 0.1 | ||
Stock options | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense recognition period (in years) | 1 year | |||
Plan 2016 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares available for issuance | 504,397 | 504,397 | ||
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 | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding at beginning of year (in shares) | 419,197 | ||
Granted (in shares) | 0 | 0 | |
Outstanding at end of period (in shares) | 419,197 | 419,197 | |
Options fully vested / exercisable at end of period (in shares) | 396,916 | 394,020 | |
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 | $ 29.02 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | 29.02 | $ 29.02 | |
Options fully vested / exercisable at December 31, 2019 | $ 29.20 | ||
Weighted Average Remaining Contractual Term | |||
Outstanding at end of year | 2 years 10 months 24 days | ||
Options fully vested / exercisable at December 31, 2019 | 2 years 8 months 12 days | ||
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 Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||||
Granted (in shares) | 62,569 | ||||
Stock issued (in shares) | 15,446 | 15,446 | |||
Stock surrendered (in shares) | 6,196 | 19,852 | 7,835 | ||
Stock surrendered to cover employee withholding taxes | $ 100 | ||||
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 | 209,444 | ||||
Granted (in shares) | 109,607 | ||||
Vested (in shares) | (54,112) | ||||
Forfeited (in shares) | (1,888) | ||||
Outstanding at end of year | 263,051 | 263,051 | 209,444 | ||
Stock issued (in shares) | 12,725 | 34,260 | |||
Stock surrendered to cover employee withholding taxes | $ 100 | $ 300 | |||
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 | 69,426 | ||||
Granted (in shares) | 60,859 | ||||
Forfeited (in shares) | (854) | ||||
Outstanding at end of year | 129,431 | 129,431 | 69,426 | ||
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 | 14,862 | ||||
Outstanding at end of year | 14,862 | 14,862 | 14,862 |
SHAREHOLDERS EQUITY - Stock b_5
SHAREHOLDERS EQUITY - Stock based compensation - Time Vesting Units (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Granted (in shares) | 62,569 | ||||
Unrecognized compensation expense | $ 0.6 | $ 0.6 | |||
Time Vesting Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Service period (in years) | 5 years | ||||
Weighted average grant date fair value | $ 12.84 | ||||
Granted (in shares) | 109,607 | ||||
Stock-based compensation expense | 0.4 | $ 0.3 | $ 1 | $ 0.7 | |
Unrecognized compensation expense | $ 3.8 | $ 3.8 | |||
Unrecognized compensation expense recognition period (in years) | 2 years | ||||
Time Vesting Units | Anniversary of grant date | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting Percentage | 20.00% | ||||
Granted (in shares) | 109,607 |
SHAREHOLDERS EQUITY - Stock b_6
SHAREHOLDERS EQUITY - Stock based compensation - Financial Performance Units (Details) - USD ($) $ in Millions | May 01, 2020 | May 01, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Dec. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in shares) | 62,569 | |||||
Unrecognized compensation expense | $ 0.6 | $ 0.6 | ||||
Financial Performance Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Service period (in years) | 5 years | |||||
Granted (in shares) | 60,859 | |||||
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 | 100.00% | |||||
Maximum number of shares can be issued | 10,000 | 10,000 | ||||
Unrecognized compensation expense | $ 0.1 | $ 0.1 | ||||
Unrecognized compensation expense recognition period (in years) | 1 year 3 months 18 days | |||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 1 year 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) | 1,866 | |||||
Maximum percentage of shares can be issued | 150.00% | |||||
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% | |||||
Financial Performance Units Granted From May 1, 2019 Through April 30, 2020 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Maximum number of shares can be issued | 86,200 | 86,200 | ||||
Stock-based compensation expense | $ 0.1 | $ 0.1 | ||||
Financial Performance Units Grante From May 1, 2020 Through June 30, 2020 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in shares) | 699 | |||||
Financial Performance Units Granted from May 1, 2020 through June 30, 2020 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Service period (in years) | 5 years | |||||
Granted (in shares) | 58,993 | |||||
Maximum percentage of shares can be issued | 150.00% | |||||
Maximum number of shares can be issued | 87,900 | 87,900 | ||||
Stock-based compensation expense | $ 0.1 | $ 0.1 | ||||
Unrecognized compensation expense | $ 0.7 | $ 0.7 | ||||
Unrecognized compensation expense recognition period (in years) | 4 years 3 months 18 days | |||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 4 years 3 months 18 days | |||||
Financial Performance Units Granted from May 1, 2020 through June 30, 2020 | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Financial performance threshold percentage | 150.00% | |||||
Financial Performance Units Granted from May 1, 2020 through June 30, 2020 | Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Financial performance threshold percentage | 0.00% | |||||
Financial Performance Units Granted In 2020 [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Service period (in years) | 2 years |
SHAREHOLDERS EQUITY - Stock b_7
SHAREHOLDERS EQUITY - Stock based compensation - Market Performance Units (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense | $ 0.6 |
Market Performance Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation expense | $ 0.4 |
Unrecognized compensation expense recognition period (in years) | 1 year 9 months 18 days |
EARNINGS PER COMMON SHARE (Deta
EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Numerator: | ||||
Net income | $ 9,630 | $ 2,406 | $ 19,660 | $ 5,437 |
Net income available for common shareholders | $ 9,630 | $ 2,406 | $ 19,660 | $ 5,437 |
Denominator: | ||||
Basic weighted average shares | 7,911,871 | 7,890,794 | 7,888,675 | 7,882,221 |
Earnings per common share - basic | $ 1.22 | $ 0.30 | $ 2.49 | $ 0.69 |
Numerator: | ||||
Net income | $ 9,630 | $ 2,406 | $ 19,660 | $ 5,437 |
Net income available for common shareholders | $ 9,630 | $ 2,406 | $ 19,660 | $ 5,437 |
Denominator: | ||||
Basic weighted average shares | 7,911,871 | 7,890,794 | 7,888,675 | 7,882,221 |
Diluted effect of common stock equivalents: | ||||
Total diluted effect of common stock equivalents | 107,136 | 24,000 | 73,833 | 18,340 |
Diluted weighted average shares | 8,019,007 | 7,914,794 | 7,962,508 | 7,900,561 |
Earnings per common share - diluted | $ 1.20 | $ 0.30 | $ 2.47 | $ 0.69 |
Time Vesting Units | ||||
Diluted effect of common stock equivalents: | ||||
Diluted effect of common stock equivalents | 85,897 | 10,702 | 44,310 | 4,942 |
Financial Performance Units | ||||
Diluted effect of common stock equivalents: | ||||
Diluted effect of common stock equivalents | 7,786 | 123 | 16,176 | 41 |
Market Performance Units | ||||
Diluted effect of common stock equivalents: | ||||
Diluted effect of common stock equivalents | 13,453 | 13,175 | 13,347 | 13,357 |
EARNINGS PER COMMON SHARE - Ant
EARNINGS PER COMMON SHARE - Anti-dilutive Securities (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
EARNINGS PER COMMON SHARE | ||||
Total potentially dilutive securities | 638,902 | 670,714 | 618,787 | 732,226 |
Stock options | ||||
EARNINGS PER COMMON SHARE | ||||
Total potentially dilutive securities | 419,197 | 423,197 | 419,197 | 438,364 |
Time Vesting Units | ||||
EARNINGS PER COMMON SHARE | ||||
Total potentially dilutive securities | 82,600 | 130,821 | 87,304 | 163,141 |
Financial Performance Units | ||||
EARNINGS PER COMMON SHARE | ||||
Total potentially dilutive securities | 116,051 | 55,028 | 70,769 | 47,008 |
Restricted Stock Awards | ||||
EARNINGS PER COMMON SHARE | ||||
Total potentially dilutive securities | 21,054 | 61,668 | 41,517 | 83,713 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
INCOME TAXES | ||||
Income tax provision | $ 3,192 | $ 780 | $ 6,301 | $ 1,865 |
Effective income tax rate | 24.90% | 24.50% | 24.30% | 25.50% |
RELATED-PARTY TRANSACTIONS (Det
RELATED-PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Summary of related party loan activity | |||
Balance, beginning of year | $ 5,675 | $ 2,659 | $ 2,659 |
Funded loans | 6,808 | 11,618 | |
Payments collected | (7,161) | (8,602) | |
Balance, end of year | 5,322 | 5,675 | |
Deposits from related parties | 21,800 | $ 28,500 | |
Board Member | |||
Summary of related party loan activity | |||
Rent expense | $ 100 | $ 100 |
FAIR VALUE - Summary of assets
FAIR VALUE - Summary of assets measured at fair value on recurring basis (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Summary of assets measured on a recurring and nonrecurring basis | ||
Available-for-sale securities, at fair value | $ 40,654 | $ 58,903 |
U.S. Treasury debt | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Available-for-sale securities, at fair value | 256 | 254 |
Corporate bonds | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Available-for-sale securities, at fair value | 2,048 | |
Recurring | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Available-for-sale securities, at fair value | 40,654 | 58,903 |
Equity securities | 732 | 713 |
Guarantee asset | 245 | |
Guarantee liability | 153 | |
Recurring | U.S. Treasury debt | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Available-for-sale securities, at fair value | 256 | 254 |
Recurring | Corporate bonds | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Available-for-sale securities, at fair value | 2,048 | |
Recurring | Corporate collateralized mortgage obligations and mortgage-backed securities | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Available-for-sale securities, at fair value | 5,846 | 10,420 |
Recurring | Interest rate lock and forward delivery commitments | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Derivative asset, Fair value | 11,622 | 1,184 |
Recurring | GNMA | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Available-for-sale securities, at fair value | 29,788 | 45,312 |
Recurring | FNMA | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Available-for-sale securities, at fair value | 2,716 | 2,917 |
Level 1 | Recurring | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Available-for-sale securities, at fair value | 256 | 254 |
Equity securities | 732 | 713 |
Level 1 | Recurring | U.S. Treasury debt | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Available-for-sale securities, at fair value | 256 | 254 |
Level 2 | Recurring | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Available-for-sale securities, at fair value | 40,398 | 58,649 |
Level 2 | Recurring | Corporate bonds | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Available-for-sale securities, at fair value | 2,048 | |
Level 2 | Recurring | Corporate collateralized mortgage obligations and mortgage-backed securities | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Available-for-sale securities, at fair value | 5,846 | 10,420 |
Level 2 | Recurring | GNMA | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Available-for-sale securities, at fair value | 29,788 | 45,312 |
Level 2 | Recurring | FNMA | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Available-for-sale securities, at fair value | 2,716 | 2,917 |
Level 3 | Recurring | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Guarantee asset | 245 | |
Guarantee liability | 153 | |
Level 3 | Recurring | Interest rate lock and forward delivery commitments | ||
Summary of assets measured on a recurring and nonrecurring basis | ||
Derivative asset, Fair value | $ 11,622 | $ 1,184 |
FAIR VALUE - Summary of asset_2
FAIR VALUE - Summary of assets measured at fair value on recurring basis (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Guarantee asset | ||
Guarantee asset, Beginning balance | $ 222 | |
Guarantee asset, Sales | $ 245 | |
Guarantee asset, Gains (losses) in net (loss) income, net | 39 | 55 |
Guarantee asset, Other settlements, net | (16) | (55) |
Guarantee asset, Ending balance | 245 | 245 |
IRLC and FSC, net | ||
IRLC and FSC, net, Beginning balance | 7,482 | 1,184 |
IRLC and FSC, net, Gains (losses) in net (loss) income, net | 1,066 | 1,713 |
IRLC and FSC, net Other settlements, net | 3,074 | 8,725 |
IRLC and FSC, net, Ending balance | 11,622 | 11,622 |
Guarantee liability | ||
Guarantee liability, Beginning balance | 191 | |
Guarantee liability, Sales | 244 | |
Guarantee liability, Gains (losses) in net (loss) income, net | (38) | (91) |
Guarantee liability, Ending balance | $ 153 | $ 153 |
FAIR VALUE - Summary of asset_3
FAIR VALUE - Summary of assets measured at level 3 fair value on recurring basis (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Summary of assets measured on a recurring and nonrecurring basis | |||
Available-for-sale securities, at fair value | $ 40,654 | $ 58,903 | |
Other real estate owned valuation allowance | 1,800 | ||
Impaired Financing Receivable, with Related Allowance, Recorded Investment | 3,421 | 4,412 | |
Loans and Leases Receivable, Allowance | 11,845 | 7,875 | |
Bank charged off | 200 | ||
Other real estate owned, gross | 2,400 | ||
Provision for loan losses | 4,000 | $ 200 | |
Other real estate owned | 558 | 658 | |
Net recorded investment | 8,458 | 11,437 | |
U.S. Treasury debt | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Available-for-sale securities, at fair value | 256 | 254 | |
Recurring | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Available-for-sale securities, at fair value | 40,654 | 58,903 | |
Equity securities | 732 | 713 | |
Guarantee asset | 245 | ||
Recurring | U.S. Treasury debt | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Available-for-sale securities, at fair value | 256 | 254 | |
Recurring | Corporate collateralized mortgage obligations and mortgage-backed securities | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Available-for-sale securities, at fair value | 5,846 | 10,420 | |
Recurring | Interest rate lock and forward delivery commitments | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Derivative asset, Fair value | 11,622 | 1,184 | |
Recurring | GNMA | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Available-for-sale securities, at fair value | 29,788 | 45,312 | |
Recurring | FNMA | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Available-for-sale securities, at fair value | 2,716 | 2,917 | |
Level 1 | Recurring | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Available-for-sale securities, at fair value | 256 | 254 | |
Equity securities | 732 | 713 | |
Level 1 | Recurring | U.S. Treasury debt | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Available-for-sale securities, at fair value | 256 | 254 | |
Level 2 | Recurring | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Available-for-sale securities, at fair value | 40,398 | 58,649 | |
Level 2 | Recurring | Corporate collateralized mortgage obligations and mortgage-backed securities | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Available-for-sale securities, at fair value | 5,846 | 10,420 | |
Level 2 | Recurring | GNMA | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Available-for-sale securities, at fair value | 29,788 | 45,312 | |
Level 2 | Recurring | FNMA | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Available-for-sale securities, at fair value | 2,716 | 2,917 | |
Level 3 | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Impaired Financing Receivable, with Related Allowance, Recorded Investment | 3,400 | 4,400 | |
Loans and Leases Receivable, Allowance | 1,400 | 800 | |
Provision for loan losses | 1,400 | 800 | |
Level 3 | Recurring | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Guarantee asset | 245 | ||
Level 3 | Recurring | Interest rate lock and forward delivery commitments | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Derivative asset, Fair value | 11,622 | 1,184 | |
Commercial properties | Nonrecurring | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Other real estate owned | 558 | 658 | |
Commercial properties | Level 3 | Nonrecurring | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Other real estate owned | 558 | 658 | |
Commercial and Industrial | Nonrecurring | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Net recorded investment | 1,998 | 3,579 | |
Commercial and Industrial | Level 3 | Nonrecurring | |||
Summary of assets measured on a recurring and nonrecurring basis | |||
Net recorded investment | $ 1,998 | $ 3,579 |
FAIR VALUE - Summary of asset_4
FAIR VALUE - Summary of assets and liabilities measured at fair value on a recurring or nonrecurring, the significant unobservable inputs (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Commercial properties | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value Estimate | $ 558 | $ 658 |
Commercial and Industrial | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value Estimate | $ 1,998 | $ 3,579 |
Discount | Commercial properties | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Range and weighted average of discount | 50.00% | |
Maximum | Commission and Cost to Sell | Commercial properties | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Range and weighted average of commission and cost to sell | 10.00% | 10.00% |
Maximum | Discount Rate | Commercial and Industrial | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Range and weighted average of discount rate | 20.00% | 50.00% |
Minimum | Commission and Cost to Sell | Commercial properties | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Range and weighted average of commission and cost to sell | 3.00% | 1.00% |
Minimum | Discount Rate | Commercial and Industrial | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Range and weighted average of discount rate | 17.00% | 0.00% |
Weighted Average | Discount | Commercial properties | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Range and weighted average of discount | 50.00% | |
Weighted Average | Commission and Cost to Sell | Commercial properties | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Range and weighted average of commission and cost to sell | 7.00% | 7.00% |
Weighted Average | Discount Rate | Commercial and Industrial | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Range and weighted average of discount rate | 20.00% | 23.00% |
FAIR VALUE - Summary of carryin
FAIR VALUE - Summary of carrying amounts and estimated fair values for financial instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Assets | |||||
Cash and cash equivalents | $ 250,358 | $ 78,638 | $ 146,176 | $ 73,357 | |
Fair Value | 40,654 | 58,903 | |||
Loans, net | 1,494,231 | 990,132 | |||
Mortgage loans held for sale | 89,872 | 48,312 | |||
Accrued interest receivable | 6,730 | 3,048 | |||
IRLC and FSC, net | 11,622 | $ 7,482 | 1,184 | ||
Other assets | 28,738 | 16,544 | |||
Liabilities | |||||
Deposits | 1,563,672 | 1,086,784 | |||
FHLB Topeka Borrowings - fixed rate | 222,075 | 10,000 | |||
Subordinated notes | 14,447 | 6,560 | |||
Accrued interest payable | 347 | 299 | |||
Carrying Amount | |||||
Assets | |||||
Cash and cash equivalents | 250,358 | 78,638 | |||
Fair Value | 40,654 | 58,903 | |||
Loans, net | 1,494,231 | 990,132 | |||
Mortgage loans held for sale | 89,872 | 48,312 | |||
Accrued interest receivable | 6,730 | 3,048 | |||
Equity securities | 732 | 713 | |||
IRLC and FSC, net | 11,622 | 1,184 | |||
Guarantee asset | 245 | ||||
Liabilities | |||||
Deposits | 1,563,672 | 1,086,784 | |||
FHLB Topeka Borrowings - fixed rate | 18,000 | 10,000 | |||
Federal Reserve Borrowings - fixed rate | 204,075 | ||||
Accrued interest payable | 347 | 299 | |||
Guarantee liability | 153 | ||||
Subordinated notes - fixed-to-floating rate | Carrying Amount | |||||
Liabilities | |||||
Subordinated notes | 14,447 | 6,560 | |||
Level 1 | Estimated Fair Value | |||||
Assets | |||||
Cash and cash equivalents | 250,358 | 78,638 | |||
Fair Value | 256 | 254 | |||
Equity securities | 732 | 713 | |||
Level 2 | Estimated Fair Value | |||||
Assets | |||||
Fair Value | 40,398 | 58,649 | |||
Mortgage loans held for sale | 89,872 | 48,312 | |||
Accrued interest receivable | 6,730 | 3,048 | |||
Liabilities | |||||
Deposits | 1,565,555 | 1,089,261 | |||
FHLB Topeka Borrowings - fixed rate | 18,070 | 10,003 | |||
Federal Reserve Borrowings - fixed rate | 204,075 | ||||
Accrued interest payable | 347 | 299 | |||
Level 3 | Estimated Fair Value | |||||
Assets | |||||
Loans, net | 1,493,863 | 974,142 | |||
IRLC and FSC, net | 11,622 | 1,184 | |||
Guarantee asset | 245 | ||||
Liabilities | |||||
Guarantee liability | 153 | ||||
Level 3 | Subordinated notes - fixed-to-floating rate | Estimated Fair Value | |||||
Liabilities | |||||
Subordinated notes | $ 14,997 | $ 6,004 |
ASSETS AND OTHER LIABILITIES _3
ASSETS AND OTHER LIABILITIES CLASSIFIED AS HELD FOR SALE (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
ASSETS | |||
Assets in disposal groups held for sale | $ 3,000 | $ 3,553 | $ 3,553 |
LIABILITIES | |||
Liabilities in disposal groups held for sale | 141 | 117 | |
Loss on intangibles held for sale | (553) | 1,600 | |
Disposal Group, Held-for-sale, Not Discontinued Operations | |||
ASSETS | |||
Goodwill | 3,000 | 3,553 | |
Assets in disposal groups held for sale | 3,000 | 3,553 | |
LIABILITIES | |||
Other liabilities | 141 | 117 | |
Liabilities in disposal groups held for sale | 141 | 117 | |
Loss on intangibles held for sale | 600 | ||
Capital Management | |||
ASSETS | |||
Assets in disposal groups held for sale | 3,000 | $ 3,553 | |
Capital Management | Disposal Group, Held-for-sale, Not Discontinued Operations | |||
ASSETS | |||
Goodwill | 3,000 | 3,553 | |
Assets in disposal groups held for sale | 3,000 | 3,553 | |
LIABILITIES | |||
Other liabilities | 141 | 117 | |
Liabilities in disposal groups held for sale | $ 141 | $ 117 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement | ||||||
Total interest income | $ 14,410 | $ 11,473 | $ 38,392 | $ 33,698 | ||
Total interest expense | 1,492 | 3,533 | 5,747 | 9,827 | ||
Provision for loan losses | 1,496 | 100 | 3,987 | 216 | ||
Net interest income, after provision for loan losses | 11,422 | 7,840 | 28,658 | 23,655 | ||
Non-interest income | 18,032 | 8,788 | 41,226 | 24,348 | ||
Total income | 29,454 | 16,628 | 69,884 | 48,003 | ||
Depreciation and amortization expense | 274 | 351 | 826 | 1,347 | ||
All other non-interest expense | 16,358 | 13,091 | 43,097 | 39,354 | ||
Income before income taxes | 12,822 | 3,186 | 25,961 | 7,302 | ||
Segment reporting | ||||||
Goodwill | 24,191 | 19,686 | 24,191 | 19,686 | $ 19,686 | $ 24,811 |
Assets held for sale | 3,000 | 3,553 | 3,000 | 3,553 | 3,553 | |
Total assets | 1,972,897 | 1,271,925 | 1,972,897 | 1,271,925 | 1,251,682 | |
Goodwill impairment | 1,572 | 1,572 | ||||
Loss on intangibles held for sale | (553) | 1,600 | ||||
SEC Penalty | 200 | |||||
Wealth Management | ||||||
Income Statement | ||||||
Total interest income | 14,410 | 11,473 | 38,392 | 33,698 | ||
Total interest expense | 1,492 | 3,533 | 5,747 | 9,827 | ||
Provision for loan losses | 1,496 | 100 | 3,987 | 216 | ||
Net interest income, after provision for loan losses | 11,422 | 7,840 | 28,658 | 23,655 | ||
Non-interest income | 4,810 | 4,714 | 13,710 | 13,956 | ||
Total income | 16,232 | 12,554 | 42,368 | 37,611 | ||
Depreciation and amortization expense | 252 | 274 | 718 | 902 | ||
All other non-interest expense | 13,664 | 10,434 | 34,619 | 30,935 | ||
Income before income taxes | 2,316 | 1,846 | 7,031 | 5,774 | ||
Segment reporting | ||||||
Goodwill | 20,499 | 15,994 | 20,499 | 15,994 | 15,994 | 15,994 |
Total assets | 1,859,390 | 1,195,340 | 1,859,390 | 1,195,340 | ||
Capital Management | ||||||
Income Statement | ||||||
Non-interest income | 899 | 776 | 2,492 | 2,339 | ||
Total income | 899 | 776 | 2,492 | 2,339 | ||
Depreciation and amortization expense | 8 | 22 | 52 | 248 | ||
All other non-interest expense | 627 | 701 | 2,772 | 3,709 | ||
Income before income taxes | 264 | 53 | (332) | (1,618) | ||
Segment reporting | ||||||
Goodwill | 3,692 | 3,692 | 3,692 | 3,692 | 3,692 | $ 8,817 |
Assets held for sale | 3,000 | 3,553 | 3,000 | 3,553 | ||
Total assets | 8,358 | 8,528 | 8,358 | 8,528 | ||
Goodwill impairment | $ 1,572 | |||||
Mortgage | ||||||
Income Statement | ||||||
Non-interest income | 12,323 | 3,298 | 25,024 | 8,053 | ||
Total income | 12,323 | 3,298 | 25,024 | 8,053 | ||
Depreciation and amortization expense | 14 | 55 | 56 | 197 | ||
All other non-interest expense | 2,067 | 1,956 | 5,706 | 4,710 | ||
Income before income taxes | 10,242 | 1,287 | 19,262 | 3,146 | ||
Segment reporting | ||||||
Total assets | $ 105,149 | $ 68,057 | $ 105,149 | $ 68,057 |
REGULATORY CAPITAL MATTERS (Det
REGULATORY CAPITAL MATTERS (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020USD ($)item | Dec. 31, 2019USD ($) | |
REGULATORY CAPITAL MATTERS | ||
Capital injection | $ 10,000 | |
Capital conservation buffer | 7.00% | |
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 | $ 122,987 | $ 105,821 |
Actual Ratio (as a percent) | 9.88% | 11.31% |
Tier 1 capital to risk-weighted assets | ||
Actual Amount | $ 122,987 | $ 105,821 |
Actual Ratio (as a percent) | 9.88% | 11.31% |
Required for Capital Adequacy Purposes Amount (as a percent) | 8.50% | |
Total capital to risk-weighted assets | ||
Actual Amount | $ 149,753 | $ 120,429 |
Actual Ratio (as a percent) | 12.03% | 12.87% |
Required for Capital Adequacy Purposes Ratio (as a percent) | 10.50% | |
Tier 1 capital to average assets | ||
Actual Amount | $ 122,987 | $ 105,821 |
Actual Ratio (as a percent) | 7.52% | 8.58% |
Bank | ||
Common Equity Tier 1 (CET 1) to risk-weighted assets | ||
Actual Amount | $ 127,441 | $ 99,461 |
Actual Ratio (as a percent) | 10.28% | 10.67% |
Required for Capital Adequacy Purposes Amount | $ 74,391 | $ 41,966 |
Required for Capital Adequacy Purposes Ratio (as a percent) | 6.00% | 4.50% |
To be Well Capitalized Under Prompt Corrective Action Regulations Amount | $ 99,188 | $ 60,617 |
To be Well Capitalized Under Prompt Corrective Action Regulations Ratio (as a percent) | 8.00% | 6.50% |
Tier 1 capital to risk-weighted assets | ||
Actual Amount | $ 127,441 | $ 99,461 |
Actual Ratio (as a percent) | 10.28% | 10.67% |
Required for Capital Adequacy Purposes Amount | $ 55,793 | $ 55,954 |
Required for Capital Adequacy Purposes Amount (as a percent) | 4.50% | 6.00% |
To be Well Capitalized Under Prompt Corrective Action Regulations Amount | $ 80,591 | $ 74,606 |
To be Well Capitalized Under Prompt Corrective Action Regulations Ratio (as a percent) | 6.50% | 8.00% |
Total capital to risk-weighted assets | ||
Actual Amount | $ 139,647 | $ 107,509 |
Actual Ratio (as a percent) | 11.26% | 11.53% |
Required for Capital Adequacy Purposes Amount | $ 99,188 | $ 74,606 |
Required for Capital Adequacy Purposes Ratio (as a percent) | 8.00% | 8.00% |
To be Well Capitalized Under Prompt Corrective Action Regulations Amount | $ 123,985 | $ 93,257 |
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 | $ 127,441 | $ 99,461 |
Actual Ratio (as a percent) | 7.81% | 8.09% |
Required for Capital Adequacy Purposes Amount | $ 65,233 | $ 49,166 |
Required for Capital Adequacy Purposes Ratio (as a percent) | 4.00% | 4.00% |
To be Well Capitalized Under Prompt Corrective Action Regulations Amount | $ 81,542 | $ 61,458 |
Tier One Leverage Capital Required to be Well Capitalized to Average Assets | 5.00% | 5.00% |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | Nov. 03, 2020USD ($) |
Subsequent events [Member] | |
Subsequent Event [Line Items] | |
Stock Repurchase Program, Authorized Amount | $ 400,000 |