Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 31, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-33572 | |
Entity Registrant Name | Bank of Marin Bancorp | |
Entity Incorporation, State or Country Code | CA | |
Entity Tax Identification Number | 20-8859754 | |
Entity Address, Address Line One | 504 Redwood Blvd. | |
Entity Address, Address Line Two | Suite 100 | |
Entity Address, City or Town | Novato | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94947 | |
City Area Code | 415 | |
Local Phone Number | 763-4520 | |
Title of 12(b) Security | Common stock, no par value and attached Share Purchase Rights | |
Trading Symbol | BMRC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Smaller Reporting Company | false | |
Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 13,615,563 | |
Entity Central Index Key | 0001403475 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF COND
CONSOLIDATED STATEMENTS OF CONDITION - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Cash, cash equivalents and restricted cash | $ 213,584 | $ 183,388 |
Investment securities | ||
Held-to-maturity, at amortized cost | 117,350 | 137,413 |
Available-for-sale, at fair value | 413,464 | 432,260 |
Total investment securities | 530,814 | 569,673 |
Loans, net of allowance for loan losses of $22,113 and $16,677 at September 30, 2020 and December 31, 2019, respectively | 2,085,878 | 1,826,609 |
Bank premises and equipment, net | 5,266 | 6,070 |
Goodwill | 30,140 | 30,140 |
Core deposit intangible | 4,045 | 4,684 |
Operating lease right-of-use assets | 26,041 | 11,002 |
Interest receivable and other assets | 79,457 | 75,714 |
Total assets | 2,975,225 | 2,707,280 |
Deposits | ||
Non-interest bearing | 1,383,719 | 1,128,823 |
Interest bearing | ||
Transaction accounts | 156,061 | 142,329 |
Savings accounts | 192,764 | 162,817 |
Money market accounts | 738,661 | 804,710 |
Time accounts | 98,084 | 97,810 |
Total deposits | 2,569,289 | 2,336,489 |
Borrowings and other obligations | 99 | 212 |
Subordinated debenture | 2,760 | 2,708 |
Operating lease liabilities | 27,527 | 12,615 |
Interest payable and other liabilities | 17,980 | 18,468 |
Total liabilities | 2,617,655 | 2,370,492 |
Stockholders' Equity | ||
Preferred stock, no par value, Authorized - 5,000,000 shares, none issued | 0 | 0 |
Common stock, no par value, Authorized - 30,000,000 shares; Issued and outstanding - 13,605,363 and 13,577,008 at September 30, 2020 and December 31, 2019, respectively | 129,284 | 129,058 |
Retained earnings | 215,976 | 203,227 |
Accumulated other comprehensive income, net of taxes | 12,310 | 4,503 |
Total stockholders' equity | 357,570 | 336,788 |
Total liabilities and stockholders' equity | $ 2,975,225 | $ 2,707,280 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF CONDITION (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Loans and Leases Receivable, Net Amount | ||
Loans, allowance for loan losses | $ 22,113 | $ 16,677 |
Stockholders' Equity | ||
Preferred stock, authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Common stock, authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, issued (in shares) | 13,605,363 | 13,577,008 |
Common stock, outstanding (in shares) | 13,605,363 | 13,577,008 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Interest income | ||||
Interest and fees on loans | $ 21,776 | $ 21,525 | $ 63,880 | $ 63,208 |
Interest on investment securities | 3,343 | 3,382 | 11,249 | 11,242 |
Interest on federal funds sold and due from banks | 50 | 425 | 421 | 754 |
Total interest income | 25,169 | 25,332 | 75,550 | 75,204 |
Interest expense | ||||
Interest on interest-bearing transaction accounts | 41 | 101 | 146 | 269 |
Interest on savings accounts | 17 | 17 | 50 | 52 |
Interest on money market accounts | 377 | 855 | 1,731 | 2,406 |
Interest on time accounts | 133 | 147 | 436 | 441 |
Interest on borrowings and other obligations | 0 | 4 | 3 | 75 |
Interest on subordinated debenture | 35 | 57 | 124 | 175 |
Total interest expense | 603 | 1,181 | 2,490 | 3,418 |
Net interest income | 24,566 | 24,151 | 73,060 | 71,786 |
Provision for loan losses | 1,250 | 400 | 5,450 | 400 |
Net interest income after provision for loan losses | 23,316 | 23,751 | 67,610 | 71,386 |
Non-interest income | ||||
Earnings on bank-owned life insurance | 232 | 795 | 741 | 970 |
Dividends on Federal Home Loan Bank stock | 149 | 202 | 503 | 591 |
Gains on sale of investment securities, net | 0 | 0 | 915 | 55 |
Other income | 229 | 305 | 927 | 888 |
Total non-interest income | 1,790 | 2,721 | 6,723 | 6,766 |
Non-interest expense | ||||
Salaries and related benefits | 8,638 | 8,412 | 25,979 | 26,426 |
Occupancy and equipment | 1,776 | 1,507 | 5,100 | 4,616 |
Depreciation and amortization | 539 | 573 | 1,591 | 1,701 |
Federal Deposit Insurance Corporation insurance | 181 | 1 | 299 | 354 |
Data processing | 822 | 923 | 2,437 | 2,942 |
Professional services | 655 | 580 | 1,749 | 1,701 |
Directors' expense | 184 | 189 | 533 | 555 |
Information technology | 256 | 279 | 758 | 822 |
Amortization of core deposit intangible | 213 | 222 | 639 | 665 |
Provision for losses on off-balance sheet commitments | 248 | 0 | 610 | 129 |
Charitable contributions | 481 | 111 | 921 | 377 |
Other expense | 1,245 | 1,403 | 4,232 | 4,356 |
Total non-interest expense | 15,238 | 14,200 | 44,848 | 44,644 |
Income before provision for income taxes | 9,868 | 12,272 | 29,485 | 33,508 |
Provision for income taxes | 2,377 | 2,824 | 7,360 | 8,346 |
Net income | $ 7,491 | $ 9,448 | $ 22,125 | $ 25,162 |
Net income per common share: | ||||
Basic (in dollars per share) | $ 0.55 | $ 0.70 | $ 1.64 | $ 1.84 |
Diluted (in dollars per share) | $ 0.55 | $ 0.69 | $ 1.62 | $ 1.82 |
Weighted average shares: | ||||
Basic (in shares) | 13,539 | 13,571 | 13,526 | 13,654 |
Diluted (in shares) | 13,610 | 13,735 | 13,617 | 13,825 |
Comprehensive income: | ||||
Net income | $ 7,491 | $ 9,448 | $ 22,125 | $ 25,162 |
Other comprehensive income | ||||
Change in net unrealized gains or losses on available-for-sale securities | 299 | 936 | 11,605 | 13,857 |
Reclassification adjustment for gains on available-for-sale securities included in net income | 0 | 0 | (915) | (55) |
Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity | 149 | 123 | 394 | 328 |
Other comprehensive income, before tax | 448 | 1,059 | 11,084 | 14,130 |
Deferred tax expense | 132 | 313 | 3,277 | 4,182 |
Other comprehensive income, net of tax | 316 | 746 | 7,807 | 9,948 |
Total comprehensive income | 7,807 | 10,194 | 29,932 | 35,110 |
Deposit account | ||||
Non-interest income | ||||
Service charges on deposit accounts, wealth management and trust services, debit card interchange fees net, and merchant interchange fees net | 284 | 439 | 1,028 | 1,403 |
Fiduciary and trust | ||||
Non-interest income | ||||
Service charges on deposit accounts, wealth management and trust services, debit card interchange fees net, and merchant interchange fees net | 450 | 495 | 1,375 | 1,406 |
Debit card | ||||
Non-interest income | ||||
Service charges on deposit accounts, wealth management and trust services, debit card interchange fees net, and merchant interchange fees net | 383 | 406 | 1,051 | 1,200 |
Merchant interchange fees, net | ||||
Non-interest income | ||||
Service charges on deposit accounts, wealth management and trust services, debit card interchange fees net, and merchant interchange fees net | $ 63 | $ 79 | $ 183 | $ 253 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss), Net of Taxes |
Beginning balance (in shares) at Dec. 31, 2018 | 13,844,353 | |||
Beginning balance at Dec. 31, 2018 | $ 316,407 | $ 140,565 | $ 179,944 | $ (4,102) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 25,162 | 25,162 | ||
Other comprehensive income | 9,948 | 9,948 | ||
Stock options exercised, net of shares surrendered for cashless exercises and tax withholdings (in shares) | 40,927 | |||
Stock options exercised, net of shares surrendered for cashless exercises and tax withholdings | 572 | $ 572 | ||
Stock issued under employee stock purchase plan (in shares) | 1,016 | |||
Stock issued under employee stock purchase plan | 40 | $ 40 | ||
Stock issued under employee stock ownership plan (in shares) | 23,200 | |||
Stock issued under employee stock ownership plan | 935 | $ 935 | ||
Restricted stock granted (in shares) | 29,110 | |||
Restricted stock granted | 0 | |||
Restricted stock surrendered for tax withholdings upon vesting (in shares) | (5,240) | |||
Restricted stock surrendered for tax withholdings upon vesting | (220) | $ (220) | ||
Restricted stock forfeited / cancelled (in shares) | (17,325) | |||
Stock-based compensation - stock options | 437 | $ 437 | ||
Stock-based compensation - restricted stock | 806 | $ 806 | ||
Cash dividends paid on common stock | (8,107) | (8,107) | ||
Stock purchased by directors under director stock plan (in shares) | 591 | |||
Stock purchased by directors under director stock plan | 24 | $ 24 | ||
Stock issued in payment of director fees (in shares) | 5,544 | |||
Stock issued in payment of director fees | 231 | $ 231 | ||
Stock repurchased, net of commissions (in shares) | (313,651) | |||
Stock repurchased, net of commissions | (13,170) | $ (13,170) | ||
Ending balance (in shares) at Sep. 30, 2019 | 13,608,525 | |||
Ending balance at Sep. 30, 2019 | 333,065 | $ 130,220 | 196,999 | 5,846 |
Beginning balance (in shares) at Jun. 30, 2019 | 13,659,143 | |||
Beginning balance at Jun. 30, 2019 | 327,667 | $ 132,151 | 190,416 | 5,100 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 9,448 | 9,448 | ||
Other comprehensive income | 746 | 746 | ||
Stock options exercised, net of shares surrendered for cashless exercises and tax withholdings (in shares) | 3,452 | |||
Stock options exercised, net of shares surrendered for cashless exercises and tax withholdings | 101 | $ 101 | ||
Stock issued under employee stock purchase plan (in shares) | 265 | |||
Stock issued under employee stock purchase plan | 10 | $ 10 | ||
Stock issued under employee stock ownership plan (in shares) | 7,600 | |||
Stock issued under employee stock ownership plan | 311 | $ 311 | ||
Stock-based compensation - stock options | 98 | 98 | ||
Stock-based compensation - restricted stock | 142 | $ 142 | ||
Cash dividends paid on common stock | (2,865) | (2,865) | ||
Stock purchased by directors under director stock plan (in shares) | 392 | |||
Stock purchased by directors under director stock plan | 16 | $ 16 | ||
Stock issued in payment of director fees (in shares) | 2,800 | |||
Stock issued in payment of director fees | 117 | $ 117 | ||
Stock repurchased, net of commissions (in shares) | (65,127) | |||
Stock repurchased, net of commissions | (2,726) | $ (2,726) | ||
Ending balance (in shares) at Sep. 30, 2019 | 13,608,525 | |||
Ending balance at Sep. 30, 2019 | $ 333,065 | $ 130,220 | 196,999 | 5,846 |
Beginning balance (in shares) at Dec. 31, 2019 | 13,577,008 | 13,577,008 | ||
Beginning balance at Dec. 31, 2019 | $ 336,788 | $ 129,058 | 203,227 | 4,503 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 22,125 | 22,125 | ||
Other comprehensive income | 7,807 | 7,807 | ||
Stock options exercised, net of shares surrendered for cashless exercises and tax withholdings (in shares) | 64,022 | |||
Stock options exercised, net of shares surrendered for cashless exercises and tax withholdings | 1,277 | $ 1,277 | ||
Stock issued under employee stock purchase plan (in shares) | 1,812 | |||
Stock issued under employee stock purchase plan | 53 | $ 53 | ||
Stock issued under employee stock ownership plan (in shares) | 29,600 | |||
Stock issued under employee stock ownership plan | 967 | $ 967 | ||
Restricted stock granted (in shares) | 29,100 | |||
Restricted stock granted | 0 | |||
Restricted stock surrendered for tax withholdings upon vesting (in shares) | (2,200) | |||
Restricted stock surrendered for tax withholdings upon vesting | (73) | $ (73) | ||
Restricted stock forfeited / cancelled (in shares) | (8,184) | |||
Stock-based compensation - stock options | 299 | $ 299 | ||
Stock-based compensation - restricted stock | 673 | $ 673 | ||
Cash dividends paid on common stock | (9,376) | (9,376) | ||
Stock purchased by directors under director stock plan (in shares) | 1,146 | |||
Stock purchased by directors under director stock plan | 43 | $ 43 | ||
Stock issued in payment of director fees (in shares) | 5,723 | |||
Stock issued in payment of director fees | 217 | $ 217 | ||
Stock repurchased, net of commissions (in shares) | (92,664) | |||
Stock repurchased, net of commissions | $ (3,230) | $ (3,230) | ||
Ending balance (in shares) at Sep. 30, 2020 | 13,605,363 | 13,605,363 | ||
Ending balance at Sep. 30, 2020 | $ 357,570 | $ 129,284 | 215,976 | 12,310 |
Beginning balance (in shares) at Jun. 30, 2020 | 13,591,835 | |||
Beginning balance at Jun. 30, 2020 | 352,240 | $ 128,633 | 211,613 | 11,994 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 7,491 | 7,491 | ||
Other comprehensive income | 316 | 316 | ||
Stock options exercised, net of shares surrendered for cashless exercises and tax withholdings (in shares) | 207 | |||
Stock options exercised, net of shares surrendered for cashless exercises and tax withholdings | 0 | $ 0 | ||
Stock issued under employee stock purchase plan (in shares) | 728 | |||
Stock issued under employee stock purchase plan | 20 | $ 20 | ||
Stock issued under employee stock ownership plan (in shares) | 10,200 | |||
Stock issued under employee stock ownership plan | 319 | $ 319 | ||
Restricted stock forfeited / cancelled (in shares) | (1,466) | |||
Stock-based compensation - stock options | 88 | $ 88 | ||
Stock-based compensation - restricted stock | 99 | $ 99 | ||
Cash dividends paid on common stock | (3,128) | (3,128) | ||
Stock purchased by directors under director stock plan (in shares) | 746 | |||
Stock purchased by directors under director stock plan | 25 | $ 25 | ||
Stock issued in payment of director fees (in shares) | 3,113 | |||
Stock issued in payment of director fees | $ 100 | $ 100 | ||
Ending balance (in shares) at Sep. 30, 2020 | 13,605,363 | 13,605,363 | ||
Ending balance at Sep. 30, 2020 | $ 357,570 | $ 129,284 | $ 215,976 | $ 12,310 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividends paid on common stock (in dollars per share) | $ 0.23 | $ 0.21 | $ 0.69 | $ 0.59 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | ||
Cash Flows from Operating Activities: | |||
Net income | $ 22,125 | $ 25,162 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Provision for loan losses | 5,450 | 400 | |
Provision for losses on off-balance sheet commitments | 610 | 129 | |
Noncash contribution expense to employee stock ownership plan | 967 | 935 | |
Noncash director compensation expense | 226 | 226 | |
Stock-based compensation expense | 972 | 1,243 | |
Amortization of core deposit intangible | 639 | 665 | |
Amortization of investment security premiums (discounts), net | 864 | 1,282 | |
Amortization of acquired loan (discounts) premiums, net | (101) | (208) | |
Accretion of discount on subordinated debenture | 52 | 51 | |
Net change in deferred loan origination costs/fees | 6,132 | (345) | |
Gain on sale of investment securities | (915) | (55) | |
Depreciation and amortization | 1,591 | 1,701 | |
Earnings on bank-owned life insurance policies | (741) | (970) | |
Net change in operating assets and liabilities: | |||
Interest receivable and other assets | (5,347) | 2,287 | |
Interest payable and other liabilities | (1,207) | (1,302) | |
Total adjustments | 9,192 | 6,039 | |
Net cash provided by operating activities | 31,317 | 31,201 | |
Cash Flows from Investing Activities: | |||
Purchase of available-for-sale securities | (71,744) | (18,892) | |
Proceeds from sale of available-for-sale securities | 33,756 | 66,081 | |
Proceeds from paydowns/maturities of held-to-maturity securities | 19,880 | 14,736 | |
Proceeds from paydowns/maturities of available-for-sale securities | 68,102 | 69,711 | |
Loans originated and principal collected, net | (269,376) | (32,895) | |
Purchase of bank-owned life insurance policies | (941) | (1,892) | |
Purchase of premises and equipment | (769) | (419) | |
Purchase of Federal Home Loan Bank stock | 0 | (616) | |
Cash paid for low income housing tax credit investment | (1,289) | (339) | |
Net cash (used in) provided by investing activities | (222,381) | 95,475 | |
Cash Flows from Financing Activities: | |||
Net increase in deposits | 232,800 | 49,684 | |
Proceeds from stock options exercised | 1,277 | 572 | |
Payment of tax withholdings for stock options exercised and vesting of restricted stock | (73) | (220) | |
Proceeds from stock issued under employee and director stock purchase plans | 96 | 64 | |
Stock repurchased, net of commissions | (3,333) | (13,279) | |
Repayment of Federal Home Loan Bank borrowings | 0 | (7,000) | |
Repayment of finance lease obligations | (131) | (125) | |
Cash dividends paid on common stock | (9,376) | (8,107) | |
Net cash provided by financing activities | 221,260 | 21,589 | |
Net increase in cash, cash equivalents and restricted cash | 30,196 | 148,265 | |
Cash, cash equivalents and restricted cash at beginning of period | 183,388 | 34,221 | |
Cash, cash equivalents and restricted cash at end of period | 213,584 | 182,486 | |
Supplemental disclosure of cash flow information: | |||
Cash paid in interest | 2,450 | 3,351 | |
Cash paid in income taxes | 9,765 | 9,025 | |
Supplemental disclosure of noncash investing and financing activities: | |||
Change in net unrealized gain or loss on available-for-sale securities | 11,605 | 13,857 | |
Amortization of net unrealized loss on available-for-sale securities transferred to held-to-maturity | 394 | 328 | |
Stock issued to employee stock ownership plan | 967 | 935 | |
Stock issued in payment of director fees | 217 | 231 | |
Repurchase of stock not yet settled | 0 | 34 | |
Restricted cash | [1] | $ 0 | $ 10,015 |
[1] | Restricted cash includes reserve requirements held with the Federal Reserve Bank of San Francisco. In response to the COVID-19 pandemic, the Federal Reserve reduced the reserve requirement ratios to zero percent effective March 26, 2020. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated financial statements include the accounts of Bank of Marin Bancorp (“Bancorp”), a bank holding company, and its wholly-owned bank subsidiary, Bank of Marin (the “Bank”), a California state-chartered commercial bank. References to “we,” “our,” “us” mean Bancorp and the Bank that are consolidated for financial reporting purposes. The accompanying unaudited consolidated interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to those rules and regulations. Although we believe that the disclosures are adequate and the information presented is not misleading, we suggest that these interim financial statements be read in conjunction with the annual financial statements and the notes thereto included in our 2019 Annual Report on Form 10-K. In the opinion of Management, the unaudited consolidated financial statements reflect all adjustments, which are necessary for a fair presentation of the consolidated financial position, the results of operations, changes in comprehensive income, changes in stockholders’ equity, and cash flows for the periods presented. All material intercompany transactions have been eliminated. The results of these interim periods may not be indicative of the results for the full year or for any other period. The NorCal Community Bancorp Trust II (the "Trust") was formed for the sole purpose of issuing trust preferred securities. Bancorp is not considered the primary beneficiary of the Trust (a variable interest entity), therefore the Trust is not consolidated in our consolidated financial statements, but rather the subordinated debenture is shown as a liability on our consolidated statements of condition. Bancorp's investment in the securities of the Trust is accounted for under the equity method and is included in interest receivable and other assets on the consolidated statements of condition. Refer to Note 6, Borrowings, for additional information on the subordinated debenture due to NorCal Community Bancorp Trust II. The following table shows: 1) weighted average basic shares, 2) potentially dilutive weighted average common shares related to stock options and unvested restricted stock awards, and 3) weighted average diluted shares. Basic earnings per share (“EPS”) are calculated by dividing net income by the weighted average number of common shares outstanding during each period, excluding unvested restricted stock awards. Diluted EPS are calculated using the weighted average number of potentially dilutive common shares. The number of potentially dilutive common shares included in the quarterly diluted EPS is computed using the average market prices during the three months included in the reporting period under the treasury stock method. The number of potentially dilutive common shares included in year-to-date diluted EPS is a year-to-date weighted average of potentially dilutive common shares included in each quarterly diluted EPS computation. In computing diluted EPS, we exclude anti-dilutive shares such as options whose exercise prices exceed the current common stock price, as they would not reduce EPS under the treasury method. We have two forms of outstanding common stock: common stock and unvested restricted stock awards. Holders of unvested restricted stock awards receive non-forfeitable dividends at the same rate as common shareholders and they both share equally in undistributed earnings. Under the two-class method, the difference in EPS is nominal for these participating securities. Three months ended Nine months ended (in thousands, except per share data) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Weighted average basic shares outstanding 13,539 13,571 13,526 13,654 Potentially dilutive common shares related to: Stock options 53 141 71 146 Unvested restricted stock awards 18 23 20 25 Weighted average diluted shares outstanding 13,610 13,735 13,617 13,825 Net income $ 7,491 $ 9,448 $ 22,125 $ 25,162 Basic EPS $ 0.55 $ 0.70 $ 1.64 $ 1.84 Diluted EPS $ 0.55 $ 0.69 $ 1.62 $ 1.82 Weighted average anti-dilutive shares not included in the calculation of diluted EPS 202 39 152 34 |
Recently Adopted and Issued Acc
Recently Adopted and Issued Accounting Standards | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recently Adopted and Issued Accounting Standards | Recently Adopted and Issued Accounting Standards Accounting Standards Adopted in 2020 In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement . The amendments in this ASU remove, modify, and add disclosure requirements for the fair value reporting of assets and liabilities. The modifications and additions relate to Level 3 fair value measurements at the end of the reporting period. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Entities should disclose and describe the range and weighted-average of significant unobservable inputs used to develop Level 3 fair value measurements. We adopted this ASU prospectively effective January 1, 2020. As the ASU’s requirements only relate to disclosures, the amendments did not impact our financial condition or results of operations. Refer to Note 3, Fair Value of Assets and Liabilities, for additional disclosures. In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . This standard aligns the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software regardless of whether they convey a license to the hosted software. The accounting for the service element of a hosting arrangement that is a service contract is not affected by this ASU. The amendments are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. An entity has the option to apply amendments in the ASU either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We adopted this ASU prospectively on January 1, 2020, which did not impact our financial condition and results of operations. Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . The standard replaces the "incurred loss" model with a "current expected credit loss" ("CECL") model. The CECL model applies to estimated credit losses on loans receivable, held-to-maturity debt securities, unfunded loan commitments, and certain other financial assets measured at amortized cost. The CECL model is based on lifetime expected losses, rather than incurred losses, and requires the recognition of credit loss expense in the consolidated statement of income and a related allowance for credit losses on the consolidated statement of condition at the time of origination or purchase of a loan receivable or held-to-maturity debt security. In addition, the CECL standard modifies the accounting for purchased loans and requires that an allowance for credit losses be established at the date of acquisition. However, for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination (“PCD assets”) that are measured at amortized cost, the initial allowance for credit losses is added to the purchase price rather than being reported as a credit loss expense. Subsequent changes in the allowance for credit losses on PCD assets are recognized through credit loss expense. Under ASU 2016-13, available-for-sale debt securities are evaluated for impairment if fair value is less than amortized cost. Estimated credit losses are recorded through a credit loss expense and an allowance, rather than a write-down of the investment. Changes in fair value that are not credit-related will continue to be recorded in other comprehensive income. The ASU also expands the disclosure requirements regarding assumptions, models, and methods for estimating the allowance for credit losses. In addition, entities will disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. However, in accordance with the accounting relief provisions of the Coronavirus Aid, Relief and Economic Security ("CARES") Act passed in March 2020, we postponed the adoption of the CECL standard. Implementation is delayed until the end of the national emergency or December 31, 2020, whichever occurs first. Early CECL implementation activities focused on, among other things, capturing and validating data, segmenting the loan portfolio, evaluating various credit loss estimation methodologies, sourcing tools to forecast future economic conditions, running multiple loan loss driver analyses that correlate our credit loss experience with one or more economic factors, and evaluating the qualitative factor framework and assumptions. Based on these activities, we determined that our primary credit loss methodology will utilize a discounted cash flow approach that considers the probability of default and loss given default. Ongoing implementation activities included refining forecast methodologies, running parallel calculations, evaluating and validating results, and documenting internal controls. The Bank has continued to run the CECL model in parallel with the incurred loss model and will adopt the CECL standard as of December 31, 2020. Upon adoption of the CECL standard, we will record a cumulative adjustment to retained earnings in our financial statements, net of taxes, based on economic forecasts and other assumptions as of January 1, 2020. That adjustment will result in an increase to our allowance for credit losses of approximately $1.6 million and an increase to the allowance for off-balance sheet commitments of approximately $122 thousand. These adjustments do not include the subsequent COVID-19 pandemic-related impact. Upon adoption on December 31, 2020, we will recognize the difference between the allowance for credit losses calculated under the CECL model as of December 31, 2020 and the allowance for credit losses calculated under the incurred loss model as of September 30, 2020 as a provision for credit losses and a provision for credit losses on off-balance sheet commitments, as applicable. Based on information available at this time, we do not expect the fourth quarter provision for credit losses to exceed 10% of the September 30, 2020 allowance for credit losses. However, the exact amount will depend on certain forecasts, such as the California unemployment rate, and other assumptions available as of December 31, 2020, which could differ significantly from present levels. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments that clarifies and improves areas of guidance related to recently issued standards. The provisions of this ASU under Topic 326 will be evaluated in conjunction with the adoption of ASU 2016-13, however, we do not expect it to have a material impact on our financial condition and results of operations. All other provisions under this ASU were adopted as of January 1, 2020 and did not impact our financial condition and results of operations. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief . This ASU allows an option for entities to irrevocably elect the fair value option on an instrument-by-instrument basis for eligible financial assets measured at amortized cost basis upon adoption of the credit loss standards. This amendment provides relief for those entities electing the fair value option on newly originated or purchased financial assets, while maintaining existing similar financial assets at amortized cost, avoiding the requirement to maintain dual measurement methods for similar assets. The fair value option does not apply to held-to-maturity debt securities. The effective date for this ASU is the same as for ASU 2016-13, as discussed above. We will evaluate this ASU in conjunction with the adoption of ASU 2016-13 to determine its impact on our financial condition and results of operations. However, at this time we do not expect to elect the fair value option for our financial assets. In November 2019, the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses . This ASU, among other narrow-scope improvements, clarifies guidance around how to report expected recoveries. “Expected recoveries” describes a situation in which an organization recognizes a full or partial write-off of the amortized cost basis of a financial asset, but then later determines that the amount written off, or a portion of that amount, will in fact be recovered. This ASU permits organizations to record expected recoveries on PCD assets. Additionally, this ASU reinforces existing guidance that prohibits organizations from recording negative allowances for available-for-sale debt securities. ASU 2019-11 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendments should be applied on a modified retrospective basis by means of a cumulative-effect adjustment to the opening retained earnings balance in the statement of financial position as of the date of adoption. The effective date for this ASU is the same as for ASU 2016-13, as discussed above. We will evaluate this ASU in conjunction with the adoption of ASU 2016-13 to determine its impact on our financial condition and results of operations. Accounting Standards Not Yet Effective In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . This ASU is intended to reduce the cost and complexity related to accounting for income taxes by removing certain exceptions to the guidance in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and simplifying aspects of the accounting for franchise taxes and enacted changes in tax laws or rates. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. As this ASU is narrow in scope and applicability to us will likely be minimal, we do not expect that the ASU will have a material impact on our financial condition or results of operations. In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 . Among other things, this ASU clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, for the purposes of applying the measurement alternative in accordance with Topic 321. This ASU is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. ASU No. 2020-01 should be applied prospectively at the beginning of the interim period that includes adoption. We do not expect that the ASU will have a material impact on our financial condition or results of operations. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) . The amendments in this ASU are elective and provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform. The amendments in this ASU provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments in this ASU may be elected as of March 12, 2020 through December 31, 2022. An entity may choose to elect the amendments in this update at an interim period subsequent to March 12, 2020 with adoption methods varying based on transaction type. We have not elected to apply these amendments, however, we will assess the applicability of the ASU to us and continue to monitor guidance for reference rate reform from FASB and its impact on our financial condition and results of operations. In October 2020, the FASB issued ASU No. 2020-08, Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs . This ASU was issued as part of the Board's ongoing project to improve codification or correct unintended application. This ASU adds clarification to ASU 2017-08, which the Bank early adopted in 2017, and delineates whether an entity with callable debt securities that have multiple call dates should amortize the amount above that which is repayable, to the next call date. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, on a prospective basis. Early adoption is not permitted. As this ASU is narrow in scope and for clarification purposes, we do not expect this ASU will have a material impact on our financial condition and results of operations. |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities Fair Value Hierarchy and Fair Value Measurement We group our assets and liabilities that are measured at fair value in three levels within the fair value hierarchy, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are: Level 1: Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Valuations are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations for which all significant assumptions are observable or can be corroborated by observable market data. Level 3: Valuations are based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Values are determined using pricing models and discounted cash flow models and may include significant Management judgment and estimation. The following table summarizes our assets and liabilities that were required to be recorded at fair value on a recurring basis. (in thousands) Description of Financial Instruments Carrying Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Measurement Categories: Changes in Fair Value Recorded In 1 September 30, 2020 Securities available-for-sale: Mortgage-backed securities and collateralized mortgage obligations issued by U.S. government-sponsored agencies $ 241,189 $ — $ 241,189 $ — OCI SBA-backed securities 32,844 — 32,844 — OCI Debentures of government sponsored agencies 45,688 — 45,688 — OCI Obligations of state and political subdivisions 93,743 — 93,743 — OCI Derivative financial liabilities (interest rate contracts) 2,529 — 2,529 — NI December 31, 2019 Securities available-for-sale: Mortgage-backed securities and collateralized mortgage obligations issued by U.S. government-sponsored agencies $ 278,144 $ — $ 278,144 $ — OCI SBA-backed securities 36,286 — 36,286 — OCI Debentures of government sponsored agencies 49,046 — 49,046 — OCI Obligations of state and political subdivisions 67,282 — 67,282 — OCI Corporate bonds 1,502 — 1,502 — OCI Derivative financial liabilities (interest rate contracts) 1,178 — 1,178 — NI 1 Other comprehensive income ("OCI") or net income ("NI"). Available-for-sale securities are recorded at fair value on a recurring basis. When available, quoted market prices (Level 1) are used to determine the fair value of available-for-sale securities. If quoted market prices are not available, we obtain pricing information from a reputable third-party service provider, who may utilize valuation techniques that use current market-based or independently sourced parameters, such as bid/ask prices, dealer-quoted prices, interest rates, benchmark yield curves, prepayment speeds, probability of default, loss severity and credit spreads (Level 2). Level 2 securities include obligations of state and political subdivisions, U.S. agencies or government-sponsored agencies' debt securities, mortgage-backed securities, government agency-issued, privately-issued collateralized mortgage obligations, and corporate bonds. As of September 30, 2020 and December 31, 2019, there were no Level 1 or Level 3 securities. Held-to-maturity securities may be written down to fair value as a result of other-than-temporary impairment, and we did not record any write-downs during the nine months ended September 30, 2020 or September 30, 2019. Fair value of held-to-maturity securities is determined using the same techniques discussed above for available-for-sale securities. On a recurring basis, derivative financial instruments are recorded at fair value, which is based on the income approach using observable Level 2 market inputs, reflecting market expectations of future interest rates as of the measurement date. Standard valuation techniques are used to calculate the present value of the future expected cash flows assuming an orderly transaction. Valuation adjustments may be made to reflect both our own credit risk and the counterparties’ credit risk in determining the fair value of the derivatives. Level 2 inputs for the valuations are limited to observable market prices for London Interbank Offered Rate ("LIBOR") and Overnight Index Swap ("OIS") rates (for the very short term), quoted prices for LIBOR futures contracts, observable market prices for LIBOR and OIS swap rates, and one-month and three-month LIBOR basis spreads at commonly quoted intervals. Mid-market pricing of the inputs is used as a practical expedient in the fair value measurements. We project spot rates at reset days specified by each swap contract to determine future cash flows, then discount to present value using OIS curves as of the measurement date. When the value of any collateral placed with counterparties is less than the interest rate derivative liability, a credit valuation adjustment ("CVA") is applied to reflect the credit risk we pose to counterparties. We have used the spread between the Standard & Poor's BBB rated U.S. Bank Composite rate and LIBOR for the closest maturity term corresponding to the duration of the swaps to derive the CVA. A similar credit risk adjustment, correlated to the credit standing of the counterparty, is made when collateral posted by the counterparty does not fully cover their liability to us. For further discussion on our methodology in valuing our derivative financial instruments, refer to Note 9, Derivative Financial Instruments and Hedging Activities. Certain financial assets may be measured at fair value on a non-recurring basis. These assets are subject to fair value adjustments that result from the application of the lower of cost or fair value accounting or write-downs of individual assets, such as impaired loans that are collateral dependent and other real estate owned ("OREO"). As of September 30, 2020 and December 31, 2019, we did not carry any assets measured at fair value on a non-recurring basis. Disclosures about Fair Value of Financial Instruments The table below is a summary of fair value estimates for financial instruments as of September 30, 2020 and December 31, 2019, excluding financial instruments recorded at fair value on a recurring basis (summarized in the first table in this note). The carrying amounts in the following table are recorded in the consolidated statements of condition under the indicated captions. Further, we have not disclosed the fair value of financial instruments specifically excluded from disclosure requirements such as bank-owned life insurance policies ("BOLI") and non-maturity deposit liabilities. Additionally, we held shares of Federal Home Loan Bank ("FHLB") of San Francisco stock and Visa Inc. Class B common stock, both recorded at cost, as there was no impairment or changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer as of September 30, 2020 or December 31, 2019. The values are discussed in Note 4, Investment Securities. September 30, 2020 December 31, 2019 (in thousands) Carrying Amounts Fair Value Fair Value Hierarchy Carrying Amounts Fair Value Fair Value Hierarchy Financial assets (recorded at amortized cost) Cash and cash equivalents $ 213,584 $ 213,584 Level 1 $ 183,388 $ 183,388 Level 1 Investment securities held-to-maturity 117,350 123,983 Level 2 137,413 139,642 Level 2 Loans, net 2,085,877 2,106,790 Level 3 1,826,609 1,839,666 Level 3 Interest receivable 11,014 11,014 Level 2 7,732 7,732 Level 2 Financial liabilities (recorded at amortized cost) Time deposits 98,084 98,495 Level 2 97,810 97,859 Level 2 Subordinated debenture 2,760 2,994 Level 3 2,708 3,182 Level 3 Interest payable 122 122 Level 2 134 134 Level 2 Fair value of loans is based on exit price techniques and obtained from an independent third-party that uses its proprietary valuation model and methodology and may not reflect actual or prospective market valuations. The discounted cash flow valuation approach reflects key inputs and assumptions such as loan probability of default, loss given default, prepayment speed, and market discount rates. Fair value of fixed-rate time deposits is estimated by discounting future contractual cash flows using discount rates that reflect the current market rates offered for time deposits of similar remaining maturities. Fair value of the subordinated debenture is estimated using a discounted cash flow approach based on current interest rates for similar financial instruments adjusted for credit and liquidity spreads. The value of unrecognized financial instruments is estimated based on the fee income associated with the commitments which, in the absence of credit exposure, is considered to approximate their settlement value. The fair value of commitment fees was not material as of September 30, 2020 or December 31, 2019. |
Investment Securities
Investment Securities | 9 Months Ended |
Sep. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment Securities | Investment Securities Our investment securities portfolio consists of obligations of state and political subdivisions, U.S. federal government agencies such as Government National Mortgage Association ("GNMA") and Small Business Administration ("SBA"), U.S. government-sponsored enterprises ("GSEs"), such as Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Farm Credit Banks Funding Corporation and FHLB. We also invest in residential and commercial mortgage-backed securities (“MBS”/"CMBS") and collateralized mortgage obligations (“CMOs”) issued or guaranteed by the GSEs, as reflected in the following table: September 30, 2020 December 31, 2019 Amortized Fair Gross Unrealized Amortized Fair Gross Unrealized (in thousands) Cost Value Gains (Losses) Cost Value Gains (Losses) Held-to-maturity: Securities of U.S. government-sponsored enterprises: MBS pass-through securities issued by FHLMC and FNMA $ 69,797 $ 73,884 $ 4,087 $ — $ 80,451 $ 81,325 $ 1,018 $ (144) SBA-backed securities 6,549 6,979 430 — 7,999 8,264 265 — CMOs issued by FNMA 8,440 8,834 394 — 10,210 10,492 282 — CMOs issued by FHLMC 29,657 31,331 1,674 — 31,477 32,157 685 (5) CMOs issued by GNMA 1,230 1,235 5 — 3,763 3,816 53 — Obligations of state and 1,677 1,720 43 — 3,513 3,588 75 — Total held-to-maturity 117,350 123,983 6,633 — 137,413 139,642 2,378 (149) Available-for-sale: Securities of U.S. government-sponsored enterprises: MBS pass-through securities issued by FHLMC and FNMA 56,679 59,482 2,803 — 98,502 100,071 1,617 (48) SBA-backed securities 31,057 32,844 1,844 (57) 35,674 36,286 688 (76) CMOs issued by FNMA 18,285 18,961 676 — 22,702 23,092 390 — CMOs issued by FHLMC 144,600 153,255 8,656 (1) 139,398 143,226 3,892 (64) CMOs issued by GNMA 9,064 9,491 427 — 11,719 11,755 42 (6) Debentures of government- sponsored agencies 45,239 45,688 449 — 48,389 49,046 727 (70) Obligations of state and 89,513 93,743 4,230 — 66,042 67,282 1,386 (146) Corporate bonds — — — — 1,497 1,502 6 (1) Total available-for-sale 394,437 413,464 19,085 (58) 423,923 432,260 8,748 (411) Total investment securities $ 511,787 $ 537,447 $ 25,718 $ (58) $ 561,336 $ 571,902 $ 11,126 $ (560) The amortized cost a nd fair value of investment debt securities by contractual maturity at September 30, 2020 and December 31, 2019 are shown below. Expected maturities may differ from contractual maturities if the issuers of the securities have the right to call or prepay obligations with or without call or prepayment penalties. September 30, 2020 December 31, 2019 Held-to-Maturity Available-for-Sale Held-to-Maturity Available-for-Sale (in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Within one year $ 247 $ 252 $ 14,235 $ 14,452 $ 1,807 $ 1,811 $ 6,699 $ 6,706 After one but within five years 8,974 9,539 60,958 64,559 2,256 2,296 48,706 49,619 After five years through ten years 52,373 56,139 164,815 174,439 56,221 57,544 208,806 214,277 After ten years 55,756 58,053 154,429 160,014 77,129 77,991 159,712 161,658 Total $ 117,350 $ 123,983 $ 394,437 $ 413,464 $ 137,413 $ 139,642 $ 423,923 $ 432,260 Sales of investment securities and gross gains and losses are shown in the following table: Three months ended Nine months ended (in thousands) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Available-for-sale: Sales proceeds $ — $ — $ 33,756 $ 66,081 Gross realized gains — — 916 214 Gross realized losses — — (1) (159) Pledged investment securities are shown in the following table: (in thousands) September 30, 2020 December 31, 2019 Pledged to the State of California: Secure public deposits in compliance with the Local Agency Security Program $ 102,396 $ 126,598 Collateral for trust deposits 752 742 Total investment securities pledged to the State of California 103,148 127,340 Collateral for Wealth Management and Trust Services checking account 629 622 Total pledged investment securities $ 103,777 $ 127,962 Other-Than-Temporarily Impaired ("OTTI") Debt Securities There were 8 and 40 securities in unrealized loss positions at September 30, 2020 and December 31, 2019, respectively. Those securities are summarized and classified according to the duration of the loss period in the tables below: September 30, 2020 < 12 continuous months ≥ 12 continuous months Total securities (in thousands) Fair value Unrealized loss Fair value Unrealized loss Fair value Unrealized loss Available-for-sale: SBA-backed securities $ — $ — $ 1,900 $ (57) $ 1,900 $ (57) CMOs issued by FHLMC 2,014 (1) — — 2,014 (1) Total available-for-sale 2,014 (1) 1,900 (57) 3,914 (58) Total temporarily impaired securities $ 2,014 $ (1) $ 1,900 $ (57) $ 3,914 $ (58) December 31, 2019 < 12 continuous months ≥ 12 continuous months Total securities (in thousands) Fair value Unrealized loss Fair value Unrealized loss Fair value Unrealized loss Held-to-maturity: MBS pass-through securities issued by FHLMC and FNMA $ 14,203 $ (60) $ 6,073 $ (84) $ 20,276 $ (144) CMOs issued by FHLMC — — 1,725 (5) 1,725 (5) Total held-to-maturity 14,203 (60) 7,798 (89) 22,001 (149) Available-for-sale: MBS pass-through securities issued by FHLMC and FNMA 4,367 (34) 4,464 (14) 8,831 (48) SBA-backed securities 9,227 (14) 2,448 (62) 11,675 (76) CMOs issued by FHLMC 14,918 (58) 2,981 (6) 17,899 (64) CMOs issued by GNMA 7,139 (6) — — 7,139 (6) Debentures of government- sponsored agencies 25,228 (70) — — 25,228 (70) Obligations of state and political subdivisions 20,579 (145) 659 (1) 21,238 (146) Corporate Bonds 500 (1) — — 500 (1) Total available-for-sale 81,958 (328) 10,552 (83) 92,510 (411) Total temporarily impaired securities $ 96,161 $ (388) $ 18,350 $ (172) $ 114,511 $ (560) As of September 30, 2020, the investment portfolio included 5 investment securities that had been in a continuous loss position for twelve months or more and 3 investment securities that had been in a loss position for less than twelve months. Securities issued by government-sponsored agencies, such as FNMA and FHLMC, usually have implicit credit support by the U.S. federal government. However, since 2008, FNMA and FHLMC have been under government conservatorship and, therefore, contractual cash flows for these investments carry explicit guarantees by the U.S. federal government. Securities issued by the SBA and GNMA have explicit credit guarantees by the U.S. federal government, which protects us from credit losses on the contractual cash flows of the securities. We routinely perform internal analyses of latest financial information of the issuers of obligations of state and political subdivisions, their credit ratings by major credit agencies, and/or credit enhancements. Based on our comprehensive analyses, we determined that the decline in the fair values of obligations of state and political subdivisions and corporate bonds as of December 31, 2019 were primarily driven by factors other than credit, such as changes in market interest rates and liquidity spreads subsequent to purchase. At September 30, 2020, Management determined that it did not intend to sell any investment securities with unrealized losses, and it is more likely than not that we will not be required to sell securities with unrealized losses before recovery of their amortized cost. Therefore, we do not consider these investment securities to be other-than-temporarily impaired at September 30, 2020. Non-Marketable Securities Included in Other Assets As a member of the FHLB, we are required to maintain a minimum investment in FHLB capital stock determined by the Board of Directors of the FHLB. The minimum investment requirements can increase in the event we increase our total asset size or borrowings with the FHLB. Shares cannot be purchased or sold except between the FHLB and its members at the $100 per share par value. We held $11.9 million and $11.7 million of FHLB stock included in other assets on the consolidated statements of condition at September 30, 2020 and December 31, 2019, respectively. The carrying amounts of these investments are reasonable estimates of fair value because the securities are restricted to member banks and they do not have a readily determinable market value. Based on our analysis of FHLB's financial condition and certain qualitative factors, we determined that the FHLB stock was not impaired at September 30, 2020 and December 31, 2019. On October 29, 2020, FHLB announced a cash dividend for the third quarter of 2020 at an annualized dividend rate of 5.00% to be distributed in mid-November 2020. Cash dividends paid on FHLB capital stock are recorded as non-interest income. As a member bank of Visa U.S.A., we held 10,439 shares of Visa Inc. Class B common stock at September 30, 2020 and December 31, 2019. These shares have a carrying value of zero and are restricted from resale to non-member banks of Visa U.S.A. until their conversion into Class A (voting) shares upon the termination of Visa Inc.'s Covered Litigation escrow account. Because of the restriction and the uncertainty on the conversion rate to Class A shares, these shares lack a readily determinable fair value. When converting this Class B common stock to Class A common stock based on the conversion rate of 1.6228 both at September 30, 2020 and December 31, 2019, and the closing stock price of Class A shares at those respective dates, the converted value of our shares of Class B common stock would have been $3.4 million and $3.2 million at September 30, 2020 and December 31, 2019, respectively. The conversion rate is subject to further adjustment upon the final settlement of the covered litigation against Visa Inc. and its member banks. As such, the fair value of these Class B shares can differ significantly from their converted values. For further information, refer to Note 8, Commitments and Contingencies. We invest in low-income housing tax credit funds as a limited partner, which totaled $3.7 million and $4.1 million recorded in other assets as of September 30, 2020 and December 31, 2019, respectively. In the first nine months of 2020, we recognized $490 thousand of low-income housing tax credits and other tax benefits, offset by $412 thousand of amortization expense of low-income housing tax credit investment, as a component of income tax expense. As of September 30, 2020, our unfunded commitments for these low-income housing tax credit funds totaled $886 thousand. We did not recognize any impairment losses on these low-income housing tax credit investments during the first nine months of 2020 or 2019, as the value of the future tax benefits exceeds the carrying value of the investments. |
Loans and Allowance for Loan Lo
Loans and Allowance for Loan Losses | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Loans and Allowance for Loan Losses | Loans and Allowance for Loan Losses Credit Quality of Loans The following table shows outstanding loans by class and payment aging as of September 30, 2020 and December 31, 2019. Loan Aging Analysis by Class (in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, investor-owned Construction Home equity Other residential Installment and other consumer Total September 30, 2020 30-59 days past due $ 198 $ — $ — $ — $ 217 $ — $ — $ 415 60-89 days past due — — — — 276 — 7 283 90 days or more past due — — — — — — — — Total past due 198 — — — 493 — 7 698 Current 512,775 299,754 966,517 66,663 106,871 130,915 23,798 2,107,293 Total loans 1 $ 512,973 $ 299,754 $ 966,517 $ 66,663 $ 107,364 $ 130,915 $ 23,805 $ 2,107,991 Non-accrual loans 2 $ — $ — $ 886 $ — $ 532 $ — $ 24 $ 1,442 December 31, 2019 30-59 days past due $ 1 $ — $ 1,001 $ — $ 279 $ — $ 7 $ 1,288 60-89 days past due — — — — 98 — 95 193 90 days or more past due — — — — 167 — — 167 Total past due 1 — 1,001 — 544 — 102 1,648 Current 246,686 308,824 945,316 61,095 115,480 136,657 27,580 1,841,638 Total loans 1 $ 246,687 $ 308,824 $ 946,317 $ 61,095 $ 116,024 $ 136,657 $ 27,682 $ 1,843,286 Non-accrual loans 2 $ — $ — $ — $ — $ 168 $ — $ 58 $ 226 1 Amounts include net deferred loan origination (fees) costs of $(5.1) million (including $6.5 million in deferred SBA PPP loan fees, net of costs) and $983 thousand at September 30, 2020 and December 31, 2019, respectively. Amounts are also net of unaccreted purchase discounts on non-PCI loans of $878 thousand at September 30, 2020 and $983 thousand at December 31, 2019. 2 There were no loans past due more than ninety days accruing interest at September 30, 2020 or December 31, 2019. We generally make commercial loans to established small and mid-sized businesses to provide financing for their growth and working capital needs, equipment purchases and acquisitions. Management examines historical, current, and projected cash flows to determine the ability of the borrower to repay obligations as agreed. Commercial loans are made based primarily on the identified cash flows of the borrower and secondarily on the underlying collateral and guarantor support. The cash flows of borrowers, however, may not occur as expected, and the collateral securing these loans may fluctuate in value. Most commercial and industrial loans are secured by the assets being financed, such as accounts receivable and inventory, and typically include personal guarantees. We target stable businesses with guarantors who provide additional sources of repayment and have proven to be resilient in periods of economic stress. Pursuant to the CARES Act, the Bank funded over 1,800 loans to eligible small businesses and non-profit organizations who participated in the Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration (“SBA”). PPP loans have terms of two to five years and earn interest at 1%. In addition, the Bank received a fee of 1%-5% from the SBA depending on the loan amount, which was netted with loan origination costs and amortized into interest income under the effective yield method over the contractual life of the loan. The recognition of fees and costs is accelerated when the loan is forgiven by the SBA and/or paid off prior to maturity. PPP loans are fully guaranteed by the SBA and are expected to be forgiven by the SBA if they meet the requirements of the program. PPP loans totaling $301.7 million at September 30, 2020 are included in commercial and industrial loan balances. The Bank ended its origination of new PPP loans on June 30, 2020. On June 5, 2020, the PPP Flexibility Act was signed into law that modified, among other things, rules governing the PPP payment deferral period. In October 2020, due to the continued delay in the PPP forgiveness process, the Bank modified the first payment due dates for PPP loans that originated prior to June 5, 2020 and extended the payment deferral period from six Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans discussed above. We underwrite these loans to be repaid from cash flow and to be supported by real property collateral. Underwriting standards for commercial real estate loans include, but are not limited to, debt coverage and loan-to-value ratios. Furthermore, a large majority of our loans are guaranteed by the owners of the properties. Conditions in the real estate markets or in the general economy may adversely affect our commercial real estate loans. In the event of a vacancy, we expect guarantors to carry the loans until they find a replacement tenant. The owner's substantial equity investment provides a strong economic incentive to continue to support the commercial real estate projects. As such, we have generally experienced a relatively low level of loss and delinquencies in this portfolio. Construction loans are generally made to developers and builders to finance construction, renovation and occasionally land acquisitions in anticipation of near-term development. Construction loans include interest reserves that are used for the payment of interest during the development and marketing periods and are capitalized as part of the loan balance. When a construction loan is placed on nonaccrual status before the depletion of the interest reserve, we apply the interest funded by the interest reserve against the loan's principal balance. These loans are underwritten after evaluation of the borrower's financial strength, reputation, prior track record, and independent appraisals. We monitor all construction projects to determine whether they are on schedule, completed as planned and in accordance with the approved construction budgets. Significant events can affect the construction industry, including: the inherent volatility of real estate markets and vulnerability to delays due to weather, change orders, inability to obtain construction permits, labor or material shortages, and price changes. Estimates of construction costs and value associated with the completed project may be inaccurate. Repayment of construction loans is largely dependent on the ultimate success of the project. Consumer loans primarily consist of home equity lines of credit, other residential loans and floating homes, along with a small number of installment loans. Our other residential loans include tenancy-in-common fractional interest loans ("TIC") located almost entirely in San Francisco County. We originate consumer loans utilizing credit score information, debt-to-income ratio and loan-to-value ratio analysis. Diversification among consumer loan types, coupled with relatively small loan amounts that are spread across many individual borrowers, mitigates risk. We do not originate sub-prime residential mortgage loans, nor is it our practice to underwrite loans commonly referred to as "Alt-A mortgages," the characteristics of which are reduced documentation, borrowers with low FICO scores or collateral with high loan-to-value ratios. We use a risk rating system to evaluate asset quality, and to identify and monitor credit risk in individual loans, and in the loan portfolio. Our definitions of “Special Mention” risk graded loans, or worse, are consistent with those used by the Federal Deposit Insurance Corporation ("FDIC"). Our internally assigned grades are as follows: Pass and Watch : Loans to borrowers of acceptable or better credit quality. Borrowers in this category demonstrate fundamentally sound financial positions, repayment capacity, credit history, and management expertise. Loans in this category must have an identifiable and stable source of repayment and meet the Bank’s policy regarding debt-service-coverage ratios. These borrowers are capable of sustaining normal economic, market or operational setbacks without significant financial consequences. Negative external industry factors are generally not present. The loan may be secured, unsecured or supported by non-real estate collateral for which the value is more difficult to determine and/or marketability is more uncertain. This category also includes “Watch” loans, where the primary source of repayment has been delayed. “Watch” is intended to be a transitional grade, with either an upgrade or downgrade within a reasonable period. Special Mention : Potential weaknesses that deserve close attention. If left uncorrected, those potential weaknesses may result in deterioration of the payment prospects for the asset. Special Mention assets do not present sufficient risk to warrant adverse classification. Substandard : Inadequately protected by either the current sound worth and paying capacity of the obligor or the collateral pledged, if any. A Substandard asset has a well-defined weakness or weaknesses that jeopardize(s) the liquidation of the debt. Substandard assets are characterized by the distinct possibility that we will sustain some loss if such weaknesses or deficiencies are not corrected. Well-defined weaknesses include adverse trends or developments of the borrower’s financial condition, managerial weaknesses and/or significant collateral deficiencies. Doubtful : Critical weaknesses that make collection or liquidation in full improbable. There may be specific pending events that work to strengthen the asset; however, the amount or timing of the loss may not be determinable. Pending events generally occur within one year of the asset being classified as Doubtful. Examples include: merger, acquisition, or liquidation; capital injection; guarantee; perfecting liens on additional collateral; and refinancing. Such loans are placed on non-accrual status and usually are collateral-dependent. We regularly review our credits for accuracy of risk grades whenever we receive new information. Borrowers are generally required to submit financial information at regular intervals. Typically, commercial borrowers with lines of credit are required to submit financial information with reporting intervals ranging from monthly to annually depending on credit size, risk and complexity. In addition, investor commercial real estate borrowers with loans exceeding a certain dollar threshold are usually required to submit rent rolls or property income statements annually. We monitor construction loans monthly. We review home equity and other consumer loans based on delinquency. We also review loans graded “Watch” or worse, regardless of loan type, no less than quarterly. The following table represents an analysis of the carrying amount in loans, net of deferred fees and costs and purchase premiums or discounts, by internally assigned risk grades, at September 30, 2020 and December 31, 2019. Credit Risk Profile by Internally Assigned Risk Grade (in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, investor-owned Construction Home equity Other residential Installment and other consumer Total September 30, 2020 Pass $ 484,305 $ 251,741 $ 946,166 $ 66,663 $ 105,824 $ 130,915 $ 23,665 $ 2,009,279 Special Mention 28,544 41,010 17,359 — 800 — — 87,713 Substandard 124 7,003 2,992 — 740 — 140 10,999 Total loans $ 512,973 $ 299,754 $ 966,517 $ 66,663 $ 107,364 $ 130,915 $ 23,805 $ 2,107,991 December 31, 2019 Pass $ 209,213 $ 264,766 $ 945,757 $ 61,095 $ 114,935 $ 136,657 $ 27,538 $ 1,759,961 Special Mention 37,065 35,016 560 — 750 — — 73,391 Substandard 409 9,042 — — 339 — 144 9,934 Total loans $ 246,687 $ 308,824 $ 946,317 $ 61,095 $ 116,024 $ 136,657 $ 27,682 $ 1,843,286 Troubled Debt Restructuring Our loan portfolio includes certain loans modified in a troubled debt restructuring (“TDR”), where we have granted economic concessions to borrowers experiencing financial difficulties. These concessions typically result from our loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. TDRs on non-accrual status at the time of restructure may be returned to accruing status after Management considers the borrower’s sustained repayment performance for a reasonable period, generally nine months, and obtains reasonable assurance of repayment and performance. We may remove a loan from TDR designation if it meets all of the following conditions: • The loan is subsequently refinanced or restructured at current market interest rates and the new terms are consistent with the treatment of creditworthy borrowers under regular underwriting standards; • The borrower is no longer considered to be in financial difficulty; • Performance on the loan is reasonably assured; and • Existing loan did not have any forgiveness of principal or interest. The same Management level that approved the loan classification upgrade must approve the removal of TDR status. There were no loans removed from TDR designation during the nine months ended September 30, 2020. There was one commercial loan with a recorded investment of $3 thousand removed from TDR designation during the nine months ended September 30, 2019 after meeting all of the conditions above. Section 4013 of the CARES Act provided optional, temporary relief from evaluating loans that may have been considered TDRs under GAAP. This relief applies to loan modifications executed between March 1, 2020 and the earlier of 60 days after the national emergency is terminated or December 31, 2020. The Bank elected to apply these temporary accounting provisions to payment relief loans beginning in March 2020. The Bank approved 264 loan modifications for full payment deferral or interest-only payments for up to 120 days on loan balances exceeding $388.5 million. As of October 19, 2020, 20 loans totaling $47.2 million had either requested additional payment relief or the relief period had not expired. We accrue and recognize interest income on loans under payment relief based on the original contractual interest rates. When payments resume at the end of the relief period, the payments will generally be applied to accrued interest due until accrued interest is fully paid. The following table summarizes the carrying amount of TDR loans by loan class as of September 30, 2020 and December 31, 2019. (in thousands) Recorded Investment in Troubled Debt Restructurings 1 September 30, 2020 December 31, 2019 Commercial and industrial $ 1,017 $ 1,223 Commercial real estate, owner-occupied 7,003 6,998 Commercial real estate, investor-owned 3,309 1,770 Home equity 527 251 Other residential — 452 Installment and other consumer 769 639 Total $ 12,625 $ 11,333 1 There was one acquired home equity TDR loan with a recorded investment of $276 thousand as of September 30, 2020. There were no acquired TDR loans as of December 31, 2019. TDR loans on non-accrual status totaled $300 thousand and $58 thousand at September 30, 2020 and December 31, 2019, respectively. The following table presents information for loans modified in a TDR during the presented periods, including the number of modified contracts, the recorded investment in the loans prior to modification, and the recorded investment in the loans at period end after being restructured. The table excludes fully charged-off TDR loans and loans modified in a TDR and subsequently paid-off during the years presented, if applicable. (dollars in thousands) Number of Contracts Modified Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment at Period End TDRs during the three months ended September 30, 2020: Commercial real estate, investor-owned 1 $ 1,553 $ 1,553 $ 1,553 TDRs during the three months ended September 30, 2019: None — $ — $ — $ — TDRs during the nine months ended September 30, 2020: Commercial and industrial 1 $ 170 $ 162 $ 125 Commercial real estate, investor-owned 1 1,553 1,553 1,553 Home equity 1 276 276 276 Installment and other consumer 3 211 211 209 6 $ 2,210 $ 2,202 $ 2,163 TDRs during the nine months ended September 30, 2019: Commercial and industrial 1 $ 298 $ 298 $ 173 The loans modified in 2020 reflected debt consolidation, interest rate concessions, and/or other loan term and payment modifications. The loan modified during the first nine months of 2019 reflected a maturity extension and interest rate concession. During the nine months ended September 30, 2020 and 2019, there were no defaults on loans that had been modified in a TDR within the prior twelve-month period. We report defaulted TDRs based on a payment default definition of more than ninety days past due. Impaired Loans The following tables summarize information by class on impaired loans and their related allowances. Total impaired loans include non-accrual loans and accruing TDR loans. (in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, investor-owned Construction Home equity Other residential Installment and other consumer Total September 30, 2020 Recorded investment in impaired loans: With no specific allowance recorded $ 291 $ — $ 885 $ — $ 532 $ — $ 89 $ 1,797 With a specific allowance recorded 726 7,003 3,310 — 251 — 680 11,970 Total recorded investment in impaired loans $ 1,017 $ 7,003 $ 4,195 $ — $ 783 $ — $ 769 $ 13,767 Unpaid principal balance of impaired loans $ 1,012 $ 6,993 $ 4,187 $ — $ 801 $ — $ 767 $ 13,760 Specific allowance 19 225 697 — 4 — 161 1,106 Average recorded investment in impaired loans during the quarter ended 798 7,002 3,430 — 829 — 774 12,833 Interest income recognized on impaired loans during the quarter ended September 30, 2020 1 11 64 30 — 3 — 7 115 Average recorded investment in impaired loans during the nine months ended 948 7,000 2,832 — 740 225 730 12,475 Interest income recognized on impaired loans during the nine months ended September 30, 2020 1 32 197 68 — 10 4 22 333 Average recorded investment in impaired loans during the quarter ended 1,324 7,000 1,791 684 413 456 659 12,327 Interest income recognized on impaired loans during the quarter ended 1 16 67 20 400 9 4 6 522 Average recorded investment in impaired loans during the nine months ended 1,495 6,998 1,804 1,687 497 458 670 13,609 Interest income recognized on impaired loans during the nine months ended September 30, 2019 1 56 199 59 456 42 14 18 844 1 No interest income was recognized on a cash basis during the three and nine months ended September 30, 2020. Interest income recognized on a cash basis of $393 thousand and $416 thousand during the respective three and nine months ended September 30, 2019 was related to a principal payment applied to interest collected but unrecognized on a former non-accrual land development loan and the pay-off of three non-accrual loans. (in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, investor-owned Construction Home equity Other residential Installment and other consumer Total December 31, 2019 Recorded investment in impaired loans: With no specific allowance recorded $ 349 $ — $ — $ — $ 167 $ 452 $ 98 $ 1,066 With a specific allowance recorded 874 6,998 1,770 — 251 — 541 10,434 Total recorded investment in impaired loans $ 1,223 $ 6,998 $ 1,770 $ — $ 418 $ 452 $ 639 $ 11,500 Unpaid principal balance of impaired loans $ 1,209 $ 6,992 $ 1,764 $ — $ 417 $ 451 $ 638 $ 11,471 Specific allowance $ 103 $ 195 $ 41 $ — $ 5 $ — $ 53 $ 397 Management monitors delinquent loans continuously and identifies problem loans (loans on non-accrual status and loans modified in a TDR) to evaluate individually for impairment. Generally, the recorded investment in impaired loans is net of any charge-offs from estimated losses related to specifically-identified impaired loans when they are deemed uncollectible. There were no charged-off amounts on impaired loans at September 30, 2020 or December 31, 2019. In addition, the recorded investment in impaired loans is net of purchase discounts or premiums on acquired loans and deferred fees and costs. At September 30, 2020 and December 31, 2019, unused commitments to extend credit on impaired loans, including performing loans to borrowers whose terms have been modified in TDRs, totaled $500 thousand and $534 thousand, respectively. The following tables disclose activity in the allowance for loan losses ("ALLL") and the recorded investment in loans by class, as well as the related ALLL disaggregated by impairment evaluation method. Allowance for Loan Losses Rollforward for the Period (in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, investor-owned Construction Home equity Other residential Installment and other consumer Unallocated Total Three months ended September 30, 2020 Beginning balance $ 2,609 $ 2,910 $ 10,403 $ 836 $ 1,044 $ 1,266 $ 426 $ 1,374 $ 20,868 Provision (reversal) (79) 225 1,221 24 (6) (6) (20) (109) 1,250 Charge-offs (10) — — — — — — — (10) Recoveries 5 — — — — — — — 5 Ending balance $ 2,525 $ 3,135 $ 11,624 $ 860 $ 1,038 $ 1,260 $ 406 $ 1,265 $ 22,113 Three months ended September 30, 2019 Beginning balance $ 2,368 $ 2,321 $ 7,721 $ 619 $ 907 $ 849 $ 323 $ 727 $ 15,835 Provision (reversal) 326 21 211 (117) (28) 56 (28) (41) 400 Charge-offs — — — — — — — — — Recoveries 5 — — — — — — — 5 Ending balance $ 2,699 $ 2,342 $ 7,932 $ 502 $ 879 $ 905 $ 295 $ 686 $ 16,240 Allowance for Loan Losses Rollforward for the Period (in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, investor Construction Home equity Other residential Installment and other consumer Unallocated Total Nine months ended September 30, 2020 Beginning balance $ 2,334 $ 2,462 $ 8,483 $ 638 $ 850 $ 973 $ 284 $ 653 $ 16,677 Provision (reversal) 208 673 3,141 219 188 287 122 612 5,450 Charge-offs (30) — — — — — — — (30) Recoveries 13 — — 3 — — — — 16 Ending balance $ 2,525 $ 3,135 $ 11,624 $ 860 $ 1,038 $ 1,260 $ 406 $ 1,265 $ 22,113 Nine months ended September 30, 2019 Beginning balance $ 2,436 $ 2,407 $ 7,703 $ 756 $ 915 $ 800 $ 310 $ 494 $ 15,821 Provision (reversal) 256 (65) 217 (254) (36) 105 (15) 192 400 Charge-offs (9) — — — — — — — (9) Recoveries 16 — 12 — — — — — 28 Ending balance $ 2,699 $ 2,342 $ 7,932 $ 502 $ 879 $ 905 $ 295 $ 686 $ 16,240 Allowance for Loan Losses and Recorded Investment in Loans (dollars in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, investor-owned Construction Home equity Other residential Installment and other consumer Unallocated Total September 30, 2020 Ending ALLL related to loans collectively evaluated for impairment $ 2,506 $ 2,910 $ 10,927 $ 860 $ 1,034 $ 1,260 $ 245 $ 1,265 $ 21,007 Ending ALLL related to loans individually evaluated for impairment 19 225 697 — 4 — 161 — 1,106 Ending balance $ 2,525 $ 3,135 $ 11,624 $ 860 $ 1,038 $ 1,260 $ 406 $ 1,265 $ 22,113 Recorded Investment: Collectively evaluated for impairment $ 511,956 $ 292,751 $ 962,322 $ 66,663 $ 106,581 $ 130,915 $ 23,036 $ — $ 2,094,224 Individually evaluated for impairment 1,017 7,003 4,195 — 783 — 769 — 13,767 Total $ 512,973 $ 299,754 $ 966,517 $ 66,663 $ 107,364 $ 130,915 $ 23,805 $ — $ 2,107,991 Ratio of allowance for loan losses to total loans 0.49 % 1.05 % 1.20 % 1.29 % 0.97 % 0.96 % 1.71 % NM 1.05 % Allowance for loan losses to non-accrual loans NM NM 1,312 % NM 195 % NM 1,692 % NM 1,533 % NM - Not Meaningful Allowance for Loan Losses and Recorded Investment in Loans (dollars in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, investor-owned Construction Home equity Other residential Installment and other consumer Unallocated Total December 31, 2019 Ending ALLL related to loans collectively evaluated for impairment $ 2,231 $ 2,267 $ 8,442 $ 638 $ 845 $ 973 $ 231 $ 653 $ 16,280 Ending ALLL related to loans individually evaluated for impairment 103 195 41 — 5 — 53 — 397 Ending balance $ 2,334 $ 2,462 $ 8,483 $ 638 $ 850 $ 973 $ 284 $ 653 $ 16,677 Recorded Investment: Collectively evaluated for impairment $ 245,464 $ 301,826 $ 944,547 $ 61,095 $ 115,606 $ 136,205 $ 27,043 $ — $ 1,831,786 Individually evaluated for impairment 1,223 6,998 1,770 — 418 452 639 — 11,500 Total $ 246,687 $ 308,824 $ 946,317 $ 61,095 $ 116,024 $ 136,657 $ 27,682 $ — $ 1,843,286 Ratio of allowance for loan losses to total loans 0.95 % 0.80 % 0.90 % 1.04 % 0.73 % 0.71 % 1.03 % NM 0.90 % Allowance for loan losses to non-accrual loans NM NM NM NM 506 % NM 490 % NM 7,379 % NM - Not Meaningful Pledged Loans Our FHLB line of credit is secured under terms of a blanket collateral agreement by a pledge of certain qualifying loans with unpaid principal balances of $1,149.5 million and $1,133.4 million at September 30, 2020 and December 31, 2019, respectively. In addition, we pledge eligible TIC loans, which totaled $120.4 million and $115.7 million at September 30, 2020 and December 31, 2019, respectively, to secure our borrowing capacity with the Federal Reserve Bank ("FRB"). Also, see Note 6, Borrowings. Related Party Loans The Bank has, and expects to have in the future, banking transactions in the ordinary course of its business with directors, officers, principal shareholders and their businesses or associates. These loans are granted on substantially the same terms, including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with persons not related to us. Likewise, these transactions do not involve more than the normal risk of collectability or present other unfavorable features. Related party loans totaled $7.2 million at September 30, 2020 and $8.3 million at December 31, 2019. In addition, undisbursed commitments to related parties totaled $8.7 million at September 30, 2020 and $9.2 million at December 31, 2019. |
Borrowings and Other Obligation
Borrowings and Other Obligations | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Borrowings and Other Obligations | Borrowings and Other Obligations Federal Funds Purchased – The Bank had unsecured lines of credit with correspondent banks for overnight borrowings totaling $135.0 million at September 30, 2020 and $92.0 million at December 31, 2019. In general, interest rates on these lines approximate the federal funds target rate. We had no overnight borrowings under these credit facilities at September 30, 2020 or December 31, 2019 . Federal Home Loan Bank Borrowings – As of September 30, 2020 and December 31, 2019, the Bank had lines of credit with the FHLB totaling $696.2 million and $648.0 million, respectively, based on eligible collateral of certain loans. There were no FHLB overnight borrowings at September 30, 2020 or December 31, 2019. Federal Reserve Line of Credit – The Bank has a line of credit with the FRBSF secured by certain residential loans. At September 30, 2020 and December 31, 2019, the Bank had borrowing capacity under this line totaling $83.1 million and $80.3 million, respectively, and had no outstanding borrowings with the FRBSF. Subordinated Debenture – As part of an acquisition in 2013, Bancorp assumed a subordinated debenture due to NorCal Community Bancorp Trust II (the "Trust"), established for the sole purpose of issuing trust preferred securities. The trust preferred securities were sold and issued in private transactions pursuant to an exemption from registration under the Securities Act of 1933, as amended. The subordinated debenture was recorded at fair value totaling $2.14 million at the acquisition date with a contractual balance of $4.12 million. The difference between the contractual balance and the fair value at the acquisition date is accreted into interest expense over the life of the debenture. Accretion on the subordinated debenture totaled $52 thousand and $51 thousand for the nine months ended September 30, 2020 and 2019, respectively. Bancorp has the option to defer payment of the interest on the subordinated debenture for a period of up to five years, as long as there is no event of default. In the event of interest deferral, dividends to Bancorp common stockholders are prohibited. Bancorp has guaranteed, on a subordinated basis, distributions and other payments due on trust preferred securities totaling $4.0 million issued by the Trust, which have identical maturity, repricing and payment terms as the subordinated debenture. The subordinated debenture due to NorCal Community Bancorp Trust II on March 15, 2036 with interest payable quarterly (repricing quarterly, based on 3-month LIBOR plus 1.40%, or 1.65% as of September 30, 2020) is redeemable in whole or in part on any interest payment date. Other Obligations – The Bank leases certain equipment under finance leases, which are included in borrowings and other obligations in the consolidated statements of condition. See Note 8, Commitments and Contingencies, for additional information. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Dividends On October 23, 2020, Bancorp declared a $0.23 per share cash dividend, payable on November 13, 2020 to shareholders of record at the close of business on November 6, 2020. Share-Based Payments The fair value of stock options as of the grant date is recorded as stock-based compensation expense in the consolidated statements of comprehensive income over the requisite service period, which is generally the vesting period, with a corresponding increase in common stock. Stock-based compensation also includes compensation expense related to the issuance of restricted stock awards. The grant-date fair value of the restricted stock awards, which equals the grant date price, is recorded as compensation expense over the requisite service period with a corresponding increase in common stock as the shares vest. Beginning in 2018, stock option and restricted stock awards issued include a retirement eligibility clause whereby the requisite service period is satisfied at the retirement eligibility date. For those awards, we accelerate the recording of stock-based compensation when the award holder is eligible to retire. However, retirement eligibility does not affect the vesting of restricted stock or the exercisability of the stock options, which are based on the scheduled vesting period. Performance-based stock awards (restricted stock) are issued to a selected group of employees. Stock award vesting is contingent upon the achievement of pre-established long-term performance goals set by the Compensation Committee of the Board of Directors. Performance is measured over a three We record excess tax benefits (deficiencies) resulting from the exercise of non-qualified stock options, the disqualifying disposition of incentive stock options and vesting of restricted stock awards as income tax benefits (expense) in the consolidated statements of comprehensive income with a corresponding decrease (increase) to current taxes payable. The holders of unvested restricted stock awards are entitled to dividends on the same per-share ratio as holders of common stock. Tax benefits for dividends paid on unvested restricted stock awards are recorded as tax benefits in the consolidated statements of comprehensive income with a corresponding decrease to current taxes payable. Dividends on forfeited awards are included in stock-based compensation expense. Stock options and restricted stock may be net settled in a cashless exercise by a reduction in the number of shares otherwise deliverable upon exercise or vesting in satisfaction of the exercise payment and/or applicable tax withholding requirements. During the nine months ended September 30, 2020, we withheld 9,214 shares totaling $369 thousand at a weighted-average price of $40.01 for cashless exercises. During the nine months ended September 30, 2019, we withheld 7,795 shares totaling $326 thousand at a weighted-average price of $41.84 for cashless exercises. Shares withheld under net settlement arrangements are available for future grants. Share Repurchase Program On April 23, 2018, Bancorp announced that its Board of Directors approved a Share Repurchase Program under which Bancorp may repurchase up to $25.0 million of its outstanding common stock through May 1, 2019. Bancorp's Board of Directors subsequently extended the Share Repurchase Program through February 28, 2020. On January 24, 2020, Bancorp Board of Directors approved a new Share Repurchase Program under which Bancorp may repurchase up to $25.0 million of its outstanding common stock through February 28, 2022. The new share repurchase program which began on March 1, 2020 was suspended by the Board of Directors on March 20, 2020 in response to the COVID-19 pandemic. The program was reactivated by the Board of Directors on October 23, 2020. Under the Share Repurchase Program, Bancorp may purchase shares of its common stock through various means such as open market transactions, including block purchases, and privately negotiated transactions. The number of shares repurchased and the timing, manner, price and amount of any repurchases will be determined at Bancorp's discretion. Factors include, but are not limited to, stock price, trading volume and general market conditions, along with Bancorp’s general business conditions. The program may be suspended or discontinued at any time and does not obligate Bancorp to acquire any specific number of shares of its common stock. As part of the Share Repurchase Program, Bancorp entered into a trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The 10b5-1 trading plan permits common stock to be repurchased at times that might otherwise be prohibited under insider trading laws or self-imposed trading restrictions. The 10b5-1 trading plan is administered by an independent broker and is subject to price, market volume and timing restrictions. During the nine months ended September 30, 2020, Bancorp repurchased 92,664 shares totaling $3.2 million for a cumulative 619,881 shares totaling $25.2 million repurchased from May 1, 2018 through September 30, 2020. Due to the suspension of the program in March 2020, there were no shares repurchased during the second or third quarters of 2020. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Financial Instruments with Off-Balance Sheet Risk We make commitments to extend credit in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit in the form of loans or through standby letters of credit. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because various commitments will expire without being fully drawn, the total commitment amount does not necessarily represent future cash requirements. Our credit loss exposure is equal to the contractual amount of the commitment in the event of nonperformance by the borrower. We use the same credit underwriting criteria for all credit exposure. The amount of collateral obtained, if deemed necessary by us, is based on Management's credit evaluation of the borrower. Collateral types pledged may include accounts receivable, inventory, other personal property and real property. The contractual amount of undrawn loan commitments and standby letters of credit not reflected in the consolidated statements of condition are as follows: (in thousands) September 30, 2020 December 31, 2019 Commercial lines of credit $ 301,107 $ 287,533 Revolving home equity lines 193,364 189,035 Undisbursed construction loans 59,548 41,033 Personal and other lines of credit 10,923 9,567 Standby letters of credit 2,572 1,964 Total commitments and standby letters of credit $ 567,514 $ 529,132 We record an allowance for losses on these off-balance sheet commitments based on an estimate of probabilities of the utilization of these commitments according to our historical experience on different types of commitments and expected loss. The allowance for losses on off-balance sheet commitments totaled $1.7 million and $1.1 million as of September 30, 2020 and December 31, 2019, respectively, which is recorded in interest payable and other liabilities in the consolidated statements of condition. Leases We lease premises under long-term non-cancelable operating leases with remaining terms of 1 year to 12 years, most of which include escalation clauses and one or more options to extend the lease term, and some of which contain lease termination clauses. Lease terms may include certain renewal options that were considered reasonably certain to be exercised. We lease certain equipment under finance leases with initial terms of 3 years to 5 years. The equipment finance leases do not contain renewal options, bargain purchase options or residual value guarantees. The following table shows the balances of operating and finance lease right-of-use assets and lease liabilities as of September 30, 2020. (in thousands) September 30, 2020 December 31, 2019 Operating leases: Operating lease right-of-use assets $ 26,041 $ 11,002 Operating lease liabilities $ 27,527 $ 12,615 Finance leases: Finance lease right-of-use assets $ 365 $ 379 Accumulated amortization (267) (170) Finance lease right-of-use assets, net 1 $ 98 $ 209 Finance lease liabilities 2 $ 99 $ 212 1 Included in premises and equipment in the consolidated statements of condition. 2 Included in borrowings and other obligations in the consolidated statements of condition. The following table shows supplemental disclosures of noncash investing and financing activities for the period presented. Nine months ended (in thousands) September 30, 2020 September 30, 2019 Right-of-use assets obtained in exchange for operating lease liabilities $ 18,021 $ 1,661 Right-of-use assets obtained in exchange for finance lease liabilities $ 18 $ 31 Reclassification of deferred rent and unamortized lease incentives from other liabilities to operating lease right-of-use assets upon adoption of ASC 842 $ — $ 1,967 The following table shows components of operating and finance lease cost. Three months ended Nine months ended (in thousands) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Operating lease cost $ 1,165 $ 1,051 $ 3,334 $ 3,123 Variable lease cost 1 — 4 — Total operating lease cost 1 $ 1,166 $ 1,051 $ 3,338 $ 3,123 Finance lease cost: Amortization of right-of-use assets 2 $ 41 $ 43 $ 129 $ 128 Interest on finance lease liabilities 3 1 2 3 $ 7 Total finance lease cost 42 45 $ 132 $ 135 Total lease cost $ 1,208 $ 1,096 $ 3,470 $ 3,258 1 Included in occupancy and equipment expense in the consolidated statements of comprehensive income. 2 Included in depreciation and amortization in the consolidated statements of comprehensive income. 3 Included in interest on borrowings and other obligations in the consolidated statements of comprehensive income. The following table shows the future minimum lease payments, weighted average remaining lease terms, and weighted average discount rates under operating and finance lease arrangements as of September 30, 2020. The discount rates used to calculate the present value of lease liabilities were based on the collateralized FHLB borrowing rates that were commensurate with lease terms and minimum payments on the later of the date we adopted the new lease accounting standards or lease commencement date. (in thousands) September 30, 2020 Year Operating Leases Finance Leases 2020 $ 1,199 $ 41 2021 4,592 42 2022 4,318 13 2023 3,893 4 2024 3,187 — Thereafter 12,475 — Total minimum lease payments 29,664 100 Amounts representing interest (present value discount) (2,137) (1) Present value of net minimum lease payments (lease liability) $ 27,527 $ 99 Weighted average remaining term (in years) 8.0 1.2 Weighted average discount rate 1.84 % 2.55 % Litigation Matters Bancorp may be party to legal actions that arise from time to time in the normal course of business. Bancorp's Management is not aware of any pending legal proceedings to which either it or the Bank may be a party or has recently been a party that will have a material adverse effect on the financial condition or results of operations of Bancorp or the Bank. The Bank is responsible for a proportionate share of certain litigation indemnifications provided to Visa U.S.A. ("Visa") by its member banks in connection with Visa's lawsuits related to anti-trust charges and interchange fees ("Covered Litigation"). Our proportionate share of the litigation indemnification liability does not change or transfer upon the sale of our Class B Visa shares to member banks. Visa established an escrow account to pay for settlements or judgments in the Covered Litigation. Under the terms of the U.S. retrospective responsibility plan, when Visa funds the litigation escrow account, it triggers a conversion rate reduction of the Class B common stock to shares of Class A common stock, effectively reducing the aggregate value of the Class B common stock held by Visa's member banks like us. In 2012, Visa had reached a $4.0 billion interchange multidistrict litigation class settlement agreement with plaintiffs representing a class of U.S. retailers. On September 17, 2018, Visa signed an amended settlement agreement with the putative class action plaintiffs of the U.S. interchange multidistrict litigation that superseded the 2012 settlement agreement. Visa's share of the settlement amount under the amended class settlement agreement increased to $4.1 billion. On September 27, 2019, Visa deposited an additional $300 million into the litigation escrow account. Certain merchants chose to opt out of the class settlement agreement and on December 13, 2019, the court entered the final judgment order approving the amended settlement agreement. On December 27, 2019, Visa received a takedown payment of approximately $467 million, which was deposited into the litigation escrow account with a corresponding increase in accrued litigation to address opt-out claims. The escrow balance of $1.1 billion as of June 30, 2020 (most recent information available), combined with funds previously deposited with the court, are expected to cover the settlement payment obligations. The outcome of the Covered Litigation affects the conversion rate of Visa Class B common stock held by us to Visa Class A common stock, as discussed above and in Note 4, Investment Securities. The final conversion rate might change depending on the final settlement payments, and the full effect on member banks is still uncertain. Litigation is ongoing and until the court approval process is complete, there is no assurance that Visa will resolve the claims as contemplated by the amended class settlement agreement, and additional lawsuits may arise from individual merchants who opted out of the class settlement. However, until the escrow account is fully depleted and the conversion rate of Class B to Class A common stock is reduced to zero, no future cash settlement payments are required by the member banks, such as us, on the Covered Litigation. Therefore, we are not required to record any contingent liabilities for the indemnification related to the Covered Litigation, as we consider the probability of losses to be remote. |
Derivative Financial Instrument
Derivative Financial Instruments and Hedging Activities | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments and Hedging Activities | Derivative Financial Instruments and Hedging Activities We entered into interest rate swap agreements, primarily as an asset/liability management strategy, in order to mitigate the changes in the fair value of specified long-term fixed-rate loans (or firm commitments to enter into long-term fixed-rate loans) caused by changes in interest rates. These hedges allow us to offer long-term fixed-rate loans to customers without assuming the interest rate risk of a long-term asset. Converting our fixed-rate interest payments to floating-rate interest payments, generally benchmarked to the one-month U.S. dollar LIBOR index, protects us against changes in the fair value of our loans associated with fluctuating interest rates. Our credit exposure, if any, on interest rate swap asset positions is limited to the fair value (net of any collateral pledged to us) and interest payments of all swaps by each counterparty. Conversely, when an interest rate swap is in a liability position exceeding a certain threshold, we may be required to post collateral to the counterparty in an amount determined by the agreements. Collateral levels are monitored and adjusted on a regular basis for changes in interest rate swap values. As of September 30, 2020, we had five interest rate swap agreements, which are scheduled to mature in June 2031, October 2031, July 2032, August 2037 and October 2037. All of our derivatives are accounted for as fair value hedges. The notional amounts of the interest rate contracts are equal to the notional amounts of the hedged loans. Our interest rate swap payments are settled monthly with counterparties. Accrued interest on the swaps totaled $13 thousand at September 30, 2020 and $6 thousand at December 31, 2019. Information on our derivatives follows: Asset Derivatives Liability Derivatives (in thousands) September 30, December 31, 2019 September 30, December 31, 2019 Fair value hedges: Interest rate contracts notional amount $ — $ — $ 16,218 $ 16,956 Interest rate contracts fair value 1 $ — $ — $ 2,529 $ 1,178 1 See Note 3, Fair Value of Assets and Liabilities, for valuation methodology. The following table presents the carrying amount and associated cumulative basis adjustment related to the application of fair value hedge accounting that is included in the carrying amount of hedged assets as of September 30, 2020 and December 31, 2019. Carrying Amounts of Hedged Assets Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Loans (in thousands) September 30, 2020 December 31, 2019 September 30, 2020 December 31, 2019 Loans $ 18,535 $ 17,900 $ 2,318 $ 944 The following table presents the net losses recognized in interest income on loans on the consolidated statements of comprehensive income related to our derivatives designated as fair value hedges. Three months ended Nine months ended (in thousands) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Interest and fees on loans 1 $ 21,776 $ 21,525 $ 63,880 $ 63,208 Increase (decrease) in fair value of designated interest rate swaps due to LIBOR interest rate movements $ 152 $ (485) $ (1,351) $ (1,389) Payment on interest rate swaps (108) (23) (255) (49) (Decrease) increase in value of hedged loans (155) 424 1,374 1,359 Decrease in value of yield maintenance agreement (3) (3) (9) (10) Net losses on fair value hedging relationships recognized in interest income $ (114) $ (87) $ (241) $ (89) 1 Represents the income line item in the statement of comprehensive income in which the effects of fair value hedges are recorded. Our derivative transactions with counterparties are under International Swaps and Derivative Association (“ISDA”) master agreements that include “right of set-off” provisions. “Right of set-off” provisions are legally enforceable rights to offset recognized amounts and there may be an intention to settle such amounts on a net basis. We do not offset such financial instruments for financial reporting purposes. Information on financial instruments that are eligible for offset in the consolidated statements of condition follows: Offsetting of Financial Assets and Derivative Assets Gross Amounts Net Amounts of Gross Amounts Not Offset in Gross Amounts Offset in the Assets Presented the Statements of Condition of Recognized Statements of in the Statements Financial Cash Collateral ( in thousands) Assets Condition of Condition Instruments Received Net Amount September 30, 2020 Derivatives by Counterparty: Counterparty A $ — $ — $ — $ — $ — $ — December 31, 2019 Derivatives by Counterparty: Counterparty A $ — $ — $ — $ — $ — $ — Offsetting of Financial Liabilities and Derivative Liabilities Gross Amounts Net Amounts of Gross Amounts Not Offset in Gross Amounts Offset in the Liabilities Presented the Statements of Condition of Recognized Statements of in the Statements Financial Cash Collateral (in thousands) Liabilities 1 Condition of Condition 1 Instruments Pledged Net Amount September 30, 2020 Derivatives by Counterparty: Counterparty A $ 2,529 $ — $ 2,529 $ — $ (2,529) $ — December 31, 2019 Derivatives by Counterparty: Counterparty A $ 1,178 $ — $ 1,178 $ — $ (1,178) $ — 1 Amounts exclude accrued interest on swaps. For more information on how we account for our interest rate swaps, refer to Note 1 to the Consolidated Financial Statements included in our 2019 Form 10-K filed with the SEC on March 13, 2020. |
Basis of Presentation - (Polici
Basis of Presentation - (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The consolidated financial statements include the accounts of Bank of Marin Bancorp (“Bancorp”), a bank holding company, and its wholly-owned bank subsidiary, Bank of Marin (the “Bank”), a California state-chartered commercial bank. References to “we,” “our,” “us” mean Bancorp and the Bank that are consolidated for financial reporting purposes. The accompanying unaudited consolidated interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to those rules and regulations. Although we believe that the disclosures are adequate and the information presented is not misleading, we suggest that these interim financial statements be read in conjunction with the annual financial statements and the notes thereto included in our 2019 Annual Report on Form 10-K. In the opinion of Management, the unaudited consolidated financial statements reflect all adjustments, which are necessary for a fair presentation of the consolidated financial position, the results of operations, changes in comprehensive income, changes in stockholders’ equity, and cash flows for the periods presented. All material intercompany transactions have been eliminated. The results of these interim periods may not be indicative of the results for the full year or for any other period. The NorCal Community Bancorp Trust II (the "Trust") was formed for the sole purpose of issuing trust preferred securities. Bancorp is not considered the primary beneficiary of the Trust (a variable interest entity), therefore the Trust is not consolidated in our consolidated financial statements, but rather the subordinated debenture is shown as a liability on our consolidated statements of condition. Bancorp's investment in the securities of the Trust is accounted for under the equity method and is included in interest receivable and other assets on the consolidated statements of condition. Refer to Note 6, Borrowings, for additional information on the subordinated debenture due to NorCal Community Bancorp Trust II. |
Earnings Per Share | Basic earnings per share (“EPS”) are calculated by dividing net income by the weighted average number of common shares outstanding during each period, excluding unvested restricted stock awards. Diluted EPS are calculated using the weighted average number of potentially dilutive common shares. The number of potentially dilutive common shares included in the quarterly diluted EPS is computed using the average market prices during the three months included in the reporting period under the treasury stock method. The number of potentially dilutive common shares included in year-to-date diluted EPS is a year-to-date weighted average of potentially dilutive common shares included in each quarterly diluted EPS computation. In computing diluted EPS, we exclude anti-dilutive shares such as options whose exercise prices exceed the current common stock price, as they would not reduce EPS under the treasury method. We have two forms of outstanding common stock: common stock and unvested restricted stock awards. Holders of unvested restricted stock awards receive non-forfeitable dividends at the same rate as common shareholders and they both share equally in undistributed earnings. Under the two-class method, the difference in EPS is nominal for these participating securities. |
Recently Adopted and Issued Accounting Standards | Accounting Standards Adopted in 2020 In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement . The amendments in this ASU remove, modify, and add disclosure requirements for the fair value reporting of assets and liabilities. The modifications and additions relate to Level 3 fair value measurements at the end of the reporting period. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Entities should disclose and describe the range and weighted-average of significant unobservable inputs used to develop Level 3 fair value measurements. We adopted this ASU prospectively effective January 1, 2020. As the ASU’s requirements only relate to disclosures, the amendments did not impact our financial condition or results of operations. Refer to Note 3, Fair Value of Assets and Liabilities, for additional disclosures. In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . This standard aligns the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software regardless of whether they convey a license to the hosted software. The accounting for the service element of a hosting arrangement that is a service contract is not affected by this ASU. The amendments are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. An entity has the option to apply amendments in the ASU either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We adopted this ASU prospectively on January 1, 2020, which did not impact our financial condition and results of operations. Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . The standard replaces the "incurred loss" model with a "current expected credit loss" ("CECL") model. The CECL model applies to estimated credit losses on loans receivable, held-to-maturity debt securities, unfunded loan commitments, and certain other financial assets measured at amortized cost. The CECL model is based on lifetime expected losses, rather than incurred losses, and requires the recognition of credit loss expense in the consolidated statement of income and a related allowance for credit losses on the consolidated statement of condition at the time of origination or purchase of a loan receivable or held-to-maturity debt security. In addition, the CECL standard modifies the accounting for purchased loans and requires that an allowance for credit losses be established at the date of acquisition. However, for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination (“PCD assets”) that are measured at amortized cost, the initial allowance for credit losses is added to the purchase price rather than being reported as a credit loss expense. Subsequent changes in the allowance for credit losses on PCD assets are recognized through credit loss expense. Under ASU 2016-13, available-for-sale debt securities are evaluated for impairment if fair value is less than amortized cost. Estimated credit losses are recorded through a credit loss expense and an allowance, rather than a write-down of the investment. Changes in fair value that are not credit-related will continue to be recorded in other comprehensive income. The ASU also expands the disclosure requirements regarding assumptions, models, and methods for estimating the allowance for credit losses. In addition, entities will disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. However, in accordance with the accounting relief provisions of the Coronavirus Aid, Relief and Economic Security ("CARES") Act passed in March 2020, we postponed the adoption of the CECL standard. Implementation is delayed until the end of the national emergency or December 31, 2020, whichever occurs first. Early CECL implementation activities focused on, among other things, capturing and validating data, segmenting the loan portfolio, evaluating various credit loss estimation methodologies, sourcing tools to forecast future economic conditions, running multiple loan loss driver analyses that correlate our credit loss experience with one or more economic factors, and evaluating the qualitative factor framework and assumptions. Based on these activities, we determined that our primary credit loss methodology will utilize a discounted cash flow approach that considers the probability of default and loss given default. Ongoing implementation activities included refining forecast methodologies, running parallel calculations, evaluating and validating results, and documenting internal controls. The Bank has continued to run the CECL model in parallel with the incurred loss model and will adopt the CECL standard as of December 31, 2020. Upon adoption of the CECL standard, we will record a cumulative adjustment to retained earnings in our financial statements, net of taxes, based on economic forecasts and other assumptions as of January 1, 2020. That adjustment will result in an increase to our allowance for credit losses of approximately $1.6 million and an increase to the allowance for off-balance sheet commitments of approximately $122 thousand. These adjustments do not include the subsequent COVID-19 pandemic-related impact. Upon adoption on December 31, 2020, we will recognize the difference between the allowance for credit losses calculated under the CECL model as of December 31, 2020 and the allowance for credit losses calculated under the incurred loss model as of September 30, 2020 as a provision for credit losses and a provision for credit losses on off-balance sheet commitments, as applicable. Based on information available at this time, we do not expect the fourth quarter provision for credit losses to exceed 10% of the September 30, 2020 allowance for credit losses. However, the exact amount will depend on certain forecasts, such as the California unemployment rate, and other assumptions available as of December 31, 2020, which could differ significantly from present levels. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments that clarifies and improves areas of guidance related to recently issued standards. The provisions of this ASU under Topic 326 will be evaluated in conjunction with the adoption of ASU 2016-13, however, we do not expect it to have a material impact on our financial condition and results of operations. All other provisions under this ASU were adopted as of January 1, 2020 and did not impact our financial condition and results of operations. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief . This ASU allows an option for entities to irrevocably elect the fair value option on an instrument-by-instrument basis for eligible financial assets measured at amortized cost basis upon adoption of the credit loss standards. This amendment provides relief for those entities electing the fair value option on newly originated or purchased financial assets, while maintaining existing similar financial assets at amortized cost, avoiding the requirement to maintain dual measurement methods for similar assets. The fair value option does not apply to held-to-maturity debt securities. The effective date for this ASU is the same as for ASU 2016-13, as discussed above. We will evaluate this ASU in conjunction with the adoption of ASU 2016-13 to determine its impact on our financial condition and results of operations. However, at this time we do not expect to elect the fair value option for our financial assets. In November 2019, the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses . This ASU, among other narrow-scope improvements, clarifies guidance around how to report expected recoveries. “Expected recoveries” describes a situation in which an organization recognizes a full or partial write-off of the amortized cost basis of a financial asset, but then later determines that the amount written off, or a portion of that amount, will in fact be recovered. This ASU permits organizations to record expected recoveries on PCD assets. Additionally, this ASU reinforces existing guidance that prohibits organizations from recording negative allowances for available-for-sale debt securities. ASU 2019-11 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendments should be applied on a modified retrospective basis by means of a cumulative-effect adjustment to the opening retained earnings balance in the statement of financial position as of the date of adoption. The effective date for this ASU is the same as for ASU 2016-13, as discussed above. We will evaluate this ASU in conjunction with the adoption of ASU 2016-13 to determine its impact on our financial condition and results of operations. Accounting Standards Not Yet Effective In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . This ASU is intended to reduce the cost and complexity related to accounting for income taxes by removing certain exceptions to the guidance in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and simplifying aspects of the accounting for franchise taxes and enacted changes in tax laws or rates. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. As this ASU is narrow in scope and applicability to us will likely be minimal, we do not expect that the ASU will have a material impact on our financial condition or results of operations. In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 . Among other things, this ASU clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, for the purposes of applying the measurement alternative in accordance with Topic 321. This ASU is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. ASU No. 2020-01 should be applied prospectively at the beginning of the interim period that includes adoption. We do not expect that the ASU will have a material impact on our financial condition or results of operations. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) . The amendments in this ASU are elective and provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform. The amendments in this ASU provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments in this ASU may be elected as of March 12, 2020 through December 31, 2022. An entity may choose to elect the amendments in this update at an interim period subsequent to March 12, 2020 with adoption methods varying based on transaction type. We have not elected to apply these amendments, however, we will assess the applicability of the ASU to us and continue to monitor guidance for reference rate reform from FASB and its impact on our financial condition and results of operations. In October 2020, the FASB issued ASU No. 2020-08, Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs . This ASU was issued as part of the Board's ongoing project to improve codification or correct unintended application. This ASU adds clarification to ASU 2017-08, which the Bank early adopted in 2017, and delineates whether an entity with callable debt securities that have multiple call dates should amortize the amount above that which is repayable, to the next call date. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, on a prospective basis. Early adoption is not permitted. As this ASU is narrow in scope and for clarification purposes, we do not expect this ASU will have a material impact on our financial condition and results of operations. |
Fair Value Hierarchy and Fair Value Measurement | We group our assets and liabilities that are measured at fair value in three levels within the fair value hierarchy, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are: Level 1: Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Valuations are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations for which all significant assumptions are observable or can be corroborated by observable market data. Level 3: Valuations are based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Values are determined using pricing models and discounted cash flow models and may include significant Management judgment and estimation. |
Finance, Loan and Lease Receivables, Held-for-investment, Allowance and Nonperforming Loans | We generally make commercial loans to established small and mid-sized businesses to provide financing for their growth and working capital needs, equipment purchases and acquisitions. Management examines historical, current, and projected cash flows to determine the ability of the borrower to repay obligations as agreed. Commercial loans are made based primarily on the identified cash flows of the borrower and secondarily on the underlying collateral and guarantor support. The cash flows of borrowers, however, may not occur as expected, and the collateral securing these loans may fluctuate in value. Most commercial and industrial loans are secured by the assets being financed, such as accounts receivable and inventory, and typically include personal guarantees. We target stable businesses with guarantors who provide additional sources of repayment and have proven to be resilient in periods of economic stress. Pursuant to the CARES Act, the Bank funded over 1,800 loans to eligible small businesses and non-profit organizations who participated in the Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration (“SBA”). PPP loans have terms of two to five years and earn interest at 1%. In addition, the Bank received a fee of 1%-5% from the SBA depending on the loan amount, which was netted with loan origination costs and amortized into interest income under the effective yield method over the contractual life of the loan. The recognition of fees and costs is accelerated when the loan is forgiven by the SBA and/or paid off prior to maturity. PPP loans are fully guaranteed by the SBA and are expected to be forgiven by the SBA if they meet the requirements of the program. PPP loans totaling $301.7 million at September 30, 2020 are included in commercial and industrial loan balances. The Bank ended its origination of new PPP loans on June 30, 2020. On June 5, 2020, the PPP Flexibility Act was signed into law that modified, among other things, rules governing the PPP payment deferral period. In October 2020, due to the continued delay in the PPP forgiveness process, the Bank modified the first payment due dates for PPP loans that originated prior to June 5, 2020 and extended the payment deferral period from six Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans discussed above. We underwrite these loans to be repaid from cash flow and to be supported by real property collateral. Underwriting standards for commercial real estate loans include, but are not limited to, debt coverage and loan-to-value ratios. Furthermore, a large majority of our loans are guaranteed by the owners of the properties. Conditions in the real estate markets or in the general economy may adversely affect our commercial real estate loans. In the event of a vacancy, we expect guarantors to carry the loans until they find a replacement tenant. The owner's substantial equity investment provides a strong economic incentive to continue to support the commercial real estate projects. As such, we have generally experienced a relatively low level of loss and delinquencies in this portfolio. Construction loans are generally made to developers and builders to finance construction, renovation and occasionally land acquisitions in anticipation of near-term development. Construction loans include interest reserves that are used for the payment of interest during the development and marketing periods and are capitalized as part of the loan balance. When a construction loan is placed on nonaccrual status before the depletion of the interest reserve, we apply the interest funded by the interest reserve against the loan's principal balance. These loans are underwritten after evaluation of the borrower's financial strength, reputation, prior track record, and independent appraisals. We monitor all construction projects to determine whether they are on schedule, completed as planned and in accordance with the approved construction budgets. Significant events can affect the construction industry, including: the inherent volatility of real estate markets and vulnerability to delays due to weather, change orders, inability to obtain construction permits, labor or material shortages, and price changes. Estimates of construction costs and value associated with the completed project may be inaccurate. Repayment of construction loans is largely dependent on the ultimate success of the project. Consumer loans primarily consist of home equity lines of credit, other residential loans and floating homes, along with a small number of installment loans. Our other residential loans include tenancy-in-common fractional interest loans ("TIC") located almost entirely in San Francisco County. We originate consumer loans utilizing credit score information, debt-to-income ratio and loan-to-value ratio analysis. Diversification among consumer loan types, coupled with relatively small loan amounts that are spread across many individual borrowers, mitigates risk. We do not originate sub-prime residential mortgage loans, nor is it our practice to underwrite loans commonly referred to as "Alt-A mortgages," the characteristics of which are reduced documentation, borrowers with low FICO scores or collateral with high loan-to-value ratios. We use a risk rating system to evaluate asset quality, and to identify and monitor credit risk in individual loans, and in the loan portfolio. Our definitions of “Special Mention” risk graded loans, or worse, are consistent with those used by the Federal Deposit Insurance Corporation ("FDIC"). Our internally assigned grades are as follows: Pass and Watch : Loans to borrowers of acceptable or better credit quality. Borrowers in this category demonstrate fundamentally sound financial positions, repayment capacity, credit history, and management expertise. Loans in this category must have an identifiable and stable source of repayment and meet the Bank’s policy regarding debt-service-coverage ratios. These borrowers are capable of sustaining normal economic, market or operational setbacks without significant financial consequences. Negative external industry factors are generally not present. The loan may be secured, unsecured or supported by non-real estate collateral for which the value is more difficult to determine and/or marketability is more uncertain. This category also includes “Watch” loans, where the primary source of repayment has been delayed. “Watch” is intended to be a transitional grade, with either an upgrade or downgrade within a reasonable period. Special Mention : Potential weaknesses that deserve close attention. If left uncorrected, those potential weaknesses may result in deterioration of the payment prospects for the asset. Special Mention assets do not present sufficient risk to warrant adverse classification. Substandard : Inadequately protected by either the current sound worth and paying capacity of the obligor or the collateral pledged, if any. A Substandard asset has a well-defined weakness or weaknesses that jeopardize(s) the liquidation of the debt. Substandard assets are characterized by the distinct possibility that we will sustain some loss if such weaknesses or deficiencies are not corrected. Well-defined weaknesses include adverse trends or developments of the borrower’s financial condition, managerial weaknesses and/or significant collateral deficiencies. Doubtful : Critical weaknesses that make collection or liquidation in full improbable. There may be specific pending events that work to strengthen the asset; however, the amount or timing of the loss may not be determinable. Pending events generally occur within one year of the asset being classified as Doubtful. Examples include: merger, acquisition, or liquidation; capital injection; guarantee; perfecting liens on additional collateral; and refinancing. Such loans are placed on non-accrual status and usually are collateral-dependent. We regularly review our credits for accuracy of risk grades whenever we receive new information. Borrowers are generally required to submit financial information at regular intervals. Typically, commercial borrowers with lines of credit are required to submit financial information with reporting intervals ranging from monthly to annually depending on credit size, risk and complexity. In addition, investor commercial real estate borrowers with loans exceeding a certain dollar threshold are usually required to submit rent rolls or property income statements annually. |
Troubled Debt Restructuring | Our loan portfolio includes certain loans modified in a troubled debt restructuring (“TDR”), where we have granted economic concessions to borrowers experiencing financial difficulties. These concessions typically result from our loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. TDRs on non-accrual status at the time of restructure may be returned to accruing status after Management considers the borrower’s sustained repayment performance for a reasonable period, generally nine months, and obtains reasonable assurance of repayment and performance. We may remove a loan from TDR designation if it meets all of the following conditions: • The loan is subsequently refinanced or restructured at current market interest rates and the new terms are consistent with the treatment of creditworthy borrowers under regular underwriting standards; • The borrower is no longer considered to be in financial difficulty; • Performance on the loan is reasonably assured; and • Existing loan did not have any forgiveness of principal or interest. |
Basis of Presentation - (Tables
Basis of Presentation - (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of earnings per share reconciliation | The following table shows: 1) weighted average basic shares, 2) potentially dilutive weighted average common shares related to stock options and unvested restricted stock awards, and 3) weighted average diluted shares. Basic earnings per share (“EPS”) are calculated by dividing net income by the weighted average number of common shares outstanding during each period, excluding unvested restricted stock awards. Diluted EPS are calculated using the weighted average number of potentially dilutive common shares. The number of potentially dilutive common shares included in the quarterly diluted EPS is computed using the average market prices during the three months included in the reporting period under the treasury stock method. The number of potentially dilutive common shares included in year-to-date diluted EPS is a year-to-date weighted average of potentially dilutive common shares included in each quarterly diluted EPS computation. In computing diluted EPS, we exclude anti-dilutive shares such as options whose exercise prices exceed the current common stock price, as they would not reduce EPS under the treasury method. We have two forms of outstanding common stock: common stock and unvested restricted stock awards. Holders of unvested restricted stock awards receive non-forfeitable dividends at the same rate as common shareholders and they both share equally in undistributed earnings. Under the two-class method, the difference in EPS is nominal for these participating securities. Three months ended Nine months ended (in thousands, except per share data) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Weighted average basic shares outstanding 13,539 13,571 13,526 13,654 Potentially dilutive common shares related to: Stock options 53 141 71 146 Unvested restricted stock awards 18 23 20 25 Weighted average diluted shares outstanding 13,610 13,735 13,617 13,825 Net income $ 7,491 $ 9,448 $ 22,125 $ 25,162 Basic EPS $ 0.55 $ 0.70 $ 1.64 $ 1.84 Diluted EPS $ 0.55 $ 0.69 $ 1.62 $ 1.82 Weighted average anti-dilutive shares not included in the calculation of diluted EPS 202 39 152 34 |
Fair Value of Assets and Liab_2
Fair Value of Assets and Liabilities - (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value, assets and liabilities measured on recurring basis | The following table summarizes our assets and liabilities that were required to be recorded at fair value on a recurring basis. (in thousands) Description of Financial Instruments Carrying Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Measurement Categories: Changes in Fair Value Recorded In 1 September 30, 2020 Securities available-for-sale: Mortgage-backed securities and collateralized mortgage obligations issued by U.S. government-sponsored agencies $ 241,189 $ — $ 241,189 $ — OCI SBA-backed securities 32,844 — 32,844 — OCI Debentures of government sponsored agencies 45,688 — 45,688 — OCI Obligations of state and political subdivisions 93,743 — 93,743 — OCI Derivative financial liabilities (interest rate contracts) 2,529 — 2,529 — NI December 31, 2019 Securities available-for-sale: Mortgage-backed securities and collateralized mortgage obligations issued by U.S. government-sponsored agencies $ 278,144 $ — $ 278,144 $ — OCI SBA-backed securities 36,286 — 36,286 — OCI Debentures of government sponsored agencies 49,046 — 49,046 — OCI Obligations of state and political subdivisions 67,282 — 67,282 — OCI Corporate bonds 1,502 — 1,502 — OCI Derivative financial liabilities (interest rate contracts) 1,178 — 1,178 — NI 1 Other comprehensive income ("OCI") or net income ("NI"). |
Schedule of fair value by balance sheet grouping | The table below is a summary of fair value estimates for financial instruments as of September 30, 2020 and December 31, 2019, excluding financial instruments recorded at fair value on a recurring basis (summarized in the first table in this note). The carrying amounts in the following table are recorded in the consolidated statements of condition under the indicated captions. Further, we have not disclosed the fair value of financial instruments specifically excluded from disclosure requirements such as bank-owned life insurance policies ("BOLI") and non-maturity deposit liabilities. Additionally, we held shares of Federal Home Loan Bank ("FHLB") of San Francisco stock and Visa Inc. Class B common stock, both recorded at cost, as there was no impairment or changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer as of September 30, 2020 or December 31, 2019. The values are discussed in Note 4, Investment Securities. September 30, 2020 December 31, 2019 (in thousands) Carrying Amounts Fair Value Fair Value Hierarchy Carrying Amounts Fair Value Fair Value Hierarchy Financial assets (recorded at amortized cost) Cash and cash equivalents $ 213,584 $ 213,584 Level 1 $ 183,388 $ 183,388 Level 1 Investment securities held-to-maturity 117,350 123,983 Level 2 137,413 139,642 Level 2 Loans, net 2,085,877 2,106,790 Level 3 1,826,609 1,839,666 Level 3 Interest receivable 11,014 11,014 Level 2 7,732 7,732 Level 2 Financial liabilities (recorded at amortized cost) Time deposits 98,084 98,495 Level 2 97,810 97,859 Level 2 Subordinated debenture 2,760 2,994 Level 3 2,708 3,182 Level 3 Interest payable 122 122 Level 2 134 134 Level 2 |
Investment Securities - (Tables
Investment Securities - (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of held-to-maturity investments | Our investment securities portfolio consists of obligations of state and political subdivisions, U.S. federal government agencies such as Government National Mortgage Association ("GNMA") and Small Business Administration ("SBA"), U.S. government-sponsored enterprises ("GSEs"), such as Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Farm Credit Banks Funding Corporation and FHLB. We also invest in residential and commercial mortgage-backed securities (“MBS”/"CMBS") and collateralized mortgage obligations (“CMOs”) issued or guaranteed by the GSEs, as reflected in the following table: September 30, 2020 December 31, 2019 Amortized Fair Gross Unrealized Amortized Fair Gross Unrealized (in thousands) Cost Value Gains (Losses) Cost Value Gains (Losses) Held-to-maturity: Securities of U.S. government-sponsored enterprises: MBS pass-through securities issued by FHLMC and FNMA $ 69,797 $ 73,884 $ 4,087 $ — $ 80,451 $ 81,325 $ 1,018 $ (144) SBA-backed securities 6,549 6,979 430 — 7,999 8,264 265 — CMOs issued by FNMA 8,440 8,834 394 — 10,210 10,492 282 — CMOs issued by FHLMC 29,657 31,331 1,674 — 31,477 32,157 685 (5) CMOs issued by GNMA 1,230 1,235 5 — 3,763 3,816 53 — Obligations of state and 1,677 1,720 43 — 3,513 3,588 75 — Total held-to-maturity 117,350 123,983 6,633 — 137,413 139,642 2,378 (149) Available-for-sale: Securities of U.S. government-sponsored enterprises: MBS pass-through securities issued by FHLMC and FNMA 56,679 59,482 2,803 — 98,502 100,071 1,617 (48) SBA-backed securities 31,057 32,844 1,844 (57) 35,674 36,286 688 (76) CMOs issued by FNMA 18,285 18,961 676 — 22,702 23,092 390 — CMOs issued by FHLMC 144,600 153,255 8,656 (1) 139,398 143,226 3,892 (64) CMOs issued by GNMA 9,064 9,491 427 — 11,719 11,755 42 (6) Debentures of government- sponsored agencies 45,239 45,688 449 — 48,389 49,046 727 (70) Obligations of state and 89,513 93,743 4,230 — 66,042 67,282 1,386 (146) Corporate bonds — — — — 1,497 1,502 6 (1) Total available-for-sale 394,437 413,464 19,085 (58) 423,923 432,260 8,748 (411) Total investment securities $ 511,787 $ 537,447 $ 25,718 $ (58) $ 561,336 $ 571,902 $ 11,126 $ (560) |
Summary of available-for-sale investments | Our investment securities portfolio consists of obligations of state and political subdivisions, U.S. federal government agencies such as Government National Mortgage Association ("GNMA") and Small Business Administration ("SBA"), U.S. government-sponsored enterprises ("GSEs"), such as Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Farm Credit Banks Funding Corporation and FHLB. We also invest in residential and commercial mortgage-backed securities (“MBS”/"CMBS") and collateralized mortgage obligations (“CMOs”) issued or guaranteed by the GSEs, as reflected in the following table: September 30, 2020 December 31, 2019 Amortized Fair Gross Unrealized Amortized Fair Gross Unrealized (in thousands) Cost Value Gains (Losses) Cost Value Gains (Losses) Held-to-maturity: Securities of U.S. government-sponsored enterprises: MBS pass-through securities issued by FHLMC and FNMA $ 69,797 $ 73,884 $ 4,087 $ — $ 80,451 $ 81,325 $ 1,018 $ (144) SBA-backed securities 6,549 6,979 430 — 7,999 8,264 265 — CMOs issued by FNMA 8,440 8,834 394 — 10,210 10,492 282 — CMOs issued by FHLMC 29,657 31,331 1,674 — 31,477 32,157 685 (5) CMOs issued by GNMA 1,230 1,235 5 — 3,763 3,816 53 — Obligations of state and 1,677 1,720 43 — 3,513 3,588 75 — Total held-to-maturity 117,350 123,983 6,633 — 137,413 139,642 2,378 (149) Available-for-sale: Securities of U.S. government-sponsored enterprises: MBS pass-through securities issued by FHLMC and FNMA 56,679 59,482 2,803 — 98,502 100,071 1,617 (48) SBA-backed securities 31,057 32,844 1,844 (57) 35,674 36,286 688 (76) CMOs issued by FNMA 18,285 18,961 676 — 22,702 23,092 390 — CMOs issued by FHLMC 144,600 153,255 8,656 (1) 139,398 143,226 3,892 (64) CMOs issued by GNMA 9,064 9,491 427 — 11,719 11,755 42 (6) Debentures of government- sponsored agencies 45,239 45,688 449 — 48,389 49,046 727 (70) Obligations of state and 89,513 93,743 4,230 — 66,042 67,282 1,386 (146) Corporate bonds — — — — 1,497 1,502 6 (1) Total available-for-sale 394,437 413,464 19,085 (58) 423,923 432,260 8,748 (411) Total investment securities $ 511,787 $ 537,447 $ 25,718 $ (58) $ 561,336 $ 571,902 $ 11,126 $ (560) |
Investments classified by contractual maturity date | The amortized cost a nd fair value of investment debt securities by contractual maturity at September 30, 2020 and December 31, 2019 are shown below. Expected maturities may differ from contractual maturities if the issuers of the securities have the right to call or prepay obligations with or without call or prepayment penalties. September 30, 2020 December 31, 2019 Held-to-Maturity Available-for-Sale Held-to-Maturity Available-for-Sale (in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Within one year $ 247 $ 252 $ 14,235 $ 14,452 $ 1,807 $ 1,811 $ 6,699 $ 6,706 After one but within five years 8,974 9,539 60,958 64,559 2,256 2,296 48,706 49,619 After five years through ten years 52,373 56,139 164,815 174,439 56,221 57,544 208,806 214,277 After ten years 55,756 58,053 154,429 160,014 77,129 77,991 159,712 161,658 Total $ 117,350 $ 123,983 $ 394,437 $ 413,464 $ 137,413 $ 139,642 $ 423,923 $ 432,260 |
Sale of investment securities and gross gains and losses | Sales of investment securities and gross gains and losses are shown in the following table: Three months ended Nine months ended (in thousands) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Available-for-sale: Sales proceeds $ — $ — $ 33,756 $ 66,081 Gross realized gains — — 916 214 Gross realized losses — — (1) (159) |
Schedule of financial instruments owned and pledged as collateral | Pledged investment securities are shown in the following table: (in thousands) September 30, 2020 December 31, 2019 Pledged to the State of California: Secure public deposits in compliance with the Local Agency Security Program $ 102,396 $ 126,598 Collateral for trust deposits 752 742 Total investment securities pledged to the State of California 103,148 127,340 Collateral for Wealth Management and Trust Services checking account 629 622 Total pledged investment securities $ 103,777 $ 127,962 |
Schedule of unrealized loss on investments | There were 8 and 40 securities in unrealized loss positions at September 30, 2020 and December 31, 2019, respectively. Those securities are summarized and classified according to the duration of the loss period in the tables below: September 30, 2020 < 12 continuous months ≥ 12 continuous months Total securities (in thousands) Fair value Unrealized loss Fair value Unrealized loss Fair value Unrealized loss Available-for-sale: SBA-backed securities $ — $ — $ 1,900 $ (57) $ 1,900 $ (57) CMOs issued by FHLMC 2,014 (1) — — 2,014 (1) Total available-for-sale 2,014 (1) 1,900 (57) 3,914 (58) Total temporarily impaired securities $ 2,014 $ (1) $ 1,900 $ (57) $ 3,914 $ (58) December 31, 2019 < 12 continuous months ≥ 12 continuous months Total securities (in thousands) Fair value Unrealized loss Fair value Unrealized loss Fair value Unrealized loss Held-to-maturity: MBS pass-through securities issued by FHLMC and FNMA $ 14,203 $ (60) $ 6,073 $ (84) $ 20,276 $ (144) CMOs issued by FHLMC — — 1,725 (5) 1,725 (5) Total held-to-maturity 14,203 (60) 7,798 (89) 22,001 (149) Available-for-sale: MBS pass-through securities issued by FHLMC and FNMA 4,367 (34) 4,464 (14) 8,831 (48) SBA-backed securities 9,227 (14) 2,448 (62) 11,675 (76) CMOs issued by FHLMC 14,918 (58) 2,981 (6) 17,899 (64) CMOs issued by GNMA 7,139 (6) — — 7,139 (6) Debentures of government- sponsored agencies 25,228 (70) — — 25,228 (70) Obligations of state and political subdivisions 20,579 (145) 659 (1) 21,238 (146) Corporate Bonds 500 (1) — — 500 (1) Total available-for-sale 81,958 (328) 10,552 (83) 92,510 (411) Total temporarily impaired securities $ 96,161 $ (388) $ 18,350 $ (172) $ 114,511 $ (560) |
Loans and Allowance for Loan _2
Loans and Allowance for Loan Losses - (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Past due financing receivables | The following table shows outstanding loans by class and payment aging as of September 30, 2020 and December 31, 2019. Loan Aging Analysis by Class (in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, investor-owned Construction Home equity Other residential Installment and other consumer Total September 30, 2020 30-59 days past due $ 198 $ — $ — $ — $ 217 $ — $ — $ 415 60-89 days past due — — — — 276 — 7 283 90 days or more past due — — — — — — — — Total past due 198 — — — 493 — 7 698 Current 512,775 299,754 966,517 66,663 106,871 130,915 23,798 2,107,293 Total loans 1 $ 512,973 $ 299,754 $ 966,517 $ 66,663 $ 107,364 $ 130,915 $ 23,805 $ 2,107,991 Non-accrual loans 2 $ — $ — $ 886 $ — $ 532 $ — $ 24 $ 1,442 December 31, 2019 30-59 days past due $ 1 $ — $ 1,001 $ — $ 279 $ — $ 7 $ 1,288 60-89 days past due — — — — 98 — 95 193 90 days or more past due — — — — 167 — — 167 Total past due 1 — 1,001 — 544 — 102 1,648 Current 246,686 308,824 945,316 61,095 115,480 136,657 27,580 1,841,638 Total loans 1 $ 246,687 $ 308,824 $ 946,317 $ 61,095 $ 116,024 $ 136,657 $ 27,682 $ 1,843,286 Non-accrual loans 2 $ — $ — $ — $ — $ 168 $ — $ 58 $ 226 1 Amounts include net deferred loan origination (fees) costs of $(5.1) million (including $6.5 million in deferred SBA PPP loan fees, net of costs) and $983 thousand at September 30, 2020 and December 31, 2019, respectively. Amounts are also net of unaccreted purchase discounts on non-PCI loans of $878 thousand at September 30, 2020 and $983 thousand at December 31, 2019. 2 There were no loans past due more than ninety days accruing interest at September 30, 2020 or December 31, 2019. |
Financing receivable credit quality indicators | The following table represents an analysis of the carrying amount in loans, net of deferred fees and costs and purchase premiums or discounts, by internally assigned risk grades, at September 30, 2020 and December 31, 2019. Credit Risk Profile by Internally Assigned Risk Grade (in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, investor-owned Construction Home equity Other residential Installment and other consumer Total September 30, 2020 Pass $ 484,305 $ 251,741 $ 946,166 $ 66,663 $ 105,824 $ 130,915 $ 23,665 $ 2,009,279 Special Mention 28,544 41,010 17,359 — 800 — — 87,713 Substandard 124 7,003 2,992 — 740 — 140 10,999 Total loans $ 512,973 $ 299,754 $ 966,517 $ 66,663 $ 107,364 $ 130,915 $ 23,805 $ 2,107,991 December 31, 2019 Pass $ 209,213 $ 264,766 $ 945,757 $ 61,095 $ 114,935 $ 136,657 $ 27,538 $ 1,759,961 Special Mention 37,065 35,016 560 — 750 — — 73,391 Substandard 409 9,042 — — 339 — 144 9,934 Total loans $ 246,687 $ 308,824 $ 946,317 $ 61,095 $ 116,024 $ 136,657 $ 27,682 $ 1,843,286 |
Troubled debt restructurings on financing receivables | The following table summarizes the carrying amount of TDR loans by loan class as of September 30, 2020 and December 31, 2019. (in thousands) Recorded Investment in Troubled Debt Restructurings 1 September 30, 2020 December 31, 2019 Commercial and industrial $ 1,017 $ 1,223 Commercial real estate, owner-occupied 7,003 6,998 Commercial real estate, investor-owned 3,309 1,770 Home equity 527 251 Other residential — 452 Installment and other consumer 769 639 Total $ 12,625 $ 11,333 1 There was one acquired home equity TDR loan with a recorded investment of $276 thousand as of September 30, 2020. There were no acquired TDR loans as of December 31, 2019. TDR loans on non-accrual status totaled $300 thousand and $58 thousand at September 30, 2020 and December 31, 2019, respectively. The following table presents information for loans modified in a TDR during the presented periods, including the number of modified contracts, the recorded investment in the loans prior to modification, and the recorded investment in the loans at period end after being restructured. The table excludes fully charged-off TDR loans and loans modified in a TDR and subsequently paid-off during the years presented, if applicable. (dollars in thousands) Number of Contracts Modified Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment at Period End TDRs during the three months ended September 30, 2020: Commercial real estate, investor-owned 1 $ 1,553 $ 1,553 $ 1,553 TDRs during the three months ended September 30, 2019: None — $ — $ — $ — TDRs during the nine months ended September 30, 2020: Commercial and industrial 1 $ 170 $ 162 $ 125 Commercial real estate, investor-owned 1 1,553 1,553 1,553 Home equity 1 276 276 276 Installment and other consumer 3 211 211 209 6 $ 2,210 $ 2,202 $ 2,163 TDRs during the nine months ended September 30, 2019: Commercial and industrial 1 $ 298 $ 298 $ 173 |
Impaired financing receivables | The following tables summarize information by class on impaired loans and their related allowances. Total impaired loans include non-accrual loans and accruing TDR loans. (in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, investor-owned Construction Home equity Other residential Installment and other consumer Total September 30, 2020 Recorded investment in impaired loans: With no specific allowance recorded $ 291 $ — $ 885 $ — $ 532 $ — $ 89 $ 1,797 With a specific allowance recorded 726 7,003 3,310 — 251 — 680 11,970 Total recorded investment in impaired loans $ 1,017 $ 7,003 $ 4,195 $ — $ 783 $ — $ 769 $ 13,767 Unpaid principal balance of impaired loans $ 1,012 $ 6,993 $ 4,187 $ — $ 801 $ — $ 767 $ 13,760 Specific allowance 19 225 697 — 4 — 161 1,106 Average recorded investment in impaired loans during the quarter ended 798 7,002 3,430 — 829 — 774 12,833 Interest income recognized on impaired loans during the quarter ended September 30, 2020 1 11 64 30 — 3 — 7 115 Average recorded investment in impaired loans during the nine months ended 948 7,000 2,832 — 740 225 730 12,475 Interest income recognized on impaired loans during the nine months ended September 30, 2020 1 32 197 68 — 10 4 22 333 Average recorded investment in impaired loans during the quarter ended 1,324 7,000 1,791 684 413 456 659 12,327 Interest income recognized on impaired loans during the quarter ended 1 16 67 20 400 9 4 6 522 Average recorded investment in impaired loans during the nine months ended 1,495 6,998 1,804 1,687 497 458 670 13,609 Interest income recognized on impaired loans during the nine months ended September 30, 2019 1 56 199 59 456 42 14 18 844 1 No interest income was recognized on a cash basis during the three and nine months ended September 30, 2020. Interest income recognized on a cash basis of $393 thousand and $416 thousand during the respective three and nine months ended September 30, 2019 was related to a principal payment applied to interest collected but unrecognized on a former non-accrual land development loan and the pay-off of three non-accrual loans. (in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, investor-owned Construction Home equity Other residential Installment and other consumer Total December 31, 2019 Recorded investment in impaired loans: With no specific allowance recorded $ 349 $ — $ — $ — $ 167 $ 452 $ 98 $ 1,066 With a specific allowance recorded 874 6,998 1,770 — 251 — 541 10,434 Total recorded investment in impaired loans $ 1,223 $ 6,998 $ 1,770 $ — $ 418 $ 452 $ 639 $ 11,500 Unpaid principal balance of impaired loans $ 1,209 $ 6,992 $ 1,764 $ — $ 417 $ 451 $ 638 $ 11,471 Specific allowance $ 103 $ 195 $ 41 $ — $ 5 $ — $ 53 $ 397 |
Allowance for credit losses on financing receivables | The following tables disclose activity in the allowance for loan losses ("ALLL") and the recorded investment in loans by class, as well as the related ALLL disaggregated by impairment evaluation method. Allowance for Loan Losses Rollforward for the Period (in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, investor-owned Construction Home equity Other residential Installment and other consumer Unallocated Total Three months ended September 30, 2020 Beginning balance $ 2,609 $ 2,910 $ 10,403 $ 836 $ 1,044 $ 1,266 $ 426 $ 1,374 $ 20,868 Provision (reversal) (79) 225 1,221 24 (6) (6) (20) (109) 1,250 Charge-offs (10) — — — — — — — (10) Recoveries 5 — — — — — — — 5 Ending balance $ 2,525 $ 3,135 $ 11,624 $ 860 $ 1,038 $ 1,260 $ 406 $ 1,265 $ 22,113 Three months ended September 30, 2019 Beginning balance $ 2,368 $ 2,321 $ 7,721 $ 619 $ 907 $ 849 $ 323 $ 727 $ 15,835 Provision (reversal) 326 21 211 (117) (28) 56 (28) (41) 400 Charge-offs — — — — — — — — — Recoveries 5 — — — — — — — 5 Ending balance $ 2,699 $ 2,342 $ 7,932 $ 502 $ 879 $ 905 $ 295 $ 686 $ 16,240 Allowance for Loan Losses Rollforward for the Period (in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, investor Construction Home equity Other residential Installment and other consumer Unallocated Total Nine months ended September 30, 2020 Beginning balance $ 2,334 $ 2,462 $ 8,483 $ 638 $ 850 $ 973 $ 284 $ 653 $ 16,677 Provision (reversal) 208 673 3,141 219 188 287 122 612 5,450 Charge-offs (30) — — — — — — — (30) Recoveries 13 — — 3 — — — — 16 Ending balance $ 2,525 $ 3,135 $ 11,624 $ 860 $ 1,038 $ 1,260 $ 406 $ 1,265 $ 22,113 Nine months ended September 30, 2019 Beginning balance $ 2,436 $ 2,407 $ 7,703 $ 756 $ 915 $ 800 $ 310 $ 494 $ 15,821 Provision (reversal) 256 (65) 217 (254) (36) 105 (15) 192 400 Charge-offs (9) — — — — — — — (9) Recoveries 16 — 12 — — — — — 28 Ending balance $ 2,699 $ 2,342 $ 7,932 $ 502 $ 879 $ 905 $ 295 $ 686 $ 16,240 Allowance for Loan Losses and Recorded Investment in Loans (dollars in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, investor-owned Construction Home equity Other residential Installment and other consumer Unallocated Total September 30, 2020 Ending ALLL related to loans collectively evaluated for impairment $ 2,506 $ 2,910 $ 10,927 $ 860 $ 1,034 $ 1,260 $ 245 $ 1,265 $ 21,007 Ending ALLL related to loans individually evaluated for impairment 19 225 697 — 4 — 161 — 1,106 Ending balance $ 2,525 $ 3,135 $ 11,624 $ 860 $ 1,038 $ 1,260 $ 406 $ 1,265 $ 22,113 Recorded Investment: Collectively evaluated for impairment $ 511,956 $ 292,751 $ 962,322 $ 66,663 $ 106,581 $ 130,915 $ 23,036 $ — $ 2,094,224 Individually evaluated for impairment 1,017 7,003 4,195 — 783 — 769 — 13,767 Total $ 512,973 $ 299,754 $ 966,517 $ 66,663 $ 107,364 $ 130,915 $ 23,805 $ — $ 2,107,991 Ratio of allowance for loan losses to total loans 0.49 % 1.05 % 1.20 % 1.29 % 0.97 % 0.96 % 1.71 % NM 1.05 % Allowance for loan losses to non-accrual loans NM NM 1,312 % NM 195 % NM 1,692 % NM 1,533 % NM - Not Meaningful Allowance for Loan Losses and Recorded Investment in Loans (dollars in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, investor-owned Construction Home equity Other residential Installment and other consumer Unallocated Total December 31, 2019 Ending ALLL related to loans collectively evaluated for impairment $ 2,231 $ 2,267 $ 8,442 $ 638 $ 845 $ 973 $ 231 $ 653 $ 16,280 Ending ALLL related to loans individually evaluated for impairment 103 195 41 — 5 — 53 — 397 Ending balance $ 2,334 $ 2,462 $ 8,483 $ 638 $ 850 $ 973 $ 284 $ 653 $ 16,677 Recorded Investment: Collectively evaluated for impairment $ 245,464 $ 301,826 $ 944,547 $ 61,095 $ 115,606 $ 136,205 $ 27,043 $ — $ 1,831,786 Individually evaluated for impairment 1,223 6,998 1,770 — 418 452 639 — 11,500 Total $ 246,687 $ 308,824 $ 946,317 $ 61,095 $ 116,024 $ 136,657 $ 27,682 $ — $ 1,843,286 Ratio of allowance for loan losses to total loans 0.95 % 0.80 % 0.90 % 1.04 % 0.73 % 0.71 % 1.03 % NM 0.90 % Allowance for loan losses to non-accrual loans NM NM NM NM 506 % NM 490 % NM 7,379 % NM - Not Meaningful |
Commitments and Contingencies -
Commitments and Contingencies - (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of undrawn loan commitments and standby letters of credit | The contractual amount of undrawn loan commitments and standby letters of credit not reflected in the consolidated statements of condition are as follows: (in thousands) September 30, 2020 December 31, 2019 Commercial lines of credit $ 301,107 $ 287,533 Revolving home equity lines 193,364 189,035 Undisbursed construction loans 59,548 41,033 Personal and other lines of credit 10,923 9,567 Standby letters of credit 2,572 1,964 Total commitments and standby letters of credit $ 567,514 $ 529,132 |
Schedule of operating and finance lease right-of-use assets and lease liabilities | The following table shows the balances of operating and finance lease right-of-use assets and lease liabilities as of September 30, 2020. (in thousands) September 30, 2020 December 31, 2019 Operating leases: Operating lease right-of-use assets $ 26,041 $ 11,002 Operating lease liabilities $ 27,527 $ 12,615 Finance leases: Finance lease right-of-use assets $ 365 $ 379 Accumulated amortization (267) (170) Finance lease right-of-use assets, net 1 $ 98 $ 209 Finance lease liabilities 2 $ 99 $ 212 1 Included in premises and equipment in the consolidated statements of condition. 2 Included in borrowings and other obligations in the consolidated statements of condition. |
Schedule of components of operating and finance lease cost | The following table shows supplemental disclosures of noncash investing and financing activities for the period presented. Nine months ended (in thousands) September 30, 2020 September 30, 2019 Right-of-use assets obtained in exchange for operating lease liabilities $ 18,021 $ 1,661 Right-of-use assets obtained in exchange for finance lease liabilities $ 18 $ 31 Reclassification of deferred rent and unamortized lease incentives from other liabilities to operating lease right-of-use assets upon adoption of ASC 842 $ — $ 1,967 The following table shows components of operating and finance lease cost. Three months ended Nine months ended (in thousands) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Operating lease cost $ 1,165 $ 1,051 $ 3,334 $ 3,123 Variable lease cost 1 — 4 — Total operating lease cost 1 $ 1,166 $ 1,051 $ 3,338 $ 3,123 Finance lease cost: Amortization of right-of-use assets 2 $ 41 $ 43 $ 129 $ 128 Interest on finance lease liabilities 3 1 2 3 $ 7 Total finance lease cost 42 45 $ 132 $ 135 Total lease cost $ 1,208 $ 1,096 $ 3,470 $ 3,258 1 Included in occupancy and equipment expense in the consolidated statements of comprehensive income. 2 Included in depreciation and amortization in the consolidated statements of comprehensive income. 3 Included in interest on borrowings and other obligations in the consolidated statements of comprehensive income. |
Schedule of operating lease liability maturities | The following table shows the future minimum lease payments, weighted average remaining lease terms, and weighted average discount rates under operating and finance lease arrangements as of September 30, 2020. The discount rates used to calculate the present value of lease liabilities were based on the collateralized FHLB borrowing rates that were commensurate with lease terms and minimum payments on the later of the date we adopted the new lease accounting standards or lease commencement date. (in thousands) September 30, 2020 Year Operating Leases Finance Leases 2020 $ 1,199 $ 41 2021 4,592 42 2022 4,318 13 2023 3,893 4 2024 3,187 — Thereafter 12,475 — Total minimum lease payments 29,664 100 Amounts representing interest (present value discount) (2,137) (1) Present value of net minimum lease payments (lease liability) $ 27,527 $ 99 Weighted average remaining term (in years) 8.0 1.2 Weighted average discount rate 1.84 % 2.55 % |
Schedule of finance lease liability maturities | The following table shows the future minimum lease payments, weighted average remaining lease terms, and weighted average discount rates under operating and finance lease arrangements as of September 30, 2020. The discount rates used to calculate the present value of lease liabilities were based on the collateralized FHLB borrowing rates that were commensurate with lease terms and minimum payments on the later of the date we adopted the new lease accounting standards or lease commencement date. (in thousands) September 30, 2020 Year Operating Leases Finance Leases 2020 $ 1,199 $ 41 2021 4,592 42 2022 4,318 13 2023 3,893 4 2024 3,187 — Thereafter 12,475 — Total minimum lease payments 29,664 100 Amounts representing interest (present value discount) (2,137) (1) Present value of net minimum lease payments (lease liability) $ 27,527 $ 99 Weighted average remaining term (in years) 8.0 1.2 Weighted average discount rate 1.84 % 2.55 % |
Derivative Financial Instrume_2
Derivative Financial Instruments and Hedging Activities - (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of derivative instruments in statement of financial position, fair value | Information on our derivatives follows: Asset Derivatives Liability Derivatives (in thousands) September 30, December 31, 2019 September 30, December 31, 2019 Fair value hedges: Interest rate contracts notional amount $ — $ — $ 16,218 $ 16,956 Interest rate contracts fair value 1 $ — $ — $ 2,529 $ 1,178 1 See Note 3, Fair Value of Assets and Liabilities, for valuation methodology. The following table presents the carrying amount and associated cumulative basis adjustment related to the application of fair value hedge accounting that is included in the carrying amount of hedged assets as of September 30, 2020 and December 31, 2019. Carrying Amounts of Hedged Assets Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Loans (in thousands) September 30, 2020 December 31, 2019 September 30, 2020 December 31, 2019 Loans $ 18,535 $ 17,900 $ 2,318 $ 944 |
Schedule of derivative instruments, gain (loss) in statement of financial performance | The following table presents the net losses recognized in interest income on loans on the consolidated statements of comprehensive income related to our derivatives designated as fair value hedges. Three months ended Nine months ended (in thousands) September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Interest and fees on loans 1 $ 21,776 $ 21,525 $ 63,880 $ 63,208 Increase (decrease) in fair value of designated interest rate swaps due to LIBOR interest rate movements $ 152 $ (485) $ (1,351) $ (1,389) Payment on interest rate swaps (108) (23) (255) (49) (Decrease) increase in value of hedged loans (155) 424 1,374 1,359 Decrease in value of yield maintenance agreement (3) (3) (9) (10) Net losses on fair value hedging relationships recognized in interest income $ (114) $ (87) $ (241) $ (89) 1 Represents the income line item in the statement of comprehensive income in which the effects of fair value hedges are recorded. |
Offsetting assets | Information on financial instruments that are eligible for offset in the consolidated statements of condition follows: Offsetting of Financial Assets and Derivative Assets Gross Amounts Net Amounts of Gross Amounts Not Offset in Gross Amounts Offset in the Assets Presented the Statements of Condition of Recognized Statements of in the Statements Financial Cash Collateral ( in thousands) Assets Condition of Condition Instruments Received Net Amount September 30, 2020 Derivatives by Counterparty: Counterparty A $ — $ — $ — $ — $ — $ — December 31, 2019 Derivatives by Counterparty: Counterparty A $ — $ — $ — $ — $ — $ — |
Offsetting liabilities | Offsetting of Financial Liabilities and Derivative Liabilities Gross Amounts Net Amounts of Gross Amounts Not Offset in Gross Amounts Offset in the Liabilities Presented the Statements of Condition of Recognized Statements of in the Statements Financial Cash Collateral (in thousands) Liabilities 1 Condition of Condition 1 Instruments Pledged Net Amount September 30, 2020 Derivatives by Counterparty: Counterparty A $ 2,529 $ — $ 2,529 $ — $ (2,529) $ — December 31, 2019 Derivatives by Counterparty: Counterparty A $ 1,178 $ — $ 1,178 $ — $ (1,178) $ — 1 Amounts exclude accrued interest on swaps. |
Basis of Presentation - Reconci
Basis of Presentation - Reconciliation of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Weighted average basic shares outstanding (in shares) | 13,539 | 13,571 | 13,526 | 13,654 |
Potentially dilutive common shares related to: | ||||
Stock options (in shares) | 53 | 141 | 71 | 146 |
Unvested restricted stock awards (in shares) | 18 | 23 | 20 | 25 |
Weighted average diluted shares outstanding (in shares) | 13,610 | 13,735 | 13,617 | 13,825 |
Net income | $ 7,491 | $ 9,448 | $ 22,125 | $ 25,162 |
Basic EPS (in dollars per share) | $ 0.55 | $ 0.70 | $ 1.64 | $ 1.84 |
Diluted EPS (in dollars per share) | $ 0.55 | $ 0.69 | $ 1.62 | $ 1.82 |
Weighted average anti-dilutive shares not included in the calculation of diluted EPS (in shares) | 202 | 39 | 152 | 34 |
Recently Adopted and Issued A_2
Recently Adopted and Issued Accounting Standards - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jan. 01, 2020 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Expected increase to financing receivable allowance for credit loss upon CECL adoption, maximum percent | 10.00% | |
ASU 2016-13 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Financing receivable, allowance for credit loss, expected impact of CECL adoption | $ 1,600 | |
Off-balance sheet, credit loss, liability, expected impact of CECL adoption | $ 122 |
Fair Value of Assets and Liab_3
Fair Value of Assets and Liabilities - Recorded on a Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | $ 413,464 | $ 432,260 |
SBA-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 32,844 | 36,286 |
Debentures of government- sponsored agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 45,688 | 49,046 |
Obligations of state and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 93,743 | 67,282 |
Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 1,502 |
Assets and liabilities at fair value measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Interest rate contract | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial liabilities (interest rate contracts) | 0 | 0 |
Assets and liabilities at fair value measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Interest rate contract | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial liabilities (interest rate contracts) | 2,529 | 1,178 |
Assets and liabilities at fair value measured on a recurring basis | Significant Unobservable Inputs (Level 3) | Interest rate contract | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial liabilities (interest rate contracts) | 0 | 0 |
Assets and liabilities at fair value measured on a recurring basis | Mortgage-backed securities and collateralized mortgage obligations issued by U.S. government-sponsored agencies | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Assets and liabilities at fair value measured on a recurring basis | Mortgage-backed securities and collateralized mortgage obligations issued by U.S. government-sponsored agencies | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 241,189 | 278,144 |
Assets and liabilities at fair value measured on a recurring basis | Mortgage-backed securities and collateralized mortgage obligations issued by U.S. government-sponsored agencies | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Assets and liabilities at fair value measured on a recurring basis | SBA-backed securities | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Assets and liabilities at fair value measured on a recurring basis | SBA-backed securities | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 32,844 | 36,286 |
Assets and liabilities at fair value measured on a recurring basis | SBA-backed securities | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Assets and liabilities at fair value measured on a recurring basis | Debentures of government- sponsored agencies | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Assets and liabilities at fair value measured on a recurring basis | Debentures of government- sponsored agencies | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 45,688 | 49,046 |
Assets and liabilities at fair value measured on a recurring basis | Debentures of government- sponsored agencies | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Assets and liabilities at fair value measured on a recurring basis | Obligations of state and political subdivisions | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Assets and liabilities at fair value measured on a recurring basis | Obligations of state and political subdivisions | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 93,743 | 67,282 |
Assets and liabilities at fair value measured on a recurring basis | Obligations of state and political subdivisions | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | 0 |
Assets and liabilities at fair value measured on a recurring basis | Corporate bonds | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | |
Assets and liabilities at fair value measured on a recurring basis | Corporate bonds | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 1,502 | |
Assets and liabilities at fair value measured on a recurring basis | Corporate bonds | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | |
Carrying Value | Assets and liabilities at fair value measured on a recurring basis | Interest rate contract | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial liabilities (interest rate contracts) | 2,529 | 1,178 |
Carrying Value | Assets and liabilities at fair value measured on a recurring basis | Mortgage-backed securities and collateralized mortgage obligations issued by U.S. government-sponsored agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 241,189 | 278,144 |
Carrying Value | Assets and liabilities at fair value measured on a recurring basis | SBA-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 32,844 | 36,286 |
Carrying Value | Assets and liabilities at fair value measured on a recurring basis | Debentures of government- sponsored agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 45,688 | 49,046 |
Carrying Value | Assets and liabilities at fair value measured on a recurring basis | Obligations of state and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | $ 93,743 | 67,282 |
Carrying Value | Assets and liabilities at fair value measured on a recurring basis | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | $ 1,502 |
Fair Value of Assets and Liab_4
Fair Value of Assets and Liabilities - Narrative (Details) | 9 Months Ended | ||
Sep. 30, 2020USD ($)security | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($)security | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Write down of held to maturity securities | $ | $ 0 | $ 0 | |
Fair Value, Measurements, Nonrecurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets measured at fair value, non-recurring basis | $ | $ 0 | $ 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Number of securities | security | 0 | ||
Significant Unobservable Inputs (Level 3) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Number of securities | security | 0 |
Fair Value of Assets and Liab_5
Fair Value of Assets and Liabilities - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Financial assets (recorded at amortized cost) | ||
Investment securities held-to-maturity | $ 123,983 | $ 139,642 |
Carrying Amounts | Level 1 | ||
Financial assets (recorded at amortized cost) | ||
Cash and cash equivalents | 213,584 | 183,388 |
Carrying Amounts | Level 2 | ||
Financial assets (recorded at amortized cost) | ||
Investment securities held-to-maturity | 117,350 | 137,413 |
Interest receivable | 11,014 | 7,732 |
Financial liabilities (recorded at amortized cost) | ||
Time deposits | 98,084 | 97,810 |
Interest payable | 122 | 134 |
Carrying Amounts | Level 3 | ||
Financial assets (recorded at amortized cost) | ||
Loans, net | 2,085,877 | 1,826,609 |
Financial liabilities (recorded at amortized cost) | ||
Subordinated debenture | 2,760 | 2,708 |
Fair Value | Level 1 | ||
Financial assets (recorded at amortized cost) | ||
Cash and cash equivalents | 213,584 | 183,388 |
Fair Value | Level 2 | ||
Financial assets (recorded at amortized cost) | ||
Investment securities held-to-maturity | 123,983 | 139,642 |
Interest receivable | 11,014 | 7,732 |
Financial liabilities (recorded at amortized cost) | ||
Time deposits | 98,495 | 97,859 |
Interest payable | 122 | 134 |
Fair Value | Level 3 | ||
Financial assets (recorded at amortized cost) | ||
Loans, net | 2,106,790 | 1,839,666 |
Financial liabilities (recorded at amortized cost) | ||
Subordinated debenture | $ 2,994 | $ 3,182 |
Investment Securities - Amortiz
Investment Securities - Amortized Cost and Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Schedule of Available-for-sale Securities and Held-to-maturity Securities [Line Items] | ||
Held to maturity, amortized cost | $ 117,350 | $ 137,413 |
Held to maturity, fair value | 123,983 | 139,642 |
Held-to-maturity, gross unrealized gains | 6,633 | 2,378 |
Held-to-maturity, gross unrealized losses | 0 | (149) |
Total | 394,437 | 423,923 |
Available-for-sale, at fair value | 413,464 | 432,260 |
Available-for-sale, gross unrealized gains | 19,085 | 8,748 |
Available-for-sale, gross unrealized losses | (58) | (411) |
Total investment securities, amortized cost | 511,787 | 561,336 |
Total investment securities, fair value | 537,447 | 571,902 |
Total investment securities, gross unrealized gains | 25,718 | 11,126 |
Total investment securities, gross unrealized losses | (58) | (560) |
MBS pass-through securities issued by FHLMC and FNMA | ||
Schedule of Available-for-sale Securities and Held-to-maturity Securities [Line Items] | ||
Held to maturity, amortized cost | 69,797 | 80,451 |
Held to maturity, fair value | 73,884 | 81,325 |
Held-to-maturity, gross unrealized gains | 4,087 | 1,018 |
Held-to-maturity, gross unrealized losses | 0 | (144) |
Total | 56,679 | 98,502 |
Available-for-sale, at fair value | 59,482 | 100,071 |
Available-for-sale, gross unrealized gains | 2,803 | 1,617 |
Available-for-sale, gross unrealized losses | 0 | (48) |
SBA-backed securities | ||
Schedule of Available-for-sale Securities and Held-to-maturity Securities [Line Items] | ||
Held to maturity, amortized cost | 6,549 | 7,999 |
Held to maturity, fair value | 6,979 | 8,264 |
Held-to-maturity, gross unrealized gains | 430 | 265 |
Held-to-maturity, gross unrealized losses | 0 | 0 |
Total | 31,057 | 35,674 |
Available-for-sale, at fair value | 32,844 | 36,286 |
Available-for-sale, gross unrealized gains | 1,844 | 688 |
Available-for-sale, gross unrealized losses | (57) | (76) |
CMOs issued by FNMA | ||
Schedule of Available-for-sale Securities and Held-to-maturity Securities [Line Items] | ||
Held to maturity, amortized cost | 8,440 | 10,210 |
Held to maturity, fair value | 8,834 | 10,492 |
Held-to-maturity, gross unrealized gains | 394 | 282 |
Held-to-maturity, gross unrealized losses | 0 | 0 |
Total | 18,285 | 22,702 |
Available-for-sale, at fair value | 18,961 | 23,092 |
Available-for-sale, gross unrealized gains | 676 | 390 |
Available-for-sale, gross unrealized losses | 0 | 0 |
CMOs issued by FHLMC | ||
Schedule of Available-for-sale Securities and Held-to-maturity Securities [Line Items] | ||
Held to maturity, amortized cost | 29,657 | 31,477 |
Held to maturity, fair value | 31,331 | 32,157 |
Held-to-maturity, gross unrealized gains | 1,674 | 685 |
Held-to-maturity, gross unrealized losses | 0 | (5) |
Total | 144,600 | 139,398 |
Available-for-sale, at fair value | 153,255 | 143,226 |
Available-for-sale, gross unrealized gains | 8,656 | 3,892 |
Available-for-sale, gross unrealized losses | (1) | (64) |
CMOs issued by GNMA | ||
Schedule of Available-for-sale Securities and Held-to-maturity Securities [Line Items] | ||
Held to maturity, amortized cost | 1,230 | 3,763 |
Held to maturity, fair value | 1,235 | 3,816 |
Held-to-maturity, gross unrealized gains | 5 | 53 |
Held-to-maturity, gross unrealized losses | 0 | 0 |
Total | 9,064 | 11,719 |
Available-for-sale, at fair value | 9,491 | 11,755 |
Available-for-sale, gross unrealized gains | 427 | 42 |
Available-for-sale, gross unrealized losses | 0 | (6) |
Debentures of government- sponsored agencies | ||
Schedule of Available-for-sale Securities and Held-to-maturity Securities [Line Items] | ||
Total | 45,239 | 48,389 |
Available-for-sale, at fair value | 45,688 | 49,046 |
Available-for-sale, gross unrealized gains | 449 | 727 |
Available-for-sale, gross unrealized losses | 0 | (70) |
Obligations of state and political subdivisions | ||
Schedule of Available-for-sale Securities and Held-to-maturity Securities [Line Items] | ||
Held to maturity, amortized cost | 1,677 | 3,513 |
Held to maturity, fair value | 1,720 | 3,588 |
Held-to-maturity, gross unrealized gains | 43 | 75 |
Held-to-maturity, gross unrealized losses | 0 | 0 |
Total | 89,513 | 66,042 |
Available-for-sale, at fair value | 93,743 | 67,282 |
Available-for-sale, gross unrealized gains | 4,230 | 1,386 |
Available-for-sale, gross unrealized losses | 0 | (146) |
Corporate bonds | ||
Schedule of Available-for-sale Securities and Held-to-maturity Securities [Line Items] | ||
Total | 0 | 1,497 |
Available-for-sale, at fair value | 0 | 1,502 |
Available-for-sale, gross unrealized gains | 0 | 6 |
Available-for-sale, gross unrealized losses | $ 0 | $ (1) |
Investment Securities - Maturit
Investment Securities - Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Held-to-maturity Securities, Amortized Cost | ||
Within one year | $ 247 | $ 1,807 |
After one but within five years | 8,974 | 2,256 |
After five years through ten years | 52,373 | 56,221 |
After ten years | 55,756 | 77,129 |
Total | 117,350 | 137,413 |
Held-to-maturity Securities, Fair Value | ||
Within one year | 252 | 1,811 |
After one but within five years | 9,539 | 2,296 |
After five years through ten years | 56,139 | 57,544 |
After ten years | 58,053 | 77,991 |
Total | 123,983 | 139,642 |
Available-for-sale Securities, Amortized Cost | ||
Within one year | 14,235 | 6,699 |
After one but within five years | 60,958 | 48,706 |
After five years through ten years | 164,815 | 208,806 |
After ten years | 154,429 | 159,712 |
Total | 394,437 | 423,923 |
Available-for-sale Securities, Fair Value | ||
Within one year | 14,452 | 6,706 |
After one but within five years | 64,559 | 49,619 |
After five years through ten years | 174,439 | 214,277 |
After ten years | 160,014 | 161,658 |
Total | $ 413,464 | $ 432,260 |
Investment Securities - Sales o
Investment Securities - Sales of investment securities and gross gains and losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Available-for-sale: | ||||
Sales proceeds | $ 0 | $ 0 | $ 33,756 | $ 66,081 |
Gross realized gains | 0 | 0 | 916 | 214 |
Gross realized losses | $ 0 | $ 0 | $ (1) | $ (159) |
Investment Securities - Pledged
Investment Securities - Pledged and Transferred Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Available-for-sale securities pledged as collateral | $ 103,777 | $ 127,962 |
Public deposits | ||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Available-for-sale securities pledged as collateral | 102,396 | 126,598 |
Trust deposits | ||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Available-for-sale securities pledged as collateral | 752 | 742 |
State of California | ||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Available-for-sale securities pledged as collateral | 103,148 | 127,340 |
Internal checking account | ||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Available-for-sale securities pledged as collateral | $ 629 | $ 622 |
Investment Securities - Narrati
Investment Securities - Narrative (Details) - security | Sep. 30, 2020 | Dec. 31, 2019 |
Investments, Debt and Equity Securities [Abstract] | ||
Number of investment securities in unrealized loss position | 8 | 40 |
Number of investment securities in unrealized loss position longer than 12 months | 5 | |
Number of investment securities in unrealized loss position less than 12 months | 3 |
Investment Securities - Unreali
Investment Securities - Unrealized Loss Positions (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Securities, Available-For-Sale, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Available-for-sale, less than 12 continuous months, fair value | $ 2,014 | $ 81,958 |
Available-for-sale, greater than 12 continuous months, fair value | 1,900 | 10,552 |
Available-for-sale, total securities in a loss position, fair value | 3,914 | 92,510 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Available-for-sale, less than 12 continuous months, unrealized loss | (1) | (328) |
Available-for-sale, greater than 12 continuous months, unrealized loss | (57) | (83) |
Available-for-sale, total securities in a loss position, unrealized loss | (58) | (411) |
Marketable Securities, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Marketable securities, less than 12 continuous months, fair value | 2,014 | 96,161 |
Marketable securities, greater than 12 continuous months, fair value | 1,900 | 18,350 |
Marketable securities, total securities in a loss position, fair value | 3,914 | 114,511 |
Marketable Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Marketable securities, less than 12 continuous months, unrealized loss | (1) | (388) |
Marketable securities, greater than 12 continuous months, unrealized loss | (57) | (172) |
Marketable securities, total securities in a loss position, unrealized loss | (58) | (560) |
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Less than 12 continuous months | 14,203 | |
Greater than or equal to 12 continuous months | 7,798 | |
Total Securities in a loss position | 22,001 | |
Debt Securities, Held-to-maturity, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Less than 12 continuous months | (60) | |
Greater than or equal to 12 continuous months | (89) | |
Held-to-maturity, gross unrealized losses | (149) | |
MBS pass-through securities issued by FHLMC and FNMA | ||
Debt Securities, Available-For-Sale, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Available-for-sale, less than 12 continuous months, fair value | 4,367 | |
Available-for-sale, greater than 12 continuous months, fair value | 4,464 | |
Available-for-sale, total securities in a loss position, fair value | 8,831 | |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Available-for-sale, less than 12 continuous months, unrealized loss | (34) | |
Available-for-sale, greater than 12 continuous months, unrealized loss | (14) | |
Available-for-sale, total securities in a loss position, unrealized loss | (48) | |
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Less than 12 continuous months | 14,203 | |
Greater than or equal to 12 continuous months | 6,073 | |
Total Securities in a loss position | 20,276 | |
Debt Securities, Held-to-maturity, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Less than 12 continuous months | (60) | |
Greater than or equal to 12 continuous months | (84) | |
Held-to-maturity, gross unrealized losses | (144) | |
SBA-backed securities | ||
Debt Securities, Available-For-Sale, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Available-for-sale, less than 12 continuous months, fair value | 0 | 9,227 |
Available-for-sale, greater than 12 continuous months, fair value | 1,900 | 2,448 |
Available-for-sale, total securities in a loss position, fair value | 1,900 | 11,675 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Available-for-sale, less than 12 continuous months, unrealized loss | 0 | (14) |
Available-for-sale, greater than 12 continuous months, unrealized loss | (57) | (62) |
Available-for-sale, total securities in a loss position, unrealized loss | (57) | (76) |
CMOs issued by FHLMC | ||
Debt Securities, Available-For-Sale, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Available-for-sale, less than 12 continuous months, fair value | 2,014 | 14,918 |
Available-for-sale, greater than 12 continuous months, fair value | 0 | 2,981 |
Available-for-sale, total securities in a loss position, fair value | 2,014 | 17,899 |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Available-for-sale, less than 12 continuous months, unrealized loss | (1) | (58) |
Available-for-sale, greater than 12 continuous months, unrealized loss | 0 | (6) |
Available-for-sale, total securities in a loss position, unrealized loss | $ (1) | (64) |
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Less than 12 continuous months | 0 | |
Greater than or equal to 12 continuous months | 1,725 | |
Total Securities in a loss position | 1,725 | |
Debt Securities, Held-to-maturity, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Less than 12 continuous months | 0 | |
Greater than or equal to 12 continuous months | (5) | |
Held-to-maturity, gross unrealized losses | (5) | |
CMOs issued by GNMA | ||
Debt Securities, Available-For-Sale, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Available-for-sale, less than 12 continuous months, fair value | 7,139 | |
Available-for-sale, greater than 12 continuous months, fair value | 0 | |
Available-for-sale, total securities in a loss position, fair value | 7,139 | |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Available-for-sale, less than 12 continuous months, unrealized loss | (6) | |
Available-for-sale, greater than 12 continuous months, unrealized loss | 0 | |
Available-for-sale, total securities in a loss position, unrealized loss | (6) | |
Debentures of government- sponsored agencies | ||
Debt Securities, Available-For-Sale, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Available-for-sale, less than 12 continuous months, fair value | 25,228 | |
Available-for-sale, greater than 12 continuous months, fair value | 0 | |
Available-for-sale, total securities in a loss position, fair value | 25,228 | |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Available-for-sale, less than 12 continuous months, unrealized loss | (70) | |
Available-for-sale, greater than 12 continuous months, unrealized loss | 0 | |
Available-for-sale, total securities in a loss position, unrealized loss | (70) | |
Obligations of state and political subdivisions | ||
Debt Securities, Available-For-Sale, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Available-for-sale, less than 12 continuous months, fair value | 20,579 | |
Available-for-sale, greater than 12 continuous months, fair value | 659 | |
Available-for-sale, total securities in a loss position, fair value | 21,238 | |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Available-for-sale, less than 12 continuous months, unrealized loss | (145) | |
Available-for-sale, greater than 12 continuous months, unrealized loss | (1) | |
Available-for-sale, total securities in a loss position, unrealized loss | (146) | |
Corporate bonds | ||
Debt Securities, Available-For-Sale, Continuous Unrealized Loss Position, Fair Value [Abstract] | ||
Available-for-sale, less than 12 continuous months, fair value | 500 | |
Available-for-sale, greater than 12 continuous months, fair value | 0 | |
Available-for-sale, total securities in a loss position, fair value | 500 | |
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract] | ||
Available-for-sale, less than 12 continuous months, unrealized loss | (1) | |
Available-for-sale, greater than 12 continuous months, unrealized loss | 0 | |
Available-for-sale, total securities in a loss position, unrealized loss | $ (1) |
Investment Securities - Non-Mar
Investment Securities - Non-Marketable Securities Included in Other Assets (Details) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020USD ($)$ / sharesshares | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($)shares | Oct. 29, 2020 | |
Schedule of Equity Method Investments [Line Items] | ||||
Federal home loan bank stock, par value (in usd per share) | $ / shares | $ 100 | |||
Investments in low income housing tax credit funds | $ 3,700,000 | $ 4,100,000 | ||
Low income housing tax credits and other tax benefits | 490,000 | |||
Low income housing amortization expense | 412,000 | |||
Unfunded commitments for low income housing tax credit funds | $ 886,000 | |||
Subsequent event | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Federal home loan bank, dividend rate percentage | 5.00% | |||
Visa Inc. Class B common stock | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Number of shares of securities carried at cost (in shares) | shares | 10,439 | 10,439 | ||
Carrying value of securities carried at cost | $ 0 | $ 0 | ||
Fair value of Class B common stock | $ 3,400,000 | $ 3,200,000 | ||
Visa Inc. | Visa Inc. Class B common stock | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Conversion rate on common stock | 1.6228 | 1.6228 | ||
Asset Derivatives | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Federal home loan bank stock | $ 11,900,000 | $ 11,700,000 | ||
Low-income housing tax credit investment | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Impairment losses | $ 0 | $ 0 |
Loans and Allowance for Loan _3
Loans and Allowance for Loan Losses - Outstanding and Aging Analysis (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans | $ 2,107,991,000 | $ 1,843,286,000 |
Deferred loan fees | (5,100,000) | 983,000 |
Unaccreted purchase discounts on non-PCI loans | 878,000 | 983,000 |
Loans past due more than 90 days still accruing | 0 | 0 |
SBA PPP | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Deferred loan fees | 6,500,000 | |
Commercial loans | Commercial and industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans | 512,973,000 | 246,687,000 |
Commercial loans | Commercial and industrial | SBA PPP | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans | 301,700,000 | |
Commercial real estate loans | Commercial real estate, owner-occupied | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans | 299,754,000 | 308,824,000 |
Commercial real estate loans | Commercial real estate, investor-owned | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans | 966,517,000 | 946,317,000 |
Commercial real estate loans | Construction | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans | 66,663,000 | 61,095,000 |
Residential loans | Home equity | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans | 107,364,000 | 116,024,000 |
Residential loans | Other residential | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans | 130,915,000 | 136,657,000 |
Consumer loans | Installment and other consumer | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total loans | 23,805,000 | 27,682,000 |
Financial asset, other than financial asset acquired with credit deterioration | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 698,000 | 1,648,000 |
Current | 2,107,293,000 | 1,841,638,000 |
Total loans | 2,107,991,000 | 1,843,286,000 |
Non-accrual | 1,442,000 | 226,000 |
Financial asset, other than financial asset acquired with credit deterioration | 30-59 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 415,000 | 1,288,000 |
Financial asset, other than financial asset acquired with credit deterioration | 60-89 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 283,000 | 193,000 |
Financial asset, other than financial asset acquired with credit deterioration | 90 days or more past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 167,000 |
Financial asset, other than financial asset acquired with credit deterioration | Commercial loans | Commercial and industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 198,000 | 1,000 |
Current | 512,775,000 | 246,686,000 |
Total loans | 512,973,000 | 246,687,000 |
Non-accrual | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Commercial loans | Commercial and industrial | 30-59 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 198,000 | 1,000 |
Financial asset, other than financial asset acquired with credit deterioration | Commercial loans | Commercial and industrial | 60-89 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Commercial loans | Commercial and industrial | 90 days or more past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Commercial real estate loans | Commercial real estate, owner-occupied | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 0 |
Current | 299,754,000 | 308,824,000 |
Total loans | 299,754,000 | 308,824,000 |
Non-accrual | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Commercial real estate loans | Commercial real estate, owner-occupied | 30-59 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Commercial real estate loans | Commercial real estate, owner-occupied | 60-89 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Commercial real estate loans | Commercial real estate, owner-occupied | 90 days or more past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Commercial real estate loans | Commercial real estate, investor-owned | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 1,001,000 |
Current | 966,517,000 | 945,316,000 |
Total loans | 966,517,000 | 946,317,000 |
Non-accrual | 886,000 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Commercial real estate loans | Commercial real estate, investor-owned | 30-59 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 1,001,000 |
Financial asset, other than financial asset acquired with credit deterioration | Commercial real estate loans | Commercial real estate, investor-owned | 60-89 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Commercial real estate loans | Commercial real estate, investor-owned | 90 days or more past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Commercial real estate loans | Construction | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 0 |
Current | 66,663,000 | 61,095,000 |
Total loans | 66,663,000 | 61,095,000 |
Non-accrual | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Commercial real estate loans | Construction | 30-59 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Commercial real estate loans | Construction | 60-89 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Commercial real estate loans | Construction | 90 days or more past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Residential loans | Home equity | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 493,000 | 544,000 |
Current | 106,871,000 | 115,480,000 |
Total loans | 107,364,000 | 116,024,000 |
Non-accrual | 532,000 | 168,000 |
Financial asset, other than financial asset acquired with credit deterioration | Residential loans | Home equity | 30-59 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 217,000 | 279,000 |
Financial asset, other than financial asset acquired with credit deterioration | Residential loans | Home equity | 60-89 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 276,000 | 98,000 |
Financial asset, other than financial asset acquired with credit deterioration | Residential loans | Home equity | 90 days or more past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 167,000 |
Financial asset, other than financial asset acquired with credit deterioration | Residential loans | Other residential | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 0 |
Current | 130,915,000 | 136,657,000 |
Total loans | 130,915,000 | 136,657,000 |
Non-accrual | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Residential loans | Other residential | 30-59 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Residential loans | Other residential | 60-89 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Residential loans | Other residential | 90 days or more past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 0 |
Financial asset, other than financial asset acquired with credit deterioration | Consumer loans | Installment and other consumer | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 7,000 | 102,000 |
Current | 23,798,000 | 27,580,000 |
Total loans | 23,805,000 | 27,682,000 |
Non-accrual | 24,000 | 58,000 |
Financial asset, other than financial asset acquired with credit deterioration | Consumer loans | Installment and other consumer | 30-59 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 0 | 7,000 |
Financial asset, other than financial asset acquired with credit deterioration | Consumer loans | Installment and other consumer | 60-89 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | 7,000 | 95,000 |
Financial asset, other than financial asset acquired with credit deterioration | Consumer loans | Installment and other consumer | 90 days or more past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans past due | $ 0 | $ 0 |
Loans and Allowance for Loan _4
Loans and Allowance for Loan Losses - CARES Act Narrative (Details) $ in Thousands | 1 Months Ended | 7 Months Ended | |||
Oct. 31, 2020 | Sep. 30, 2020USD ($)loan | Oct. 19, 2020USD ($)loan | Jun. 30, 2020loan | Dec. 31, 2019USD ($) | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Payroll Protection Program loans, balance | $ 2,107,991 | $ 1,843,286 | |||
Number of loan modifications under CARES Act | loan | 264 | ||||
Payment deferral period, loans modified under CARES Act | 120 days | ||||
Total loan balance modified under CARES Act | $ 388,500 | ||||
SBA PPP | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Number of loans (over) | loan | 1,800 | ||||
Commercial loans | Commercial and industrial | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Payroll Protection Program loans, balance | 512,973 | $ 246,687 | |||
Commercial loans | Commercial and industrial | SBA PPP | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Payroll Protection Program loans, balance | $ 301,700 | ||||
Subsequent event | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Loan modifications under CARES Act, additional relief | loan | 20 | ||||
Loans and leases receivable, net of deferred income, modified under CARES Act, additional relief | $ 47,200 | ||||
Subsequent event | SBA PPP | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Payment deferral period, before extension due to PPP forgiveness process delay | 6 months | ||||
Payment deferral period, before extension due to PPP forgiveness process delay | 16 months |
Loans and Allowance for Loan _5
Loans and Allowance for Loan Losses - Credit Quality (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | $ 2,107,991 | $ 1,843,286 |
Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 2,107,991 | 1,843,286 |
Pass | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 2,009,279 | 1,759,961 |
Special Mention | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 87,713 | 73,391 |
Substandard | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 10,999 | 9,934 |
Commercial loans | Commercial and industrial | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 512,973 | 246,687 |
Commercial loans | Commercial and industrial | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 512,973 | 246,687 |
Commercial loans | Commercial and industrial | Pass | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 484,305 | 209,213 |
Commercial loans | Commercial and industrial | Special Mention | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 28,544 | 37,065 |
Commercial loans | Commercial and industrial | Substandard | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 124 | 409 |
Commercial real estate loans | Commercial real estate, owner-occupied | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 299,754 | 308,824 |
Commercial real estate loans | Commercial real estate, owner-occupied | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 299,754 | 308,824 |
Commercial real estate loans | Commercial real estate, owner-occupied | Pass | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 251,741 | 264,766 |
Commercial real estate loans | Commercial real estate, owner-occupied | Special Mention | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 41,010 | 35,016 |
Commercial real estate loans | Commercial real estate, owner-occupied | Substandard | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 7,003 | 9,042 |
Commercial real estate loans | Commercial real estate, investor-owned | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 966,517 | 946,317 |
Commercial real estate loans | Commercial real estate, investor-owned | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 966,517 | 946,317 |
Commercial real estate loans | Commercial real estate, investor-owned | Pass | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 946,166 | 945,757 |
Commercial real estate loans | Commercial real estate, investor-owned | Special Mention | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 17,359 | 560 |
Commercial real estate loans | Commercial real estate, investor-owned | Substandard | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 2,992 | 0 |
Commercial real estate loans | Construction | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 66,663 | 61,095 |
Commercial real estate loans | Construction | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 66,663 | 61,095 |
Commercial real estate loans | Construction | Pass | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 66,663 | 61,095 |
Commercial real estate loans | Construction | Special Mention | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 0 | 0 |
Commercial real estate loans | Construction | Substandard | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 0 | 0 |
Residential loans | Home equity | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 107,364 | 116,024 |
Residential loans | Home equity | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 107,364 | 116,024 |
Residential loans | Home equity | Pass | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 105,824 | 114,935 |
Residential loans | Home equity | Special Mention | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 800 | 750 |
Residential loans | Home equity | Substandard | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 740 | 339 |
Residential loans | Other residential | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 130,915 | 136,657 |
Residential loans | Other residential | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 130,915 | 136,657 |
Residential loans | Other residential | Pass | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 130,915 | 136,657 |
Residential loans | Other residential | Special Mention | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 0 | 0 |
Residential loans | Other residential | Substandard | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 0 | 0 |
Consumer loans | Installment and other consumer | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 23,805 | 27,682 |
Consumer loans | Installment and other consumer | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 23,805 | 27,682 |
Consumer loans | Installment and other consumer | Pass | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 23,665 | 27,538 |
Consumer loans | Installment and other consumer | Special Mention | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | 0 | 0 |
Consumer loans | Installment and other consumer | Substandard | Financial asset acquired and no credit deterioration | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total loans | $ 140 | $ 144 |
Loans and Allowance for Loan _6
Loans and Allowance for Loan Losses - Troubled Debt Restructuring Narrative (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020loan | Sep. 30, 2019USD ($)loan | |
Financing Receivable, Troubled Debt Restructuring [Line Items] | ||
Number of loans removed from TDR designation | 0 | |
Commercial loans | ||
Financing Receivable, Troubled Debt Restructuring [Line Items] | ||
Number of loans removed from TDR designation | 1 | |
Recorded investment of loans removed from TDR designation | $ | $ 3 |
Loans and Allowance for Loan _7
Loans and Allowance for Loan Losses - Troubled Debt Restructuring by Class (Details) | Sep. 30, 2020USD ($)loan | Dec. 31, 2019USD ($) |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Recorded investment in troubled debt restructurings | $ 12,625,000 | $ 11,333,000 |
Troubled debt restructuring, loans acquired, number of loans | loan | 1 | |
Troubled debt restructuring, loans acquired | $ 276,000 | 0 |
Financing receivable, modifications, recorded investment, nonaccrual status | 300,000 | 58,000 |
Commercial loans | Commercial and industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Recorded investment in troubled debt restructurings | 1,017,000 | 1,223,000 |
Commercial real estate loans | Commercial real estate, owner-occupied | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Recorded investment in troubled debt restructurings | 7,003,000 | 6,998,000 |
Commercial real estate loans | Commercial real estate, investor-owned | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Recorded investment in troubled debt restructurings | 3,309,000 | 1,770,000 |
Residential loans | Home equity | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Recorded investment in troubled debt restructurings | 527,000 | 251,000 |
Residential loans | Other residential | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Recorded investment in troubled debt restructurings | 0 | 452,000 |
Consumer loans | Installment and other consumer | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Recorded investment in troubled debt restructurings | $ 769,000 | $ 639,000 |
Loans and Allowance for Loan _8
Loans and Allowance for Loan Losses - Troubled Debt Restructuring Modifications (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020USD ($)contract | Sep. 30, 2019USD ($)contract | Sep. 30, 2020USD ($)contractloan | Sep. 30, 2019USD ($)loancontract | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Number of Contracts Modified | contract | 0 | 6 | ||
Pre-Modification Outstanding Recorded Investment | $ 0 | $ 2,210 | ||
Post-Modification Outstanding Recorded Investment | 0 | 2,202 | ||
Post-Modification Outstanding Recorded Investment at Period End | $ 0 | $ 2,163 | ||
Number of modified TDR loans that defaulted | loan | 0 | 0 | ||
Commercial and industrial | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Number of Contracts Modified | contract | 1 | 1 | ||
Pre-Modification Outstanding Recorded Investment | $ 170 | $ 298 | ||
Post-Modification Outstanding Recorded Investment | 162 | 298 | ||
Post-Modification Outstanding Recorded Investment at Period End | $ 125 | $ 173 | ||
Commercial real estate, investor-owned | Commercial real estate loans | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Number of Contracts Modified | contract | 1 | 1 | ||
Pre-Modification Outstanding Recorded Investment | $ 1,553 | $ 1,553 | ||
Post-Modification Outstanding Recorded Investment | 1,553 | 1,553 | ||
Post-Modification Outstanding Recorded Investment at Period End | $ 1,553 | $ 1,553 | ||
Home equity | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Number of Contracts Modified | contract | 1 | |||
Pre-Modification Outstanding Recorded Investment | $ 276 | |||
Post-Modification Outstanding Recorded Investment | 276 | |||
Post-Modification Outstanding Recorded Investment at Period End | $ 276 | |||
Installment and other consumer | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Number of Contracts Modified | contract | 3 | |||
Pre-Modification Outstanding Recorded Investment | $ 211 | |||
Post-Modification Outstanding Recorded Investment | 211 | |||
Post-Modification Outstanding Recorded Investment at Period End | $ 209 |
Loans and Allowance for Loan _9
Loans and Allowance for Loan Losses - Impaired and Related Allowance (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Recorded investment in impaired loans: | |||||
With no specific allowance recorded | $ 1,797,000 | $ 1,797,000 | $ 1,066,000 | ||
With a specific allowance recorded | 11,970,000 | 11,970,000 | 10,434,000 | ||
Total recorded investment in impaired loans | 13,767,000 | 13,767,000 | 11,500,000 | ||
Unpaid principal balance of impaired loans | 13,760,000 | 13,760,000 | 11,471,000 | ||
Specific allowance | 1,106,000 | 1,106,000 | 397,000 | ||
Average recorded investment in impaired loans during the period | 12,833,000 | $ 12,327,000 | 12,475,000 | $ 13,609,000 | |
Interest income recognized on impaired loans during the period ended | 115,000 | 522,000 | 333,000 | 844,000 | |
Interest income, cash basis, recognized on impaired loans during the period | 0 | 393,000 | 0 | 416,000 | |
Charge-off amounts on impaired loans | 0 | 0 | |||
Outstanding commitments to extend credit on impaired loans | 500,000 | 500,000 | 534,000 | ||
Commercial loans | Commercial and industrial | |||||
Recorded investment in impaired loans: | |||||
With no specific allowance recorded | 291,000 | 291,000 | 349,000 | ||
With a specific allowance recorded | 726,000 | 726,000 | 874,000 | ||
Total recorded investment in impaired loans | 1,017,000 | 1,017,000 | 1,223,000 | ||
Unpaid principal balance of impaired loans | 1,012,000 | 1,012,000 | 1,209,000 | ||
Specific allowance | 19,000 | 19,000 | 103,000 | ||
Average recorded investment in impaired loans during the period | 798,000 | 1,324,000 | 948,000 | 1,495,000 | |
Interest income recognized on impaired loans during the period ended | 11,000 | 16,000 | 32,000 | 56,000 | |
Commercial real estate loans | Commercial real estate, owner-occupied | |||||
Recorded investment in impaired loans: | |||||
With no specific allowance recorded | 0 | 0 | 0 | ||
With a specific allowance recorded | 7,003,000 | 7,003,000 | 6,998,000 | ||
Total recorded investment in impaired loans | 7,003,000 | 7,003,000 | 6,998,000 | ||
Unpaid principal balance of impaired loans | 6,993,000 | 6,993,000 | 6,992,000 | ||
Specific allowance | 225,000 | 225,000 | 195,000 | ||
Average recorded investment in impaired loans during the period | 7,002,000 | 7,000,000 | 7,000,000 | 6,998,000 | |
Interest income recognized on impaired loans during the period ended | 64,000 | 67,000 | 197,000 | 199,000 | |
Commercial real estate loans | Commercial real estate, investor-owned | |||||
Recorded investment in impaired loans: | |||||
With no specific allowance recorded | 885,000 | 885,000 | 0 | ||
With a specific allowance recorded | 3,310,000 | 3,310,000 | 1,770,000 | ||
Total recorded investment in impaired loans | 4,195,000 | 4,195,000 | 1,770,000 | ||
Unpaid principal balance of impaired loans | 4,187,000 | 4,187,000 | 1,764,000 | ||
Specific allowance | 697,000 | 697,000 | 41,000 | ||
Average recorded investment in impaired loans during the period | 3,430,000 | 1,791,000 | 2,832,000 | 1,804,000 | |
Interest income recognized on impaired loans during the period ended | 30,000 | 20,000 | 68,000 | 59,000 | |
Commercial real estate loans | Construction | |||||
Recorded investment in impaired loans: | |||||
With no specific allowance recorded | 0 | 0 | 0 | ||
With a specific allowance recorded | 0 | 0 | 0 | ||
Total recorded investment in impaired loans | 0 | 0 | 0 | ||
Unpaid principal balance of impaired loans | 0 | 0 | 0 | ||
Specific allowance | 0 | 0 | 0 | ||
Average recorded investment in impaired loans during the period | 0 | 684,000 | 0 | 1,687,000 | |
Interest income recognized on impaired loans during the period ended | 0 | 400,000 | 0 | 456,000 | |
Residential loans | Home equity | |||||
Recorded investment in impaired loans: | |||||
With no specific allowance recorded | 532,000 | 532,000 | 167,000 | ||
With a specific allowance recorded | 251,000 | 251,000 | 251,000 | ||
Total recorded investment in impaired loans | 783,000 | 783,000 | 418,000 | ||
Unpaid principal balance of impaired loans | 801,000 | 801,000 | 417,000 | ||
Specific allowance | 4,000 | 4,000 | 5,000 | ||
Average recorded investment in impaired loans during the period | 829,000 | 413,000 | 740,000 | 497,000 | |
Interest income recognized on impaired loans during the period ended | 3,000 | 9,000 | 10,000 | 42,000 | |
Residential loans | Other residential | |||||
Recorded investment in impaired loans: | |||||
With no specific allowance recorded | 0 | 0 | 452,000 | ||
With a specific allowance recorded | 0 | 0 | 0 | ||
Total recorded investment in impaired loans | 0 | 0 | 452,000 | ||
Unpaid principal balance of impaired loans | 0 | 0 | 451,000 | ||
Specific allowance | 0 | 0 | 0 | ||
Average recorded investment in impaired loans during the period | 0 | 456,000 | 225,000 | 458,000 | |
Interest income recognized on impaired loans during the period ended | 0 | 4,000 | 4,000 | 14,000 | |
Consumer loans | Installment and other consumer | |||||
Recorded investment in impaired loans: | |||||
With no specific allowance recorded | 89,000 | 89,000 | 98,000 | ||
With a specific allowance recorded | 680,000 | 680,000 | 541,000 | ||
Total recorded investment in impaired loans | 769,000 | 769,000 | 639,000 | ||
Unpaid principal balance of impaired loans | 767,000 | 767,000 | 638,000 | ||
Specific allowance | 161,000 | 161,000 | $ 53,000 | ||
Average recorded investment in impaired loans during the period | 774,000 | 659,000 | 730,000 | 670,000 | |
Interest income recognized on impaired loans during the period ended | $ 7,000 | $ 6,000 | $ 22,000 | $ 18,000 |
Loans and Allowance for Loan_10
Loans and Allowance for Loan Losses - Allowance for Loan Losses (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 | |
Allowance for Loan and Lease Losses [Roll Forward] | |||||
Beginning balance | $ 20,868 | $ 15,835 | $ 16,677 | $ 15,821 | |
Provision (reversal) | 1,250 | 400 | 5,450 | 400 | |
Charge-offs | (10) | 0 | (30) | (9) | |
Recoveries | 5 | 5 | 16 | 28 | |
Ending balance | 22,113 | 16,240 | 22,113 | 16,240 | |
Ending ALLL related to loans collectively evaluated for impairment | 21,007 | 21,007 | $ 16,280 | ||
Ending ALLL related to loans individually evaluated for impairment | 1,106 | 1,106 | 397 | ||
Ending ALLL | 22,113 | 22,113 | 16,677 | ||
Collectively evaluated for impairment | 2,094,224 | 2,094,224 | 1,831,786 | ||
Individually evaluated for impairment | 13,767 | 13,767 | 11,500 | ||
Total loans | $ 2,107,991 | $ 2,107,991 | $ 1,843,286 | ||
Ratio of allowance for loan losses to total loans | 1.05% | 1.05% | 0.90% | ||
Allowance for loan losses to non-accrual loans | 1533.00% | 1533.00% | 7379.00% | ||
Commercial loans | Commercial and industrial | |||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||
Beginning balance | $ 2,609 | 2,368 | $ 2,334 | 2,436 | |
Provision (reversal) | (79) | 326 | 208 | 256 | |
Charge-offs | (10) | 0 | (30) | (9) | |
Recoveries | 5 | 5 | 13 | 16 | |
Ending balance | 2,525 | 2,699 | 2,525 | 2,699 | |
Ending ALLL related to loans collectively evaluated for impairment | 2,506 | 2,506 | $ 2,231 | ||
Ending ALLL related to loans individually evaluated for impairment | 19 | 19 | 103 | ||
Ending ALLL | 2,525 | 2,525 | 2,334 | ||
Collectively evaluated for impairment | 511,956 | 511,956 | 245,464 | ||
Individually evaluated for impairment | 1,017 | 1,017 | 1,223 | ||
Total loans | $ 512,973 | $ 512,973 | $ 246,687 | ||
Ratio of allowance for loan losses to total loans | 0.49% | 0.49% | 0.95% | ||
Commercial real estate loans | Commercial real estate, owner-occupied | |||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||
Beginning balance | $ 2,910 | 2,321 | $ 2,462 | 2,407 | |
Provision (reversal) | 225 | 21 | 673 | (65) | |
Charge-offs | 0 | 0 | 0 | 0 | |
Recoveries | 0 | 0 | 0 | 0 | |
Ending balance | 3,135 | 2,342 | 3,135 | 2,342 | |
Ending ALLL related to loans collectively evaluated for impairment | 2,910 | 2,910 | $ 2,267 | ||
Ending ALLL related to loans individually evaluated for impairment | 225 | 225 | 195 | ||
Ending ALLL | 3,135 | 3,135 | 2,462 | ||
Collectively evaluated for impairment | 292,751 | 292,751 | 301,826 | ||
Individually evaluated for impairment | 7,003 | 7,003 | 6,998 | ||
Total loans | $ 299,754 | $ 299,754 | $ 308,824 | ||
Ratio of allowance for loan losses to total loans | 1.05% | 1.05% | 0.80% | ||
Commercial real estate loans | Commercial real estate, investor-owned | |||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||
Beginning balance | $ 10,403 | 7,721 | $ 8,483 | 7,703 | |
Provision (reversal) | 1,221 | 211 | 3,141 | 217 | |
Charge-offs | 0 | 0 | 0 | 0 | |
Recoveries | 0 | 0 | 0 | 12 | |
Ending balance | 11,624 | 7,932 | 11,624 | 7,932 | |
Ending ALLL related to loans collectively evaluated for impairment | 10,927 | 10,927 | $ 8,442 | ||
Ending ALLL related to loans individually evaluated for impairment | 697 | 697 | 41 | ||
Ending ALLL | 11,624 | 11,624 | 8,483 | ||
Collectively evaluated for impairment | 962,322 | 962,322 | 944,547 | ||
Individually evaluated for impairment | 4,195 | 4,195 | 1,770 | ||
Total loans | $ 966,517 | $ 966,517 | $ 946,317 | ||
Ratio of allowance for loan losses to total loans | 1.20% | 1.20% | 0.90% | ||
Allowance for loan losses to non-accrual loans | 1312.00% | 1312.00% | |||
Commercial real estate loans | Construction | |||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||
Beginning balance | $ 836 | 619 | $ 638 | 756 | |
Provision (reversal) | 24 | (117) | 219 | (254) | |
Charge-offs | 0 | 0 | 0 | 0 | |
Recoveries | 0 | 0 | 3 | 0 | |
Ending balance | 860 | 502 | 860 | 502 | |
Ending ALLL related to loans collectively evaluated for impairment | 860 | 860 | $ 638 | ||
Ending ALLL related to loans individually evaluated for impairment | 0 | 0 | 0 | ||
Ending ALLL | 860 | 860 | 638 | ||
Collectively evaluated for impairment | 66,663 | 66,663 | 61,095 | ||
Individually evaluated for impairment | 0 | 0 | 0 | ||
Total loans | $ 66,663 | $ 66,663 | $ 61,095 | ||
Ratio of allowance for loan losses to total loans | 1.29% | 1.29% | 1.04% | ||
Residential loans | Home equity | |||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||
Beginning balance | $ 1,044 | 907 | $ 850 | 915 | |
Provision (reversal) | (6) | (28) | 188 | (36) | |
Charge-offs | 0 | 0 | 0 | 0 | |
Recoveries | 0 | 0 | 0 | 0 | |
Ending balance | 1,038 | 879 | 1,038 | 879 | |
Ending ALLL related to loans collectively evaluated for impairment | 1,034 | 1,034 | $ 845 | ||
Ending ALLL related to loans individually evaluated for impairment | 4 | 4 | 5 | ||
Ending ALLL | 1,038 | 1,038 | 850 | ||
Collectively evaluated for impairment | 106,581 | 106,581 | 115,606 | ||
Individually evaluated for impairment | 783 | 783 | 418 | ||
Total loans | $ 107,364 | $ 107,364 | $ 116,024 | ||
Ratio of allowance for loan losses to total loans | 0.97% | 0.97% | 0.73% | ||
Allowance for loan losses to non-accrual loans | 195.00% | 195.00% | 506.00% | ||
Residential loans | Other residential | |||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||
Beginning balance | $ 1,266 | 849 | $ 973 | 800 | |
Provision (reversal) | (6) | 56 | 287 | 105 | |
Charge-offs | 0 | 0 | 0 | 0 | |
Recoveries | 0 | 0 | 0 | 0 | |
Ending balance | 1,260 | 905 | 1,260 | 905 | |
Ending ALLL related to loans collectively evaluated for impairment | 1,260 | 1,260 | $ 973 | ||
Ending ALLL related to loans individually evaluated for impairment | 0 | 0 | 0 | ||
Ending ALLL | 1,260 | 1,260 | 973 | ||
Collectively evaluated for impairment | 130,915 | 130,915 | 136,205 | ||
Individually evaluated for impairment | 0 | 0 | 452 | ||
Total loans | $ 130,915 | $ 130,915 | $ 136,657 | ||
Ratio of allowance for loan losses to total loans | 0.96% | 0.96% | 0.71% | ||
Consumer loans | Installment and other consumer | |||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||
Beginning balance | $ 426 | 323 | $ 284 | 310 | |
Provision (reversal) | (20) | (28) | 122 | (15) | |
Charge-offs | 0 | 0 | 0 | 0 | |
Recoveries | 0 | 0 | 0 | 0 | |
Ending balance | 406 | 295 | 406 | 295 | |
Ending ALLL related to loans collectively evaluated for impairment | 245 | 245 | $ 231 | ||
Ending ALLL related to loans individually evaluated for impairment | 161 | 161 | 53 | ||
Ending ALLL | 406 | 406 | 284 | ||
Collectively evaluated for impairment | 23,036 | 23,036 | 27,043 | ||
Individually evaluated for impairment | 769 | 769 | 639 | ||
Total loans | $ 23,805 | $ 23,805 | $ 27,682 | ||
Ratio of allowance for loan losses to total loans | 1.71% | 1.71% | 1.03% | ||
Allowance for loan losses to non-accrual loans | 1692.00% | 1692.00% | 490.00% | ||
Unallocated | |||||
Allowance for Loan and Lease Losses [Roll Forward] | |||||
Beginning balance | $ 1,374 | 727 | $ 653 | 494 | |
Provision (reversal) | (109) | (41) | 612 | 192 | |
Charge-offs | 0 | 0 | 0 | 0 | |
Recoveries | 0 | 0 | 0 | 0 | |
Ending balance | 1,265 | $ 686 | 1,265 | $ 686 | |
Ending ALLL related to loans collectively evaluated for impairment | 1,265 | 1,265 | $ 653 | ||
Ending ALLL related to loans individually evaluated for impairment | 0 | 0 | 0 | ||
Ending ALLL | 1,265 | 1,265 | 653 | ||
Collectively evaluated for impairment | 0 | 0 | 0 | ||
Individually evaluated for impairment | 0 | 0 | 0 | ||
Total loans | $ 0 | $ 0 | $ 0 |
Loans and Allowance for Loan_11
Loans and Allowance for Loan Losses - Pledged Loans (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Residential loans pledged for FRB borrowings | $ 1,149.5 | $ 1,133.4 |
Other residential | ||
Financial Instruments Owned and Pledged as Collateral [Line Items] | ||
Pledged residential loan portfolio to secure borrowing with FRB | $ 120.4 | $ 115.7 |
Loans and Allowance for Loan_12
Loans and Allowance for Loan Losses - Related Party (Details) - Directors, officers, principal shareholders and associates - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Related Party Transaction [Line Items] | ||
Related party loans | $ 7.2 | $ 8.3 |
Undisbursed commitment to related parties | $ 8.7 | $ 9.2 |
Borrowings and Other Obligati_2
Borrowings and Other Obligations - Lines of Credit (Details) - Line of credit - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Federal funds purchased | ||
Line of Credit Facility [Line Items] | ||
Amount of borrowings outstanding | $ 0 | $ 0 |
Federal home loan bank borrowings | ||
Line of Credit Facility [Line Items] | ||
Lines of credit | 696,200,000 | 648,000,000 |
Federal home loan bank overnight borrowings | ||
Line of Credit Facility [Line Items] | ||
Amount of borrowings outstanding | 0 | 0 |
Federal reserve line of credit | ||
Line of Credit Facility [Line Items] | ||
Lines of credit | 83,100,000 | 80,300,000 |
Amount of borrowings outstanding | 0 | 0 |
Unsecured debt | Federal funds purchased | ||
Line of Credit Facility [Line Items] | ||
Lines of credit | $ 135,000,000 | $ 92,000,000 |
Borrowings and Other Obligati_3
Borrowings and Other Obligations - Subordinated Debt (Details) - USD ($) $ in Thousands | Nov. 29, 2013 | Sep. 30, 2020 | Sep. 30, 2019 |
Debt Instrument [Line Items] | |||
Accretion of discount on subordinated debenture | $ 52 | $ 51 | |
Amount guaranteed, on subordinated basis, distributions and other payments on trust preferred securities | 4,000 | ||
Subordinated debenture | |||
Debt Instrument [Line Items] | |||
Subordinated debenture | $ 2,140 | ||
Contractual value of subordinated debt | $ 4,120 | ||
Accretion of discount on subordinated debenture | $ 52 | $ 51 | |
Debenture distribution deferral period (up to number of years) | 5 years | ||
Subordinated debenture | NorCal Community Bancorp Trust II | |||
Debt Instrument [Line Items] | |||
Basis spread on subordinated debentures | 1.40% | ||
Effective interest rate | 1.65% |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) - USD ($) | Oct. 23, 2020 | Jun. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | Jan. 24, 2020 | Apr. 23, 2018 |
Class of Stock [Line Items] | |||||||||
Shares withheld for tax withholding and exercise of options (in shares) | 9,214 | 7,795 | |||||||
Amount of shares withheld for tax withholding and exercise of options | $ 369,000 | $ 326,000 | |||||||
Shares withheld for tax withholding and exercise of options, weighted average price (in usd per share) | $ 40.01 | $ 41.84 | |||||||
Share repurchase program, amount approved to repurchase | $ 25,000,000 | $ 25,000,000 | |||||||
Stock repurchased, net of commissions | $ 2,726,000 | $ 3,230,000 | $ 13,170,000 | $ 25,200,000 | |||||
Subsequent event | |||||||||
Class of Stock [Line Items] | |||||||||
Dividends declared per common share (in usd per share) | $ 0.23 | ||||||||
Common Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Stock repurchased, net of commissions (in shares) | 0 | 65,127 | 0 | 92,664 | 313,651 | 619,881 | |||
Stock repurchased, net of commissions | $ 2,726,000 | $ 3,230,000 | $ 13,170,000 | ||||||
Performance-based stock awards | |||||||||
Class of Stock [Line Items] | |||||||||
Vesting period of performance-based stock awards | 3 years | ||||||||
Performance-based stock awards | Minimum | |||||||||
Class of Stock [Line Items] | |||||||||
Vesting percentage of performance-based awards | 0.00% | ||||||||
Performance-based stock awards | Maximum | |||||||||
Class of Stock [Line Items] | |||||||||
Vesting percentage of performance-based awards | 200.00% |
Commitments and Contingencies_2
Commitments and Contingencies - Off Balance Sheet Arrangements (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Total commitments and standby letters of credit | ||
Other Commitments [Line Items] | ||
Total commitments and standby letters of credit | $ 567,514 | $ 529,132 |
Commercial lines of credit | ||
Other Commitments [Line Items] | ||
Total commitments and standby letters of credit | 301,107 | 287,533 |
Revolving home equity lines | ||
Other Commitments [Line Items] | ||
Total commitments and standby letters of credit | 193,364 | 189,035 |
Undisbursed construction loans | ||
Other Commitments [Line Items] | ||
Total commitments and standby letters of credit | 59,548 | 41,033 |
Personal and other lines of credit | ||
Other Commitments [Line Items] | ||
Total commitments and standby letters of credit | 10,923 | 9,567 |
Standby letters of credit | ||
Other Commitments [Line Items] | ||
Total commitments and standby letters of credit | $ 2,572 | $ 1,964 |
Commitments and Contingencies_3
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Thousands | Dec. 27, 2019 | Sep. 27, 2019 | Sep. 17, 2018 | Dec. 31, 2012 | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | |
Litigation Matters | ||||||||
Restricted cash and cash equivalents | [1] | $ 0 | $ 10,015 | |||||
Visa Inc. | ||||||||
Litigation Matters | ||||||||
Settlement agreement amount | $ 4,000,000 | |||||||
Damages sought amended value | $ 4,100,000 | |||||||
Loss contingency accrual, payments | $ 467,000 | $ 300,000 | ||||||
Restricted cash and cash equivalents | $ 1,100,000 | |||||||
Minimum | ||||||||
Loss Contingencies [Line Items] | ||||||||
Weighted average remaining term (in years) | 1 year | |||||||
Finance lease, initial contract terms (in years) | 3 years | |||||||
Maximum | ||||||||
Loss Contingencies [Line Items] | ||||||||
Weighted average remaining term (in years) | 12 years | |||||||
Finance lease, initial contract terms (in years) | 5 years | |||||||
Total commitments and standby letters of credit | Interest payable and other liabilities | ||||||||
Loss Contingencies [Line Items] | ||||||||
Allowance for off balance sheet commitments | $ 1,700 | $ 1,100 | ||||||
[1] | Restricted cash includes reserve requirements held with the Federal Reserve Bank of San Francisco. In response to the COVID-19 pandemic, the Federal Reserve reduced the reserve requirement ratios to zero percent effective March 26, 2020. |
Commitments and Contingencies_4
Commitments and Contingencies - Lease Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Operating leases: | ||
Operating lease right-of-use assets | $ 26,041 | $ 11,002 |
Operating lease liabilities | 27,527 | 12,615 |
Finance leases: | ||
Finance lease right-of-use assets | 365 | 379 |
Accumulated amortization | (267) | (170) |
Finance lease right-of-use assets, net | 98 | 209 |
Finance lease liabilities | $ 99 | $ 212 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:PropertyPlantAndEquipmentNet |
Commitments and Contingencies_5
Commitments and Contingencies - Noncash Investing and Financing Activities (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Right-of-use assets obtained in exchange for operating lease liabilities | $ 18,021 | $ 1,661 |
Right-of-use assets obtained in exchange for finance lease liabilities | 18 | 31 |
Reclassification of deferred rent and unamortized lease incentives from other liabilities to operating lease right-of-use assets upon adoption of ASC 842 | $ 0 | $ 1,967 |
Commitments and Contingencies_6
Commitments and Contingencies - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Operating lease cost | $ 1,165 | $ 1,051 | $ 3,334 | $ 3,123 |
Variable lease cost | 1 | 0 | 4 | 0 |
Total operating lease cost | 1,166 | 1,051 | 3,338 | 3,123 |
Finance lease cost: | ||||
Amortization of right-of-use assets | 41 | 43 | 129 | 128 |
Interest on finance lease liabilities | 1 | 2 | 3 | 7 |
Total finance lease cost | 42 | 45 | 132 | 135 |
Total lease cost | $ 1,208 | $ 1,096 | $ 3,470 | $ 3,258 |
Commitments and Contingencies_7
Commitments and Contingencies - Lease Liability Maturity Schedule (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Operating Leases | ||
2020 | $ 1,199 | |
2021 | 4,592 | |
2022 | 4,318 | |
2023 | 3,893 | |
2024 | 3,187 | |
Thereafter | 12,475 | |
Total minimum lease payments | 29,664 | |
Amounts representing interest (present value discount) | (2,137) | |
Present value of net minimum lease payments (lease liability) | $ 27,527 | $ 12,615 |
Weighted average remaining term (in years) | 8 years | |
Weighted average discount rate | 1.84% | |
Finance Lease, Liability, Payment, Due [Abstract] | ||
2020 | $ 41 | |
2021 | 42 | |
2022 | 13 | |
2023 | 4 | |
2024 | 0 | |
Thereafter | 0 | |
Total minimum lease payments | 100 | |
Amounts representing interest (present value discount) | (1) | |
Present value of net minimum lease payments (lease liability) | $ 99 | $ 212 |
Weighted average remaining term (in years) | 1 year 2 months 12 days | |
Weighted average discount rate | 2.55% |
Derivative Financial Instrume_3
Derivative Financial Instruments and Hedging Activities - Narrative (Details) - Fair value hedge - Designated as hedging instrument $ in Thousands | Sep. 30, 2020USD ($)derivative | Dec. 31, 2019USD ($) |
Derivatives, Fair Value [Line Items] | ||
Interest rate swaps accrued interest | $ | $ 13 | $ 6 |
Interest rate swap | ||
Derivatives, Fair Value [Line Items] | ||
Number of instruments held | derivative | 5 |
Derivative Financial Instrume_4
Derivative Financial Instruments and Hedging Activities - Information on Derivatives (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 | |
Derivatives, Fair Value [Line Items] | |||||
Carrying Amounts of Hedged Assets | $ 18,535 | $ 18,535 | $ 17,900 | ||
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Loans | 2,318 | 2,318 | 944 | ||
Interest and fees on loans | 21,776 | $ 21,525 | 63,880 | $ 63,208 | |
Fair value hedge | Interest income | |||||
Derivatives, Fair Value [Line Items] | |||||
Increase (decrease) in fair value of designated interest rate swaps due to LIBOR interest rate movements | 152 | (485) | (1,351) | (1,389) | |
Payment on interest rate swaps | (108) | (23) | (255) | (49) | |
(Decrease) increase in value of hedged loans | (155) | 424 | 1,374 | 1,359 | |
Decrease in value of yield maintenance agreement | (3) | (3) | (9) | (10) | |
Net losses on fair value hedging relationships recognized in interest income | (114) | $ (87) | (241) | $ (89) | |
Fair value hedge | Designated as hedging instrument | Interest rate swap | Asset Derivatives | |||||
Derivatives, Fair Value [Line Items] | |||||
Interest rate contracts notional amount, asset derivatives | 0 | 0 | 0 | ||
Interest rate contracts fair value, asset derivatives | 0 | 0 | 0 | ||
Fair value hedge | Designated as hedging instrument | Interest rate swap | Liability Derivatives | |||||
Derivatives, Fair Value [Line Items] | |||||
Interest rate contracts notional amount, liability derivatives | 16,218 | 16,218 | 16,956 | ||
Interest rate contracts fair value, liability derivatives | $ 2,529 | $ 2,529 | $ 1,178 |
Derivative Financial Instrume_5
Derivative Financial Instruments and Hedging Activities - Offsetting of Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross amounts of recognized assets | $ 0 | $ 0 |
Gross amounts offset in the statements of condition | 0 | 0 |
Net amounts of assets presented in the statements of condition | 0 | 0 |
Gross amounts not offset in the statements of condition, financial instruments | 0 | 0 |
Gross amounts not offset in the statements of condition, cash collateral received | 0 | 0 |
Net Amount | $ 0 | $ 0 |
Derivative Financial Instrume_6
Derivative Financial Instruments and Hedging Activities - Offsetting of Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross amounts of recognized liabilities | $ 2,529 | $ 1,178 |
Gross amounts offset in the statements of condition | 0 | 0 |
Net amounts of liabilities presented in the statements of condition | 2,529 | 1,178 |
Gross amounts not offset in the statements of condition, financial instruments | 0 | 0 |
Gross amounts not offset in the statements of condition, cash collateral pledged | (2,529) | (1,178) |
Net Amount | $ 0 | $ 0 |